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Trial Docket: (2014) HuYiZhongMinWu(Zhi)ChuZi No. 98
Appellate Docket: (2016)HuMinZhong No. 339
City of Shanghai
When goods sold or services provided by an Internet store holding out as "self-run" on the e-commerce platform constitute infringement, the operator of the e-commerce platform, whether or not the actual business operator of the store, shall carry a heightened duty of care, as well as legal responsibilities for such infringing activities commensurate with the store operator that sold the goods or provided the services.
Plaintiff: DHC Corporation Defendant: New Height E-Commerce (Shanghai) Co., Ltd. (New Height E-Commerce); Elov (France) International Group Limited (Elov); New Height Information Technology (Shanghai) Co., Ltd. (New Height IT); and Beijing Wanhao Tiancheng Trading Co., Ltd. (WanHao Trading)
Plaintiff, holder of exclusive rights under trademark registration Nos. 1395239 for DHC, 8718597 for DHC, and 8284725 for , etc., discovered information relating to Vitamin E facial masks and other mask products showing DHCFOCUS from the website operated by New Height E-Commerce. The website carries the words: "Self-Run by" A product photo revealed a mark  on in- and outside packaging where the "DHC" portion was enlarged and boldfaced. The website used the indicia of "DHCFOCUS/DHC焦点" and , as well as DHCFOCUS before the product names. The word DHC on the product info page was also enlarged and boldfaced. In its "Brand Story," the trademark and DHC Corporation's background information were used. The ensuing purchase made from the said Internet store revealed that these products carried the mark and with sales invoice indicating the issuer to be New Height IT, manufacturer to be Elov, and the distributor to be Wanhao Trading Co. DHC therefore sued the aforementioned four defendants for trademark infringement and unfair competition, seeking corresponding infringement liabilities.
The trial court found infringement of registered trademarks of DHC in the four companies activities, and unfair competition against New Height E-Commerce, and New Height IT of false advertisement by using on their websites, without permission, introductory materials about DHC and their products. The court ordered injunction against the four defendants and levied liabilities accordingly.
New Height E-Commerce and Elov were not satisfied, and appealed to the High Court of Shanghai. New Height E-Commerce contended that it is merely e-trading platform service provider, and not a seller of the products at issue, for which the sales invoice was issued by New Height IT which operated a self-run store at which was an independent business, responsible for its own business activities, totally unrelated to New Height E-Commerce. The appeals court was of the opinion that New Height E-Commerce, being the operator of in this case should be equally liable for infringement activities for the store that labeled itself as "self-run" at its website, and therefore denied its contention.
[Judge's Comment]
This case relates to liabilities at law for e-commerce platform operators, and relevant duty of care, in particular, for "self-run" stores' infringing activities. Finding of infringement ought to be made from two perspectives of both intentions and circumstantial surroundings. Emphasis should be placed on whether there exists a duty of care, and whether the duty has been breached as a subject fault.
It is actually a business model in a case like this where trading information is advertised and business conducted in the name of platform operator by using the indicia of "self-run." In this way, the ordinary consumer mainly relies on the self-run information disclosed by the store to evaluate the store operator. On the other hand, in light of usually greater reliability of the e-commerce itself than a third party product or service provider, the consumer is prone to take the business model as e-commerce platform selfrun business, which inevitably creates more trading opportunities and actual benefits for the platform and such store. Based on the principles of equal rights and obligations, and of fairness, greater responsibilities should be imposed on e-commerce platform operators.
As for platform operators, when Internet stores use the indicia of "selfrun," it would mean that business activities of relevant products or services are conducted in the name of the e-commerce platforms or their operators. Such activities should encompass not only specific deals, but also trading information. An e-commerce platform operator, as the manager of e-commerce platform, though perhaps unable to keep track of prior examination on the massive trading information within its platform, but must be more sensitive of and exercise greater control over the business activities that are labeled "self-run" under its name. In other words, there exists a greater duty of care to manage and control such activities.
In view of streamlining e-commerce development, the imposition of greater duty of care is necessary for the proper development where the products or services infringe upon interests of others when labeled under "self-run."