Liability of a market operator in torts of its merchants

UpdateTime:2017-04-21 18:25:31 Read:


1. Brief of the case1

 

LOCK&LOCK owns a design patent titled "Folding Storage Box (U-zipper-window)". LOCK&LOCK has authorized Beijing LOCK&LOCK Trade Co., Ltd. (hereafter, Beijing LOCK&LOCK) to enforce the design patent in China. Beijing LOCK&LOCK was also authorized to bring a lawsuit and require compensation in its own name.

 

On May 31, 2014, Beijing LOCK&LOCK bought a storage box by notarization in a shop on the third floor of the Guang'an Caishikou Department Store Market Center (hereafter, the Center) in Beijing, and obtained a business card and a receipt. The business license of the shop showed its operator is " Yuzeng JIN ". The storage box contains no information such as name, address and telephone of the manufacturer, product logo, production date, and product specification.

 

By comparison, the storage box bought by notarization is basically identical with figures of the design patent. The Center has signed a Lease Contract, a Business Responsibility Book, and a Business Agreement with its merchants. The merchants have signed a Market Management Commitment, promising not to sell infringing products.

 

In the first instance, Beijing Intellectual Property Court concluded that: the Center is a market operator rather than a seller who sold infringing products, so the claims that the Center should stop selling infringing products are lack of basis, and therefore will not be supported. However, the Center should assume the liability for providing assistance in the torts due to failing to take effective actions to prevent its merchants from selling infringing products, which are "three-no (no brand, no date, and no manufacturer)" products. Although the Center requires its merchants not to sell infringing products, it does not check its merchants’ products with reasonable diligence.

 

In the second instance, Beijing Higher People's Court concluded that: the element of the liability is subjective intent, that is, if one person knows the torts of the direct infringer but still provides assistance to the direct infringer, the person should assume the liability of contributory infringement. In this case, the involved products sold by the seller in the Center are "three-no" products, which are the products that should not be sold in markets and are substantially infringing products. As a market supervisor the Center has the obligations of supervising "three-no" products. The Center made it clear to the Court in the second instance that they inspected the center at least twice a day. The "three-no" products are substantially infringing products, which are goods in the key supervising and inspecting range. Since the Center inspects the center at least twice a day, it should know that the involved products are infringing products, as long as it fulfills obligations of normal inspection and supervision. In this case, it can be presumed that the Center knew that there are infringing products in the center but did not take effective measures to prevent the occurrence of infringement, which is subjective intent. Therefore, it is concluded that the Center provided assistance in the sale of the infringing products and should assume the liability of contributory infringement.

 

2. Issues and Analysis

 

The focus of the dispute in this case is whether the Center, as a market operator, should be responsible for torts of its merchants.

 

"To be liable for damage is not because of damage, but because of the fault."2 That is to say, the cause of liability for damage is the negligence of the duty of care that shall be imposed in a particular situation. The duty of care means that the doer, when performing a certain act, should be able to foresee some kind of damage that may be caused the act and should take precautionary measures to prevent damage from occurring. The duty of care is legal obligation that the doers shall not cause damage to others in their social activities.

 

A market started by its operator, on the one hand, facilitates the business of its merchants and the life of the consumers, but on the other hand, increases the possibility of infringement of intellectual property rights. Thus, the market operator has a certain duty of care to reducing damages to patentees that may be caused by the start of its market to the maximum extent. The duty of care of a market operator may include: preventing the potential infringer from entering its market to the maximum extent, identifying torts of its merchants to the maximum extent, and stopping the torts promptly and preventing the torts from further expending. Identifying the torts of its merchants to the maximum extent requires the market operator to perform daily inspection and supervision and stop the torts as soon as identify them.

 

In this case, the involved products sold by the merchant are "three-no" products, which are prohibited by law from being purchased and sold. The Center should be aware of and understand such prohibitive norms. Therefore, if the Center performs its normal daily inspection and supervision, it is easy for the Center to find that its merchant is selling "three-no" products and identify the torts of its merchant. Accordingly, it can be presumed that either the Center neglected its daily inspection and supervision and thereby failing to fulfill the duty of care of finding its merchants’ torts to the maximum extent, or the Center allowed the torts of its merchant after finding them without taking any actions to stop the torts. For the above reasons, the court of first instance concluded that the Center failed to fulfill a duty of reasonable care regarding the products sold by its merchants, but the court of second instance acknowledged that the Center had fulfilled its daily inspection obligations, and therefore presumed that the Center allowed the occurrence of the torts and concluded that the Center had jointly committed the torts.

 

 

1 Refer to the paper of civil judgment of No. 711 of first instance of intellectual property of Beijing (2015) made by Beijing Intellectual Property Court and the paper of civil judgment of No. 253 of final instance of intellectual property of Beijing (2016) made by Beijing Higher People's Court

2 [Germany] Christian von Bar: p. 310, 2001, Law Press, Gemeineuro Paisches Deliktsrecht / The Common European Law of Torts (Part 2) translated by Meihua JIAO