Author: Andrea
Liang, senior associate
In
2021, the Shanghai Pudong New Area People’s Court heard the case of unfair
competition dispute between Shanghai Hongyun Software Technology Co., Ltd. and
the defendants Tongchuang Lantian Investment Management (Beijing) Co., Ltd. and
Beijing Baidu Netcom Technology Co., Ltd. (“Hongyun Case”) [(2020) Hu
0115 Min Chu No. 3814].
In the first-instance judgment, Pudong Court held that the defendant only set the plaintiff’s URL as a search keyword in
the background but not included in the title and description of the front-end search link and
the web page. At the same time, the plaintiff’s
website still ranks first on the first page of the search results, and the
defendant’s promotion link is at the end of the first page of the search
results. This method of use did not damage the visibility of the plaintiff’s
website to consumers, did not cause confusion among the relevant public, or disrupt the normal market competition order, nor violated the principle of
good faith and common business ethics. Therefore the defendant behavior did not constitute
unfair competition.
The judgment has aroused extensive attention and discussion
in China legal community.
Interestingly,
the Shanghai Pudong Court made the opposite determinations in the 2018 “Jiayang Case” and the 2019
“Lao Qin Case”, namely the implicit use of keyword robbed the plaintiff’s potential trading
opportunities, thus constitutes unfair competition by the violaiton of the
principle of good faith and business ethics.
Keyword promotion and implicit
use
Keyword
recommendation is bidding ranking. It was first launched by search engine
service providers as an online promotion service. Currently, Alibaba,
Pinduoduo, and Meituan also promote this service. Market entities select the
keywords associated with their websites or links for bidding ranking, edit
promotion content (including titles, product descriptions, links, page display
content, etc.), and set click prices, so as to influence search keywords and
the website. or the technical relevance of the webpage. In short, it is to
intervene in the natural search results through technical means, so that the
promotion content of the main body of the purchased PPC keyword is prioritized
in the search results.
The
so-called “implicit use” refers to the fact that the subject who has
purchased the keyword promotion service adds the trademark or business name or
website of others (generally more common in the same industry) as keywords
within its account system, so that network users can use the keyword to
search, and the promotion link can be placed at the top or preferentially
appear in a prominent position that is easily recognized by network users, or
appear in the advertising area. However, the advertiser did not include the
keyword in the prepared promotional content, nor did the advertiser show the
keyword to the Internet users in the link title or web page content. In
judicial practice and academic research, the above behavior is called the
implicit use of keywords.
Corresponding
to the implicit use behavior is the explicit use behavior, namely, the use of
another person’s trademark or company name in the promotion link title or web
page content or promotion content. The explicit use behavior is mostly
determined to constitute trademark infringement by judicial judgments in China,
which does not fall within the discussion scope of this article.
Regarding
the implicit use, the mainstream view is that it does not constitute trademark
infringement, because the keywords are set by market entities in the back-end
system, and network users are neither aware nor visible, and will not be confused
about the source of goods or services. However, when it comes to whether the
implicit use of keywords constitutes unfair competition, local courts have
different opinons on the determination of this issue.
business opportunities constitutes unfair competition
In
the case of unfair competition disputes between Beijing Baidu Netcom Technology
Co., Ltd. and Epson (China) Co., Ltd. [(2015) Jing Zhi Min Zhong Zi No. 1753],
the Beijing Intellectual Property Court held that:
Although
the purchase of the background keywords will not confuse users and will not
affect the natural search results, but this does not mean that it will not
affect the business opportunities of Xinhui Jiangyu Company.The existence of
the accused behavior makes search users see the products or information of
Xinhui Jiangyu Company at the top of the search results before they see the
products or information of Epson.Although
the title of the promotion result link does not include the trademark involved,
it is undeniable that some users will click the link to browse the Epson website
after seeing the search result. Some users may thus become Epson users.
This
situation fully shows that although no confusion and no natural search results
are affected, there is no doubt that the accused behavior plundered the
business opportunities of Xinhui Jiangyu Company.To
sum up, the accused behavior did not conform to recognized business ethics and
violated Article 2 of the Anti-Unfair Competition Law.
