With the electronic commerce developed rapidly, the e-commerce platform becomes a battle ground for all businesses; even the traditional brands go along with the trend. So it is important for the operators to create and maintenance a good environment of the electric commerce platform. However, the behaviors of improper competition occur, such as malicious complaint. Some merchants try to crack down their opponents by filing the false complaints on e-commerce platform in order to make their opponents suffer from a poor influence, which leads to a decrease in the amount of marketing and a reputation of the competition opponent. A case regarding online complaint with bad-faith on e-commerce platform is selected as one of annual 10 typical cases of intellectual property protection of Zhejiang province on 17 April 2020. Such behaviors of the defendant in the case violate the principle of good faith, which constitute unfair competition in accordance with the article 2 of Anti-unfair Completion Law issued by the court. The reason for its recommendation is as follows: filing complaints maliciously, destroying the regular market competition order is obvious illicit and constitutes an unfair competition, which make the case has a typical meaning."

Here are the detail introductions related to the case:

A person named Wanglei opened an online store on the Taobao platform, and sells athletic products such as athletic apparel and athletic footwear. A complaint against Wanglei's store was filed on behave of "UnderArmour, INC" on December, 2016, claiming that the products of UnderArmour, INC sold by Wanglei's store were counterfeits. The links of the products on Wanglei's store were deleted by the platform after receiving the complaint. The evidence submitted by Wanglei was forwarded to the platform in order to prove that the products on his store were purchased from the authorized distributor of the UnderArmour, INC. So the platform restored his links. But the platform received a letter of termination of business relationship with the company "UnderArmour, INC"'s official seal sent by an email address of usaunderarmour@163.com to indicate that the alleged authorized distributor Shoeking,Inc submitted by Wanglei had no business relationship with the "UnderArmour, INC", and the Shoeking,Inc was not the authorized distributor of "UnderArmour, INC". The emails urged the platform to takedown the infringing links and execute the penalty onto Wanglei's shop. In the end, the platform considered that the products on Wanglei's store were counterfeits and deleted the links of the products and made a penalty to degrade his range on the platform. Such penalties lasted to the date of the court hearing and have not canceled.

The complaint against Wanglei's store turned out to be fake, which did not made by the company UnderArmour, INC, but made by a person named Jianghai. And Jianghai was sued in a criminal case for he has sold the counterfeits of UnderArmour, INC and he admitted that he made an official seal of the UnderArmour, INC without authorization to file the complaints on the e-commence platform. The email address of usaunderarmour@163.com was not belong to UnderArmour, INC, but registered with the phone number of Jianghai's wife.

After the hearing, the court held the opinion as bellows:

Firstly, the evidence submitted by Wanglei proved that his products sent by oversea, purchased for American authorized distributor, while there is no evidence submitted by Jianghai to prove the products sold by Wanglei were counterfeits. According the theory of trademark parallel import, it does not constitute trademark infringement for importing the products from the oversea without the authorization of the trademark owner or users. So it was legal for Wanglei to import the products even he did not have the authorized to sell the products in China. The business benefits and advantage of his online shop are protected by Anti-unfair Competition Law.

Secondly, as the network service content and the network user group of the online stores operated by Jianghai and Wanglei are completely the same, they have a high degree of coincidence. So there is a direct contention relationship between Jianghai and Wanglei.

Third, the behaviors of Jianghai are illegitimate. It is clear for Jianghai that he has not authorized to use the trademark, neither to file the complaint against the infringement. He knew that he sold the counterfeits but still used false material to precede the complaint against Wanglei's shop on Taobao. And he took further actions after Wenglei's counter-complaint's succeeds, which convinced the platform to take the punishment against Wanglei's shop. Consequently, Wanglei's shop was deteriorated. All above proved Jianghai's malicious intent. Furthermore, objective behavior of Jianghai also did not have the legitimacy. Jianghai filed the complaint though the platform with the false material, which impaired the commercial reputation of the competition opponent, so that the Wanglei's shop was penalized by the platform. Jianghai took the business opportunities that should be acquired by Wanglei's shop, and acquired the business benefits and competition advantages. The behaviors of Jianghai obviously violated the recognized business ethics.

Fourthly, Wanglei suffered from losses due to Jianghai's complaint behavior. Wang lei's shop did not only suffer from loss of commercial reputation, but also the sales were affected because of the punishment from the platform. Sales of March 2017 were up to 8434433.99RMB, and dropped directly to 4820346.72RMB on April 2017. Up to October 2018, the amount was only 3490658.04RMB. Furthermore, the result of the shop penalty of descending was irreversible. It can be seen that behaviors of Jianghai had led to suffering from actual loss of Wanglei.

In conclusion, the court considered that the behaviors of Jianghai were malicious, which violated the principles of good faith and the recognized business ethics. The behavior impaired the legitimate benefits of the contenders in the same industry, destroyed the normal contention orders. These behaviors constituted unfair competition. The court finally determined that the amount of compensation was 2.1 million RMB (including the reasonable cost).

The above case provides a favorable reference and enlightenment for bad-faith complaints: anyone who files complaints on e-commence platform should be cautious. It is a quick way to remove infringing links by filing the complaints. But, if anyone attempts to use as a means of cracking down on legitimate competitors with the improper complaints, he will be punished. Once encounter malice to complain, it is necessary and important to protect legitimate rights and interests according to the law.

Originally published by Kangxin Partners, June 2020

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