Just yesterday, the Hangzhou Internet Court held a public hearing in accordance with the law to hear a dispute over the infringement of the right to disseminate information network of works by a technology company and pronounced a judgment in court. This case should be the first case in which a dispute over the infringement of digital collections in the mainland has been concluded and publicly pronounced. At present, there is no special law in the mainland to clearly regulate digital collections and digital collection platforms, and in this environment, the legal significance of the "first case" is self-evident.
In its judgment in this case, the Hangzhou Internet Court explained the nature of digital collections, the definition of behavior in the digital collection trading model, the attributes of the digital collection trading platform and the determination of liability, and the way the platform stopped infringing and formed corresponding review standards. Although precedents are not the source of law in the mainland, new types of cases with detailed judgments will certainly become an important reference for judicial practice in the mainland in the future.
As far as the digital collection business operators are concerned, the most important thing to pay attention to in this judgment is that the Hangzhou Internet Court found that the digital collection trading platform should bear a higher duty of care in advance review in addition to the obligation of "notice-delete" after the fact. From the perspective of digital collection business operators, this article will help digital collection trading platform operators clarify their legal obligations, tort liabilities and relevant legal boundaries, and make a modest contribution to the healthy and sustainable development of the domestic digital collection industry.
1. Summary of the facts of the case
The plaintiff, Company A, was authorized to enjoy the copyright property rights and rights protection rights of the "Fat Tiger" series of digital collections created by a well-known artist on a global scale. Plaintiff Company A found that on the digital collection trading platform operated by defendant Company B, there were users who cast and published the "Fat Tiger" digital collection, which was completely consistent with the "Fat Tiger" illustration works published by the above-mentioned well-known artists on its social platform, and Company A sued the Hangzhou Internet Court for this situation.
Company A believes that defendant Company B, as a professional digital collection trading platform, should fulfill a higher obligation to protect intellectual property rights, and should conduct a preliminary review of the ownership of digital collections published by users on its platform. The defendant not only failed to perform the audit obligation, but also charged a certain percentage of the transaction fee. Therefore, Company B's move constitutes an information network communication right to help infringe. Plaintiff Company A demanded that defendant Company B stop the infringement and compensate for losses of RMB100,000.
Defendant Company B raised three major defenses. First, Company B is only a third-party digital collection trading platform, and the "Fat Tiger" digital collection involved in the case is not minted by Company B, but uploaded by the platform users themselves, so Company B is not liable; second, Company B, as a digital collection trading platform, only has the obligation of review after the fact. Moreover, after the incident, Company B has entered the digital collection involved in the case into the address black hole and fulfilled the obligation of notice-review, so there is no need to stop the infringement; third, Company B believes that it has no obligation to disclose the specific blockchain and node location where the digital collection involved in the case is located, nor has it the obligation to disclose the content of the smart contract applicable to the digital collection involved in the case.
After trial, the Hangzhou Internet Court held that the digital collection trading platform operated by defendant Company B failed to fulfill its duty of review and care, there was subjective fault, and its behavior had constituted assistance to infringement, and ordered defendant Company B to immediately delete the "Fat Tiger" digital collection published on the platform involved in the case, and at the same time compensate plaintiff Company A for economic losses and reasonable expenses totaling 4,000 yuan.
Second, the digital collection trading platform shall bear a higher obligation of review and care
Looking at the judgment in this case from the perspective of the digital collection business operator, the most noteworthy assertion is that "the digital collection trading platform should bear a higher obligation of review and care". In this case, defendant Company B argued that the "Fat Tiger" digital collection suspected of infringement was minted and uploaded by the platform user itself, and it only had the obligation of review after the fact and had fulfilled the obligation of notice-deletion, so it did not need to bear the tort liability.
The idea of a "notice-delete" obligation has a long history. Prior to the promulgation of the Civil Code of the People's Republic of China, the most basic legal norm for adjusting online tort liability was article 36 of the Tort Liability Law, and the obligation of "notice-delete" refers to the provisions of the second paragraph of article 36 of the Tort Liability Law, that is, "where a network user uses network services to commit an infringing act, the infringed party has the right to notify the network service provider to take necessary measures such as deleting, blocking, or disconnecting links." Where a network service provider fails to take necessary measures in a timely manner after receiving the notice, it shall bear joint and several liability for the expanded part of the damage and the network user." In addition to the Tort Liability Law, the obligation to "notify-delete" also appears in the E-commerce Law, the Cybersecurity Law, the Consumer Rights and Interests Protection Law, the Copyright Law, the Patent Law, the Trademark Law and other laws, administrative regulations such as the Regulations on the Protection of the Right of Communication on Information Networks, the Measures for the Administration of Internet Information Services, and the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Disputes Involving infringement of the Right of Communication over Information Networks.
With the increasingly diverse Internet business models and the complexity of online infringements, the provisions of the second paragraph of Article 36 of the Tort Liability Law on the obligation of "notice-erasure" have become difficult to meet the needs of regulating online infringement liability. The Civil Code of the People's Republic of China adopts four articles (i.e. Articles 1194-1197) to provide detailed provisions on online infringement liability. In addition to article 1195, which expands the content of the original "notice-delete" obligation, the new article 1197 stipulates that "if a network service provider knows or should know that a network user uses its network services to infringe upon the civil rights and interests of others and fails to take necessary measures, it shall bear joint and several liability with the network user" can be regarded as the legal basis for "the platform shall bear a higher obligation of review and care".
