Christine Yiu explains a new development in the global debate over the responsibility of internet platforms for the content they host – a recent decision from China's internet court which clarifies platforms' obligations on being notified of copyright-infringing content.

In a recent decision issued by the Hangzhou Internet Court on 27 February 2019, the Court finds that Wechat is not liable for copyright infringing content uploaded to three Mini-Programs run via its public account platform.  The case relates to a copyrighted series of online psychology tutorials taught by a KOL.  The plaintiff Daodou enjoys an exclusive licence of the online dissemination right to the copyright work.  Daodou discovered that infringing copies of the tutorials were made available on three separate Mini-Programs run by the first defendant Baizhan.  Daodou complained to Wechat and requested that it use its power as the platform owner to disconnect the three Mini-Programs.  Wechat argued that it does not have the obligation to do so under the law and also in view of objective technical reasons.

What is Wechat?

Since its first release in 2011, Wechat has expanded from a messaging app into a colossal ecosystem in which users could use the app to order cinema tickets, book a car, read news, pay for electricity bills and much more.   Readers may recall a Times article reporting that a beggar in China has before him not a bowl but instead a QR code, indicating the evolution of China into a cashless online society.  In 2017, Wechat launched a new functionality called the Mini-Programs, which amounts to an app within an app, in which public account holders could run a program accessible via the Wechat portal without a separate download.  The Mini-Programs run in parallel with the Wechat app and can open a separate webpage of online games or e-Commerce shops.   There are now over one million Mini-Programs built on the Wechat platforms covering over 200 industries.

What is the position of ISP copyright liability for this giant platform? The basic principle can be traced back to Article 36 of the PRC Tort Law enacted in 2010, which states that in the event of infringement, the rights owner could complain to the ISP (“notification“) and request that it takes necessary actions such as deleting the content, screening, de-linking, etc. (“deletion“).   If the ISP fails to take necessary action after being put on notice, it shall be jointly liable with the direct infringer for the additional part of infringement. This is known as the safe-harbour principle as the ISP is not automatically liable before the notification. Alas the safe harbour is not so safe.  In 2013, the PRC Regulations on the Protection of Rights to Information Network Communication (Regulations) set out exceptions.  Staying inside the safe harbour also does not mean a quiet life.  The notification + takedown procedure often means that an ISP is caught in the middle of numerous disputes between rights owners and alleged infringing users, and whichever decision it comes to, one side is not going to be happy.

What is the significance of the Daodou v Baisan and Wechat decision?

The Daodou v Baizan and Wechat case clarifies the boundary in the case of an ISP which offers an access service without control of the underlying content.  The Hanghzou Internet Court finds that there are different categories of ISP as recognised in Articles 20 to 23 of the Regulations, namely ISPs which provide network access services, cache services, information storage, searching, or linking services.  The different types of ISP have different degrees of editing rights over the content, and therefore their liabilities should also be different.  In case of fundamental network services such as that providing access services, the ISP does not have control over the information transmitted by users, and does not have any ability or power to interfere with the content.  Providers of fundamental network services charge users in accordance with the level of technical services provided, and not in accordance with the content.   The Court finds that Article 20 of the Regulations exempts such ISPs from damages liability, and extends to interpret that there is no deletion obligation.  The “notice + takedown” procedure in Article 14 to 16 is only obligatory for  ISPs which provide storage, searching, list ranking, or linking services.  The Court further states that the definition of “network service provider” in Article 36 of the PRC Tort law should not include this type of ISP, though it would have other monitoring obligations under the Cyber Security Law such as that against gambling, pornography, or terrorist activities.   Applying this analysis, the Court found that Wechat is not liable because it does not store nor have access to the server of the Mini-Programs developer to examine or delete the infringing content.

The judgment has not yet become effective pending possible appeal.  It is certainly a breaking news for certain classes of ISP, as the argument that it does not have access nor control over specific infringing content seems to be a viable defence against joint liability.  For the IP owners, however, it means the option of online takedown procedure may not be as effective as one would hope, as it is natural for an ISP to avoid disruption to its services. Admittedly the author reads this Chinese court judgment on her Wechat on the same day it was released, and will continue to monitor the update by spending more time on screen.  In the past Chinese judgments often took days to be served on the defendant via post, and lawyers would have to decipher a smudged date stamp painstakingly in order to work out the deadline for appeal.  “No more!”  I typed.