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Should Alibaba be liable for the counterfeiting activities of online stores? On the secondary liability of internet service providers in Chinese trade mark, copyright and tort law

Shujie Feng

Keywords: ISP's liability; secondary liability; counterfeiting; intellectual property; tort law; Chinese law; ISP's duty of care

According to Chinese copyright law, internet service providers (ISPs) are jointly liable for the piracy of internet service users (ISUs) if they are aware of or have reason to know the latter's illegal acts, while the Trade Mark Law imposes joint liability on ISPs only if it is aware of the infringing acts of ISUs. As for the tort law, which is of general applicability, it provides that ISPs are jointly liable if they know of an ISU's tortious behaviour, but what constitutes this knowledge is quite controversial. A transversal study between these three laws shows that the term ‘have reason to know’ or ‘know’ in related rules should be interpreted as encompassing constructive knowledge and negligence, in order to conform with Chinese judicial practice. The divergence between these laws, other legal texts and judicial practice has given rise to disorder in the interpretation and application of Chinese law, and has broadened the scope of applicability of liability exemption clauses. The fundamental conditions for the determination of an ISP's liability are twofold: the ISP must have actual knowledge or constructive knowledge of the infringing act, or be negligent regarding the facts or circumstances related to the ISU's tort; and the illegal nature of the ISU's behaviour must be obvious or easy to recognize by a reasonably diligent person. The negligence of an ISP should be identified by the lack of appropriate and effective measures taken to prevent an ISU's torts. A general duty of care for ISPs has been introduced and developed by Chinese courts despite the fact that ISPs are generally regarded as not being subject to a general obligation to monitor the activities of ISUs.

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