IP Protection in the Internet Plus Field
By Wang Lei
Updated: 2015-09-11

When delivering the government work report of 2015, Chinese Premier Li Keqiang mentioned for the first time the Internet Plus action plan, aiming to integrate mobile Internet, cloud computing, big data and the Internet of Things with modern manufacturing, and encourage the healthy development of e-commerce, industrial networks, and Internet banking.

The Internet Plus represents a new form of economy that makes full use of the role of the Internet in optimizing and integrating allocation of production factors, fully integrates innovative achievements based on the Internet into all areas of economic and social fields, enhances creativity and productivity of the real economy, and promotes an extensive and new economic development mode with the Internet as the infrastructure and implementation tool. The Internet Plus, in simple terms, means a combination of the Internet and traditional industries to promote industrial development. It represents a new economic form that makes full use of the Internet in optimizing and integrating allocation of production factors, fully integrates innovative achievements based on the Internet into all areas of economic and social fields, and promotes an extensive and new economic development mode with the Internet as the infrastructure and implementation tool. During the integration process, there will be a massive number of infringement risks, so that new demands for IP protection are arised from the combination of the Internet with traditional industries. The Author would like to share some of his ideas hereby.

Expansion of the Customer Base After Combination of Traditional Model with the Internet

On May 4, 2015, the State Council released Opinions on Greatly Accelerating the Development of E-commerce to Create a New Economic Dynamism (GuoFa [2015] No. 24), further clarifying the country’s determination to encourage the rapid development of e-business and pointing out the new direction to create new economic dynamism through e-commerce.

Under the national strategic plan, the traditional operation and circulation model, combined with the Internet, will greatly expand contacts with all sectors of traditional industries, thereby expanding the customer base.

1. Tremendous Impact of the IP Customer Base

The national policy is aimed at accelerating in-depth integration of the Internet and the circulation industry, promoting industrial transformation and upgrading, enhancing circulation efficiency, cultivating new economic growth points, making innovations for public livelihood and stimulating consumption potential. As the market integrates and expands, the number of infringing parties and the infringed parties will grow substantially in cases of infringement. Under the Internet Plus Circulation Action Plan issued by the financial departments, the major goal of the future action will focus on creating an upgraded circulation industry through popularizing e-commerce in the rural areas, small and medium sized cities as well as communities, integrating and interacting online and offline business and crossborder e-commerce, in order to realize the constant innovation on distribution methods and greatly improve the circulation efficiency and environment. An upgraded circulation industry and higher efficiency lead not only to an expansion of the IP base, but also a tremendous impact on the rights protection. In the future circulation plans, the life and economy of all members in the society covered by the Internet Plus will present new challenges in protection efforts and methods.

2. Distinctive Characteristics of Boundaries Breaking and Decentralization

In the market and circulation environment linked by the Internet, rural and urban areas inter - exchange, domestic and overseas markets are connected, and crossborder interconnection beyond the geographical scope further demonstrates the characteristics of boundaries breaking and decentralization. The action plan, based on the current application of the Internet technology in China’s circulation industry, expressly announces approaches and measures to promote the construction of a modern circulation system with the Internet as a carrier. In other words, the modern circulation system will no longer be restricted to markets in a particular geographic region, but will span online and offline markets, and expand into traditional markets in towns and villages, at home and abroad.

Protection of Emerging Rights on the Internet

1. Expansion and Protection of Inherent Rights

Protection of Emerging Rights and Traditional Rights.

Popularizing in the 1990s, the Internet has so far influenced every aspect of people’s lives. Likewise, new types of IP rights, such as the right to network dissemination of information, have also emerged with the development of the Internet. In addition, new problems will inevitably come into being, such as the confrontation between use and exploration of big data and personal privacy, and legal issues involved in cross-border e-commerce. It can be predicted that the current protection scope of IP needs will be updated and rebuilt. After the concept of the Internet Plus was put forward, the range of rights which has been greatly expanded will ultimately fall into the IP field due to the innovation of the carriers.

(1) Problems in IP Protection

On the Internet, the cross-border and low-cost nature of infringement has undermined the healthy development of the market. For example, IP protection over online artistic works and games has been hardest hit in recent years. Likewise, Apps on mobile phones have become ravaged by rampant copycatting. At present, China has not worked out rules of advanced approval and filing to regulate Apps. Therefore, some would use those legal loopholes to plagiarize and infringe upon others’ IP rights, hampering the sound development of the network market.

(2) Increasing Cost on IP Protection

Since IP infringing technologies are constantly changing, network piracy technologies are becoming increasingly diverse. In particular, emerging technologies, such as cloud computing and rapid website building, have been used in network infringement wantonly. In this regard, it is more difficult for original copyright holders and authentic websites to effectively control the dissemination of copyrighted contents and protect the relevant IP.

Because of the sharing nature of the Internet, it is very difficult for enterprises to identify specific infringers. Besides, enterprises will face an increasingly high cost of rights protection because it is easy to erase, but difficult to discover, evidence of infringement on the Internet, and that the infringement usually has extensive influence and can be quite hidden.