In
the unfair competition dispute between Beijing Taxing Tianji Technology
Development Co., Ltd. and Ledongtianxia (Beijing) Sports Technology Co., Ltd.
[(2019) Jing 0101 Min Chu No. 1529], the Beijing Dongcheng District People’s
Court held that:
Although
the defendant purchased background keywords that users would not see, the
behavior makes the promotion link of the defendant’s website appear on the
search result page of “walking the sky”.
The
defendant link follows the link to the plaintiff’s website as the second item
in the search results, and does not differ in any way from the link that the
plaintiff’s website is displayed.
Although
the title and description of the link in the second search result does not
include “walking in the sky”, it is undeniable that there must be
some people who want “walking in the sky” branded products, after
seeing the search results, are confused about whether “walking the
sky” and the defendant are related or affiliated to each other, so they
click on the link to browse the defendant’s website. The user thus becomes the
defendant’s user.
To
sum up,the above-mentioned acts of the defendant grabbed the trading
opportunity of the plaintiff, reduced the economic benefits that the plaintiff
should obtain from this trading opportunity, violated the principle of good
faith in market competition, and damaged the legality of the plaintiff rights
and interests, disrupting the normal market order and constituting an act of
unfair competition, and should bear corresponding legal responsibilities.
In
the case of unfair competition dispute between Shanghai Jiayang Information
System Co., Ltd. and Shanghai Renli Mingcai Software Co., Ltd. [(2018) Hu 0115
Min Chu No. 53064], the Shanghai Pudong New Area People’s Court held that
When the internet user searches
for the key word set by the defendant, the defendant’s website link and
promotional content appeared at the top of the search results, and both
preceded the plaintiff’s website link.
Although the keywords set by the
defendant are only used as keywords for background search, and do not appear
directly in the promotional content set by the defendant and the websites
pointed to by the promotional links, they may not necessarily confuse the
relevant public about the source of the products or services.
However, the defendant’s behavior
is very likely to attract the attention of the relevant public and guide the
relevant public to click on the defendant’s website, so that the customers who
originally paid attention to the plaintiff and its products will come into
contact with the defendant’s products and bring potential business to the
defendant, and then the defendant obtained unfair competitive benefits.
In the information age, what is
valuable is no longer just the information itself, but user attention also has
a relatively independent value. The attention of network users has become an
important resource for competition among business operators.
The purpose of
keyword promotion by operators is to maximize the attention of users who are
interested in a certain keyword. It is understandable to set keywords that are
not closely related to themselves.However, it should not improperly gain
competitive interests by clinging to the goodwill of others.
Judging from the above-mentioned subjective and objective aspects, the
defendant’s conduct violated the principle of good faith and common business
ethics, and harmed the interests of the plaintiff, and its conduct constituted
unfair competition.
In
the case of trademark infringement dispute and unfair competition dispute
between Shanghai Laoqin Information Technology Co., Ltd. and Beijing Baidu
Netcom Technology Co., Ltd. [(2018) Hu 0115 Min Chu No. 87336], the People’s
Court of Shanghai Pudong New Area held that:
Gaia
company by setting words such as “COHO”, “Laoqin” and
“Laoqin COHO” as search keywords, Gaia’s website is at the top of
the Baidu search results page, which will naturally increase the number of
people who want to search for the Laoqin company’s website will click to open
the Gaia company’s website. Some may be attracted by the service products
introduced on Gaia’s website and become Gaia clients.The
above behavior of Gaia is essentially increasing the probability of visiting
Gaia’s website, thereby turning these customers into the defendant’s customers,
and ultimately obtaining benefits at the expense of Laoqin’s commercial
interests. Therefore, Gaia’s above-mentioned behavior is objectively
inappropriate.