In other words, for the operators of the digital collection trading platform, the "should know" in article 1197 of the Civil Code of the People's Republic of China gives the operator of the digital collection trading platform the obligation to review the pictures provided by the user for the production of the digital collection. Therefore, it is not enough to fulfill the obligation of "notice-erasure" after the fact.
Is it reasonable to determine that the digital collection trading platform needs to fulfill such a prior review obligation? The Hangzhou Internet Court gave four reasons:
First, from the perspective of the digital collection trading model, the transaction of digital collections involves the reproduction and dissemination of information on the original work (in this case, the "Fat Tiger" illustration), so the caster who casts the "Fat Tiger" illustration into a digital collection should not only be the owner of the "Fat Tiger" illustration, but also the copyright owner or authorizer of the illustration, otherwise it will infringe on the copyright of others. As a professional digital collection trading institution, the digital collection trading platform should take reasonable measures to prevent infringement, review the legality and authenticity of the source of the digital collection, and confirm that the foundry has the appropriate rights or permission to engage in the casting behavior.
Second, from the perspective of the immutability of the blockchain, if there are technical defects in digital collections, it will not only destroy the trust and transaction integrity system between trading entities, but also damage the legitimate rights and interests of transaction counterparties, so the digital collection trading platform should fulfill a higher duty of review and care than the "notice-delete" obligation.
Third, from the perspective of the control ability of the digital collection trading platform, the digital collection trading platform has a strong control ability, and also has the corresponding audit capabilities and conditions, requiring the platform to fulfill a higher duty of review and care without increasing its cost.
Fourth, from the perspective of the profit model of the digital collection trading platform, it is directly from the transaction of digital collections to obtain benefits, specific to this case, the defendant B platform not only collects the GAS fee for the work at the time of casting, but also charges a certain proportion of the fee after each successful transaction of the work, since the digital collection trading platform directly obtains economic benefits from the transaction of the digital collection, it should naturally have a higher duty of care.
The above four points of the Hangzhou Internet Court are extremely detailed, and the most important of them are the first and fourth points. The first point directly indicates that the caster of the original work as a digital collection should be the copyright owner or authorizer of the original work, and the digital collection trading platform has the obligation to review it in advance; the fourth point directly points out the principle of reimbursement, that is, the digital collection trading platform directly obtains economic benefits from the transaction of the digital collection, then it should have a corresponding duty of care, which is not only a "notice-delete" obligation after the fact, but should be a higher degree of prior review and care.
III. What kind of prior review and care should the digital collection trading platform fulfill?
As mentioned above, the post-review obligation of "notice-delete" obligation is far from sufficient to prevent the infringement risk of the digital collection trading platform, and the digital collection trading platform should bear a higher duty of prior review and care.
In the present case, such a duty of care for prior examination is a prior examination of intellectual property rights. As far as the current situation in China is concerned, in order to attract users to participate in the trading activities of digital collections, digital collection trading platforms often cooperate with companies that hold some well-known IP at home and abroad, in this business model, the vast majority of trading platforms have corresponding legal awareness, that is, in the cooperation agreement, the company is required to license its legally held intellectual property rights to the digital collection trading platform so that it can cast digital collections and issue them. This process is typical of the IP examination process. However, at present, a considerable number of digital collection trading platforms ignore the intellectual property rights issues in the process of individual users casting digital collections.
That is to say, the digital collection trading platform also has a prior intellectual property review obligation for individual users to cast digital collections on their platforms, and must ensure that individual users are the copyright owners or authorizers of the original works used to cast digital collections; in addition, the digital collection trading platform should establish a long-term intellectual property protection mechanism, and in the case where individual users declare that they are the copyright owners or authorizers of the original works cast into digital collections, but the platform receives a notice of intellectual property infringement. It can be determined at the first time whether the digital collection cast by the individual user is infringing, and if there is infringement, corresponding measures must be taken at the first time.
In addition to this case, there are many types of similar prior review of the duty of care, including the prior review of anti-money laundering risks, the prior review of the risk of cyber fraud crimes, etc., which are limited to space and will not be repeated here.
Fourth, the aftermath
This judgment of the Hangzhou Internet Court follows the "Three Associations Initiative", and its guiding role in the digital collection business is self-evident. It is worth noting that in addition to determining the duty of care in advance review of the operator of the digital collection trading platform, this case also discusses the legal nature of the digital collection. The Hangzhou Internet Court held that the NFT (Non-Fungible Token, a non-homogeneous token, equivalent to a "digital collection" in the context of this article) is essentially a proof of interest.
Taking this case as an example, when the user uploads the original work to the digital collection trading platform and casts the original work into a digital collection, it essentially marks the original work with a "voucher", which records the initial publisher, release date and future circulation information of the original work. On this basis, the Hangzhou Internet Court held that when the digital collection was traded, the purchaser obtained a property interest. In fact, the Hangzhou Internet Court did not intend to systematically argue the legal nature of digital collections, and made the above assertions only to show that its own intellectual property rights did not circulate during the transaction of digital collections, so as to determine that the digital collection trading platform should bear the obligation of prior intellectual property review. It is important to note that the debate over the legal nature of the digital collection will not be settled by this decision.
The judgment of the first case of digital collection of the Hangzhou Internet Court has important reference value, but it is still necessary to note that this case is not a final judgment, the mainland is not a case law country, and the majority of digital collection business operators must examine it in light of their own specific conditions while attaching importance to the reasoning process of this case, and do a good job in the compliance work of the enterprise to help the healthy and stable development of the industry.