Indirect infringement of intellectual property in China

Abstract

China has no clear rules for addressing indirect infringement of intellectual property rights, and Chinese courts are split widely on how to find liability for indirect infringement. The two most controversial topics for Chinese courts are the level of knowledge and the types of contributing activities that are required for indirect infringement liability. Although Chinese courts frequently use the red flag and wilful blindness standards for imputing constructive knowledge to alleged indirect infringers, some Chinese courts arguably misuse the wilful blindness standard in requiring only knowledge of a high possibility of infringement. By thus failing to require that a defendant also deliberately act to avoid learning that infringement is in fact occurring, the wilful blindness standard in actual Chinese judicial practice approximates the recklessness standard. Indeed, some Chinese courts go even further and impose indirect infringement liability based simply on the defendant's business model, regardless of whether the defendant had knowledge of infringement. With regard to the second issue, the type of contributing activities necessary for indirect infringement liability, Chinese courts have no uniform standard and are greatly divided on what constitutes such contributing activity. Some courts require affirmative action on the part of the defendant, while other courts focus simply on the defendant's duty of care, looking not at whether the defendant committed some affirmative act but only at whether it failed to meet its duty of care.