2. New Rights and Legislation

After expanding to a certain scale and depth, the industrial innovation accelerated by the Internet will give rise to new types of rights. Taking the right to network dissemination of information as an example, China Copyright Law, amended in 2001, expressly offers legal protection for technical measures and rights management information. In accordance with China Copyright Law, the State Council standing committee meetings examined and passed in principle Regulations on the Right to Network Dissemination of Information, which came into force on July 1, 2006. This marks the implementation of the legal system regarding the right to network dissemination of information.

On the eve of its accession into the WTO, China revised the Copyright Law, in which advocated the right to network dissemination of information and authorized the State Council to enact protection measures for the right. Undoubtedly the provision, to certain extent, results from WCT and TRIPs rules with a combination of domestic legal and cultural characteristics. The provision emphasizing protection of works in network dissemination, attempts to create an independent type of copyright, which aims to be more accurate than the offline wording “an extension of reproduction right and distribution right” is “the right of dissemination to the public”, or “the right provided for the public”.

The right to network dissemination of information is defined on the basis of differentiation from the traditional reproduction right, distribution right, performance right and broadcasting right. Under the Copyright Law, it is seen that only the performance right may be extended to network dissemination, yet other rights are strictly confined to the traditional concepts without any improvements. The apparent purpose of lawmakers strictly sticking to the traditional concepts is to prepare conditions for the right to network dissemination of information.

As a matter of fact, Copyright Law successfully breaks down copyright into 16 types, in particular the addition of the right to network dissemination of information, which puts an end to the domestic controversy over the creation of rights on the network dissemination. Although Copyright Law tends to favor independent creation of the right to dissemination of information, there is still much room for discussions and expansion on the definition of the right.

In recent years, European countries have also gradually come up with newborn rights such as the right to be forgotten in the dissemination of information. It can be seen that with the development of the Internet and global digital network, the thorny problems of reshaping the copyright law have never been perfectly solved. Not only the proposal of the Internet Plus, technological development and up-to-date progress on digital copyright legislation in each country are also required to closely follow the latest technologies and legal developments, in a bid to provide practical rules to guide the public on works utilization and protect interests of copyright holders.

Competition Issues that Follow Technological Innovation

There has been an increasingly intensive outbreak of unfair competition cases on the Internet since 2009, and thus encouraging technological innovation and promoting healthy competition will be two new topics of the Internet Plus. To be specific, the new topics focus on how to settle the confrontation between development of productive forces brought about by technological revolution and transformation and upgrading of traditional industrial models, and how to draw the line between good will technological innovation and bad will technological hijacking.

In terms of contents, cases on unfair competition involve various Internet products, including searching, browsers, security products, network games, mobile Apps distribution, etc. In terms of quantity, statistics from Beijing First Intermediate People’s Court show that the Internet has been a field prone to disputes of unfair competition. Among 110 cases of unfair competition heard by the court from 2010 to 2013, 33 relate to the Internet field, accounting for 30% of all the cases. Disorderly market competition resulting from rapid industry updates in the new business model should take the responsibility.

1. Diverse Competition Complicates the Market Competition Regulations

(1) Competition in the Same Field

Competition in the nascent field of the Internet tends to be more comparable and can specifically fall into the legal framework of IP protection, antitrust and unfair competition. In 360 v. Tencent (a dispute between Tencent and Qihoo), for example, the conflicting sides are Internet companies providing similar products and services. In fact, the case is malicious competition which leads to limitation of consumer choices. It can be resolved in accordance with Anti-Unfair Competition Law.

(2) Cross-field Competition

In the tricky Internet field, e-commerce has brought great changes to consumption patterns. Offline industries scramble to embrace e-commerce for business expansion and launching corresponding online services. The interconnection between offline and online markets has greatly expanded the traditional market, giving rise to a new round of competition on market share. In this regard, the nascent online market also needs new regulations to guide and limit competition within a normal and reasonable extent.

2. Urgent Need of Regulations in Online Competition

Unfair competition on the Internet has four characteristics: the tendency of expanding infringing parties; the extensive infringed parties severely impairing the industry; repeated infringement; and chaos of persistent unfair competition.

Specifically, based on cases of unfair competition which have come into force, it can be seen that malicious and repeated infringements are prominently rampant in unfair competition cases on the Internet, and infr ingements cannot be banned effectively; that infringing enterprises, after being declared to have committed infringement and ordered to bear civil liabilities, continue to commit similar or identical acts of infringement; and that although infringed enterprises obtain civil compensation after judicial judgments, they often “win the case, but lose the market”.

In future, against the backdrop of the Internet Plus and promotion of mass entrepreneurship, there will be a continuous increase of pluralistic and interactive business models and creative marketing spanning both online and offline. In view of the enormous harm and rapid dissemination resulting from unfair competition within the Internet industry, an enterprise may flourish and fail quickly within a few days if such acts of competition are not forcibly stopped. In this regard, it is urgent for the government to impose more effective regulations on acts of unfair competition on the Internet.

(Translated by Wang Hongjun)

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