Did Unauthorized Use of Information Collected by Other People Constitute Unfair Competition?

Did Unauthorized Use of Information Collected by Other People Constitute Unfair Competition? - Judgment of Shanghai Intellectual Property Court on Dispute of Unfair Competition (Shanghai Hantao Information Consulting Co., Ltd v. Beijing Baidu Netcom Science and Technology Co., Ltd)

 

November 16, 2017 People's Court Daily Page 6

 

Judgment Summary

Under the context of the Internet, unauthorized use of other people's information cannot be definitely regarded as constituting unfair competition, and lots of factors should be considered to delimit the boundaries of the behavior. When judging whether such behavior violates business ethics, it's necessary to consider the positive effect of the behavior, measurement of damage to the plaintiff, impact on the market order and interests of consumers, etc., and conduct a relatively objective examination of the violation. 

 

Case Review

Shanghai Hantao Information Consulting Co., Ltd (hereinafter referred to as "Hantao") is the operator of Dianping website (http://www.dianping.com), which offers netizens business information, consumer comments, preferential information, group purchase and other services, and has accumulated a wealth of consumer comments on merchants. It's stipulated in Dianping User Agreement that "By accepting this agreement, you agree to voluntarily transfer to Dianping operator, without any charge and exclusively, the property right of any form of information published at any time on the website and other transferable rights to which the copyright owner should be entitled, and you agree that Dianping has the right to sue separately against any subject for infringement and get compensation." Beijing Baidu Netcom Science and Technology Co., Ltd (hereinafter referred to as "Baidu") used lots of Dianping comments in its products, Baidu Map and Baidu Zhidao.

Believing that Baidu had provided information for users in lieu of Dianping in this way, through which Baidu quickly acquired users and traffic, grabbed Hantao's market share, reduced Hantao's competitive advantage and trading opportunities and caused huge losses to Hantao; Baidu's act went against established business ethics and the principle of good faith, which constituted unfair competition, Hantao filed a suit to the court, requesting Baidu to stop unfair competition, eliminate the impact and compensate for the losses. Baidu argued that there's no competitive relationship between two sides and it had used the information reasonably, which didn't constitute unfair competition.

Judgment

After the trial, Pudong New Area People's Court of Shanghai held that Hantao and Baidu were rivals; Baidu's act of using lots of Dianying information in Baidu Map and Baidu Zhidao without authorization has caused losses to Hantao since it actually provided information for users in lieu of Dianping, which was unjustified and constituted unfair competition. Therefore, Baidu was ordered to stop unfair competition and compensate for Hantao's economic losses totaling 3,000,000 yuan and reasonable expenses totaling 230,000 yuan.

Baidu lodged an appeal against the first-instance judgement. After the trial, Shanghai Intellectual Property Court held that Baidu's act constituted unfair competition, and thus dismissed the appeal and affirmed the original judgment.

 

Case Study    

This case involves determination of whether unauthorized use of information collected by other people in the context of Internet is justified.

1. When using the information acquired by others, market players should follow the established business ethics and use it to a relatively reasonable extent. Information isn't a legal object of right, and unauthorized use or utilize the results of other's labour which isn't a legal right can not necessarily be deemed to constitute "hitchhike" or "gain without due endeavors" under the Anti-Unfair Competition Law. This is because of "imitation freedom" and the basic public policy to use or utilize information not protected by law, which is also the foundation for all technological and business model innovations. Otherwise, a right of fruit of labour would have been set. However, with the development of information technology industry and Internet industry, the value of information is greater than ever, especially in the era of big data. More and more market players are investing heavily on information collecting, sorting and mining. If market players are allowed to use or utilize the information obtained by others through huge investment without restraint, it will be unfavorable to encourage business investment, industrial innovation and honest management, and ultimately harm the healthy competition mechanism. Therefore, market players should follow the established business ethics and use it to a relatively reasonable extent when using the information acquired by others.

2. How to judge whether an operator's act of using other people's information violates the business ethics and disturbs the market order of fair competition. Business ethics are generally accepted code of conduct formed in long-term business practice. However, business rules in emerging markets such as the Internet are still being explored on the whole, making the boundary of rights and interests of market players unclear yet. An act, while detrimental to the interests of other competitors, may at the same time have a positive effect of promoting market competition and enhancing consumer well-being. There is no consensus in the market community as to whether many new types of competitive behaviors violate business ethics. When judging whether an operator's act of using other people's information violates business ethics and disrupts the market order of fair competition, it's necessary to take into account the feature of information sharing and interconnection in industrial development and Internet environment, meanwhile consider the interests of information acquirers, information users and the public at large, so as to demarcate the boundaries of act on a balance of interests. Such boundary demarcation should not rely on subjective moral judgment completely. All the above factors should be considered to objectively examine whether the act disturbs the market order of fair competition.

In this case, Baidu's business model innovation has indeed brought positive effect, while Hantao has paid a tremendous amount of labor to obtain the information involved and has the rights and interests that can be protected by law. So, the interests of two sides should be balanced to a certain extent. However, by grabbing and displaying a large amount of full-text information from Dianping through search technology, Baidu has actually provided relvevant services in lieu of Dianping, and the positive effect it wants to realize and the loss caused to Dianping don't accord with the principle of balance of interest. Besides, Baidu could obviously take measures that would cause less damage to Hantao and achieve positive results to some extent. Shanghai Intellectual Property Court found that Baidu's use of the information involved has gone beyond what is necessary, which not only damaged the interests of Hantao, but also discouraged other market players from investing in information collection, destroyed the normal industrial ecosystem and had a certain negative impact on the competitive order. It might also harm the interests of future consumers.

 

 

 

Case No.: [2015] Pu Min San (Zhi) Chu Zi No.528, [2016]Hu 73 Min Zhong No.242    

Author: Fan Jingbo, Shanghai Intellectual Property Court

 

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