Viewpoint 2: No actual damage
caused does not constitute unfair competition
In
the case of trademark infringement dispute between Chongqing Jin Fu Ren
Industrial Co., Ltd. and Beijing Baidu Wangxun Technology Co., Ltd. [(2016) Su
01 Min Zhong No. 8584], the Nanjing Intermediate People’s Court of Jiangsu
Province held that:
The
title of the promotion link set up by Milan Company is sufficient to indicate
the source of the services it provides and does not intentionally cause
confusion with Jin Fu Ren’s services or make people believe that there is a
specific connection between the two parties.The
behavior of the Milan company to set up the promotion link did not cause the network
link of Jin Fu Ren company to not appear in the search results or cause it to
be ranked in a position that is not easily recognized by network users.Therefore,
the behavior of Milan Company did not cause internet users who searched for
“Jin Fu Ren” information to select the website of Milan Company
incorrectly because they could find the website link of Jin Fu Ren Company in
the search results.Although
the Milan company used the word “Jin Fu Ren”, the trademark of Jin Fu
Ren company as the keyword for the promotion link, with the intention of
increasing the chances of its website and service advertisements appearing in
the search results, considering factors such as the specific circumstances of
the promotion links, the characteristics of the keyword advertising market, and
the cognitive level of network users, Milan company behavior has not yet
reached the level of violating the principle of good faith and generally
recognized business ethics. Its behavior does not constitute unfair competition.
It
can be seen from the above cases that different courts hold diametrically
opposite attitudes when trying cases on whether the implicit use of keywords
constitutes infringement.
Our comments and opinions
We agree with the latest view of the Shanghai Pudong New Area Court in
the “Hongyun Case” that the implicit use of keywords will not lead to
the loss of the plaintiff’s market opportunities.
keywords causes internet users to click on the link and finally reach a
transaction, which has no direct causal relationship with the keyword setting.
Internet
users who click on the keyword promotion link may be a group interested in the
plaintiff’s goods or services, but they may not necessarily buy the goods or
services if they are interested; or they may search for other subjects after
clicking on information collection, comparison and selection. promotional
content. Therefore, for the plaintiff, it may or may not lose trading opportunities.
Secondly, even the loss of a small
number of trading opportunities does not necessarily constitute “actual
damage” that should be relieved by law. Business opportunities in the
Anti-Unfair Competition Law are also the predictable interests of market
entities confirming that they will enter into transactions with others. The
conclusion of transactions is not entirely dependent on unilateral wishes and
requires the agreement of both parties. Therefore, others are free to compete
for trading opportunities.
Whether
the act constitutes an act of unfair competition depends on whether the act
will bring the operator a competitive advantage or be sufficient to cause
damage to other operators. Judiciary should not intervene in acts that do not
cause actual damage or that damage is minimal.
In
Tencent v. Window of the World Browser case [(2018) Jing 73 Min Zhong No. 558],
the court stated that harming some of the interests of competitors and
affecting the choices of some internet users to a certain extent, there will be
no interference to the market and will not constitute fundamental damage to the
interests of the plaintiff company. Therefore, the implicit use of keywords may
only damage a small part of the plaintiff’s interests or even no losses, and it
will not reach a serious degree of impact, and will not constitute a
disturbance of the market competition order.
This
reduction in probabilistic trading opportunities cannot be used as a legal
remedy “actual damage”. Competing for business opportunities among
competitors is the norm of competition and is also encouraged and advocated by
market competition. Only competitors who do not follow the principle of good
faith when competing for business opportunities, violate recognized business
ethics, and obtain business opportunities that others can reasonably expect to
obtain through improper means are prohibited by the Anti-Unfair Competition
Law.
Thirdly, whether the market
entity obtains the opportunity mainly depends on its own product quality,
price, after-sales service, etc.
For some Internet users
who are exclusively or more likely to conduct transactions with the plaintiff,
the appearance of the promotional link will not prevent them from having a
transaction with the plaintiff. Some users clicked to the competitor’s website may
wish to have more information in the same industry for reference, making comparison,
and selection, etc.As
long as the promotion links set up clearly and not misleadingly describe the
source of their products and related information, when faced with multiple
products or services appearing in natural search results and promotion links,
network users will still be able to comprehensively measure the various
products or services. The transaction party is selected based on the price,
quality, function and other factors of the goods or services provided, which is
also in line with the normal state of market transactions.
Finally, from the perspective of
user cognition, with the development of the search engine industry and the
maturity of its profit model, the phenomenon of bidding rankings on search
sites has become more and more known to common internet users. Internet users
have a certain level of cognition and judgment. If a link different from their
target appears in the search results, their search efficiency may be reduced,
but their judgment ability will not be hindered.
【END】
