How to Use Reverse Behavior Preservation in E-commerce Disputes?

1. Introduction

E-commerce has become the mainstream sales model, and there are more and more cases of intellectual property infringement disputes involving products sold on e-commerce platforms. When an infringement dispute occurs, the intellectual property rights holder can, in order to stop losses in a timely manner, request the e-commerce platform to delete the link to the alleged infringing product without a final result in the case. However, if the accused infringer believes that he has not infringed or the intellectual property rights of the rights holder (such as patent rights) are unstable and may be invalidated, the accused infringer can in turn request the e-commerce platform to disconnect the link or restore the link; if the accused infringer requests to continue to link and sell, he should provide a guarantee, which is called reverse behavior preservation.

2. Introduction to the case of reverse behavior preservation

2.1 Reverse behavior preservation case background

(2020) The Supreme People’s Court of P.R.C. (SPC)’s Intellectual Property Court Civil Final Appeal No. 993 disclosed a case of reverse behavior preservation.

In this case, the utility model patent owner of the “flat mop cleaning tool” claimed that the infringing products sold by the accused infringer (hereinafter referred to as the defendant) on Tmall infringed its patent rights, and requested the defendant to stop the infringement, and required Tmall to delete and disconnect the sales links involved and compensate for economic losses. The first instance court supported the patent owner’s request, and Tmall deleted the sales links involved.

2.2 Application for reverse behavior preservation

During the second instance, as “November 11（major festivals for promotions on China’s e-commerce platforms）” was approaching, the defendant filed an application for reverse behavior preservation with the Supreme Court, requesting the court to order Tmall to immediately restore the sales link involved in the case, and stated that if the link was not restored, the defendant would suffer irreparable losses during the “November 11” period; at this time, CNIPA also made a review decision on the request for invalidation of the patent involved, declaring that all the patent rights involved were invalid.

3. SPC ruling on reverse behavior preservation case

In response to the defendant’s application for reverse conduct preservation, the SPC made a reverse conduct preservation ruling on the second day, ordering Tmall to immediately restore the defendant’s sales link for the alleged infringing products, but freezing part of the defendant’s Alipay account totaling RMB 15.6 million as collateral.

4. Reasons for the decision

4.1 Uncertainty of patent rights

The reason why SPC froze part of the defendant’s account is that although the patent in question was declared invalid by CNIPA, the patent owner may file an administrative lawsuit and the validity of the patent in question is still uncertain.

4.2 Impact on market competition

If the links to the defendant’s products are not restored, it is possible that the defendant’s market competitive advantage or business opportunities will be damaged, resulting in a serious impact on the defendant’s sales during the November 11 promotion period.

4.3 Damage to the patent owner

Restoring the link will not lead to the complete replacement of the patent owner’s product, and the damage to the patent owner is relatively small. Therefore, SPC ordered Tmall to immediately restore the defendant’s sales link for the alleged infringing products, but froze part of the defendant’s Alipay account and wait for the final result of the administrative lawsuit for patent invalidation.

5. Legal obligations and review standards

In this case, the SPC believes that: when the e-commerce platform operator (Tmall) receives a notice from the intellectual property rights holder containing preliminary evidence of infringement, it has a legal obligation to take necessary measures such as deletion, blocking, disconnecting links, and terminating transactions and services. However, after taking the above-mentioned sales prohibition measures, if the links are not restored, the defendant’s legitimate interests will suffer irreparable damage. The defendant can apply to the SPC for reverse behavior preservation and require the e-commerce platform to take behavior preservation measures such as restoring links.

6. Factors considered by the court in review

During the court’s legal review, when determining whether to restore the link for reverse behavior preservation measures, the following factors should be mainly considered:

a) Whether the request for restoration has factual basis and legal basis;

b) Whether failure to restore the link will cause irreparable damage to the applicant (defendant) for restoration;

c) Whether the damage that may be caused to the patent owner by restoring the link will exceed the damage caused to the defendant by not restoring the link;

d) Whether restoring the link will harm the public interest;

e) Whether there are other circumstances where it is not appropriate to restore the link.

7. Conclusion

Intellectual property rights such as patents are powerful means for market competition or cooperation. How to make good use of intellectual property rights such as patents in market activities is an important part of the normal operation of market economic activities. In this case, if the patent owner’s patent is finally declared invalid, the defendant will obtain huge profits during the November 11 promotion period; but if the patent owner’s patent is finally maintained valid, the defendant’s product involved in the case infringes the defendant’s rights, and the defendant’s reverse behavior preservation will cause the defendant to suffer a huge blow.

Original link:Making good use of reverse behavior preservation in e-commerce patent infringement disputes

About us:Shanghai Bulu Intellectual Property Agency LLP