At the "2024 Intellectual Property Nanhu Forum" held on April 20, the problem of overseas rights protection of small and medium-sized enterprises (SMEs) was highlighted as a key issue, and according to its publicly disclosed information, many SMEs will even be bullied by malicious lawsuits.
Obviously, in order to truly let small and medium-sized businesses go to sea, the road of copyright must be clearer.
Barriers and pitfalls faced by small and medium-sized businesses
In conventional cognition, we often feel that the infringement of cross-border merchants is basically subjective, and there is a lack of copyright awareness. However, in the complex overseas environment, small and medium-sized businesses encounter copyright problems when going overseas, which are often related to their poor information, weak overseas operation capabilities, and incomplete understanding of relevant local policies and regulations or other copyright information. For example, some businesses believe that trademark infringement is counterfeiting a well-known brand. However, in fact, even if the product itself is not misappropriated in terms of appearance, the appearance of relevant information at the level of links, detail pages, etc., will still be transformed into a risk of infringement.
For small and medium-sized sellers, the complexity of the risk profile is on the rise.
首先，部分国外律师事务所会专门抓卖家在版权上的弱点，钓鱼执法。 最典型的就是美国四大“流氓”律师事务所——GBC（Greer Burns & Crain）、EPS（Epstein Drangel LLP）、Keith（Keith A. Vogt）、SMG（STEPHEN M. GAFFIGAN, P.A.）。
Second, the "invisible and unintentional" infringements caused by negligence and negligence are mostly manifested in the lack of rigorous investigation awareness in the relevant fields. For example, in the first week of this year, nearly 30 TRO rights protection cases occurred in the field of cross-border e-commerce. One of them was a case of a Dutch company's spray bottle product protecting its appearance patent - before the incident, many companies did not expect that this common category had actually been registered with the patent center of the United States Patent and Trademark Office.
(Source: Patent Center of the United States Patent and Trademark Office)
The last risk is also related to TRO. TRO is an abbreviation for Temporary Restraing Order, which means that the defendant may be prohibited from current sales and assets frozen. For small and medium-sized businesses, this is almost the same as a lifeline. However, because many small and medium-sized businesses rely on the platform to go overseas, they are often involved in copyright disputes by the platform and encounter such "accidents".
According to foreign media reports such as SOURCING JOURNAL, at the beginning of this year, SHEIN, a global fast fashion giant that started in China, launched a lawsuit against dozens of Temu sellers, claiming that the sellers infringed on the intellectual property rights of their products. And, SHEIN filed for TROs in several of these lawsuits, one of which the seller said "froze all of the defendant's financial accounts (even funds unrelated to the sale of the defendant's products), which had a devastating impact on the defendant's business."
For small and medium-sized merchants, the most troublesome problem is that SHEIN believes that these sellers sell on multiple platforms and use original copyrighted works that belong to SHEIN, so it is infringement, and uses the TRO ban to cause many small and medium-sized businesses to be forced to suspend their business.
However, according to the relevant information compiled by the legal blogger Yichuan Legal Lab, among the "Four Tigers Going to Sea" in the field of cross-border e-commerce, SHEIN adopts a self-operated model, and its brands are all produced and manufactured by its Chinese suppliers, and the ownership of copyright obviously needs to be considered according to the actual situation.
(Source: Yichuan Law WeChat public account)
In December last year, Temu sued SHEIN in the United States, and its lawsuit disclosed that SHEIN "revised the exclusivity agreement with the merchant in a targeted manner, further expanded the exclusivity requirements in the agreement, forced the merchant to transfer the intellectual property rights of the image, photo or video of the product, and granted SHEIN an irrevocable exclusive license worldwide."
Obviously, for small and medium-sized businesses that lack intellectual property protection, the sources of risk are too broad, and may even come from the platform.
The awareness of cross-border merchants to protect their rights is awakening
Judging from the above cases, there are roughly three types of penalties or consequences caused by cross-border merchants due to infringement: the platform detects infringement, the product is removed from the shelves, and the store is judged to be in violation, the right holder comes to complain, the product is removed from the shelves, and the store suspends trading, and the defendant infringes, and the court issues a TRO, and the business is frozen. In the case of TRO, it is the worst-case scenario. If the problem itself is not caused by the business, then it will be treated unfairly.
IN A REPORT BY SOURCING JOURNAL, SOME CROSS-BORDER MERCHANTS REVEALED THE DILEMMA OF ENCOUNTERING COPYRIGHT LAWSUITS: SOME PEOPLE "HAD TO CLOSE THEIR FACTORIES...... resulting in the dismissal of 300 of the 500 employees", while another defendant "borrowed money from personal credit cards to pay workers", and even one company that originally employed about 1,000 workers, but under the ban, these workers either lost their jobs or could not get their salaries because the assets of the business had been frozen.
As a result, cross-border businesses are more likely to expect a more positive outcome in unfair copyright litigation to avoid falling prey.
Feng Xiaoqing, a professor at the School of Civil, Commercial and Economic Law at China University of Political Science and Law, said at the Nanhu Forum that after decades of development, small and medium-sized enterprises have accumulated a large number of intellectual property rights, but they are not protected enough in the international market due to the lack of awareness of intellectual property protection and overseas rights protection capabilities. Although it will take longer for the system to improve, at present, more cross-border businesses are awakening to the awareness of rights protection, and the environment has also shown some favorable signs.
According to the Intellectual Property Information Network, in February this year, the British High Court issued a ruling on cross-border e-commerce copyright complaints. The incident itself was last year when SHEIN applied for an injunction against Temu in London on the grounds of infringement, so that thousands of merchants could no longer sell related products. Temu refuted this, and the court found that SHEIN failed to effectively prove that it owned the copyright of the merchant's images, so the previous ban was terminated and the merchant's rights and interests were restored.
(Source: Weibo user)
It is worth noting that the key to SHEIN's proof is the aforementioned "exclusivity agreement", while the English High Court held that it is a normal choice for merchants to sell on multiple platforms, and it is impossible to prove the exclusive ownership of copyright. For small and medium-sized businesses, this means that they can still retain their own intellectual property rights in overseas areas, which is obviously good news and a victory for small and medium-sized businesses to protect their rights.
In addition, cross-border merchants are collectively germinating a sense of rights protection, no longer unilaterally accustomed to compromising with platforms or any other subject with unreasonable requirements, and their awareness has progressed far beyond intellectual property rights, which will ultimately help cross-border merchants establish a more orderly self-protection system.
The most typical example is that, according to the 21st Century Business Herald, since the beginning of Amazon's "ban wave" in May 2021, some domestic lawyer teams, legal technology and legal operation teams have launched the "Cross-border E-commerce Overseas Rights Protection Plan". The program is mainly for sellers whose rights and interests have been infringed by the platform, and jointly initiates class arbitration in the United States and other places to protect their legitimate rights and interests and strive for reasonable compensation. As of June last year, more than 10,000 small and medium-sized sellers have joined the program.
Returning to the copyright level, according to a report by SOURCING JOURNALD, most brands, such as Nike or Birkenstock, often directly target the copyright and trademark infringement lawsuits at platforms, such as Amazon and AliExpress, rather than choosing to target merchants. Therefore, brands with a high sense of compliance are also well aware of how to protect their rights and interests within a reasonable framework, rather than abusing relevant legal provisions.
With the development of time, the competition in the cross-border e-commerce industry has become more and more fierce, and merchants will also expect to choose platforms and methods with less business risks. Complying with reasonable and legal copyright requirements and resisting copyright and legal bullying are becoming the common cognition of overseas businesses.