The Beijing Intellectual Property Court recently issued a final judgment on the unfair competition dispute between Beijing Douyin (TikTok China) Information Service Co., Ltd. (Beijing ByteDance Technology Co., Ltd.) and the defendant Beijing Weimeng Chuangke Network Technology Co., Ltd.: the appeal of Douyin was rejected. Beijing Douyin Information Service Co., Ltd. compensates Beijing Weimeng Chuangke Network Technology Co., Ltd. for economic losses of 20 million yuan and reasonable expenses of 1,156,700 yuan.

According to the civil judgment (No. (2017) Jing 0108 Min Chu 24530) issued by the Haidian District People’s Court of Beijing on May 17, 2021, the plaintiff is Weimeng (the operator of Sina Weibo), and the defendant is ByteDance. The two parties went to court for unfair competition disputes. The court of first instance ruled that ByteDance was found to have constituted unfair competition and was ordered to pay 20 million yuan.

Case introduction

Beijing Douyin Information Service Co., Ltd. (Beijing ByteDance Technology Co., Ltd.) appealed to the Beijing Intellectual Property Court for dissatisfaction with the first-instance judgment ((2017) Jing 0108 Min Chu 24530 civil judgment) made by the Haidian District People’s Court of Beijing: requesting the revocation of the first-instance judgment and changing the ruling to reject all the litigation requests of Weimeng.

Beijing Douyin Information Service Co., Ltd. argued in its appeal that the first-instance judgment lacked relevant facts to ascertain the basis of Weimeng’s rights and interests in this case, and there were errors in fact finding; Weimeng claimed that Douyin used technical means to crawl or use its company employees to manually copy and obtain large-scale content originating from Sina Weibo, and then publish and display it on Toutiao. This behavior will not cause Toutiao to substantially replace Sina Weibo. Even if the accused behavior is found to constitute unfair competition, the compensation amount determined by the first-instance judgment is too high, and the order of Douyin to bear the legal responsibility of publishing a statement and eliminating the impact is wrong in fact finding and lacks legal basis.

Weimeng argued that the Weibo content involved in the case was attached with Weimeng’s operational contribution, which was different from the original text and picture content, and was Weimeng’s core competitive property rights and interests. Weimeng’s operation of Weibo content created direct social value and consumer welfare, and should enjoy legal benefits; the public display of Weibo content does not affect Weimeng’s legal benefits, and the existence or absence of technical protection measures does not affect Weimeng’s legal benefits. It should be protected, and in fact, Weimeng has also taken corresponding measures including robots agreements to maintain the rights and interests of Weibo content. Douyin’s accused behavior infringed Weimeng’s legal interests, constituted a substantial substitution for the Weibo platform, damaged consumer welfare, disrupted the market competition order, and belonged to the illegal situation regulated by the Anti-Unfair Competition Law. In addition, Douyin claimed that the user authorization did not involve Weimeng’s legal interests, and was irrelevant to the dispute involved in the case. It could not exercise it in a way that infringed Weimeng’s legal rights and interests, and the user authorization documents it submitted had many major defects in effectiveness. Weimeng believes that the first-instance judgment is true, the applicable law is correct, and it should be maintained. Douyin’s appeal request has no factual or legal basis and should be rejected according to law.

Court judgment

The other facts found by the court of second instance after trial are consistent with the other facts found by the court of first instance. The Anti-Unfair Competition Law implemented on January 1, 2018 was revised on April 23, 2019 and came into effect on the date of promulgation. In view of the fact that both parties to the case recognized that the accused behavior occurred since 2016, and some of the behaviors have continued and have not stopped, the 2019 Anti-Unfair Competition Law should be applied. However, when the first-instance judgment was made, the 2019 Anti-Unfair Competition Law had been implemented, so the first-instance judgment applied the 2018 Anti-Unfair Competition Law incorrectly, and this was corrected.

According to the second paragraph of Article 29 of the “Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Anti-Unfair Competition Law of the People’s Republic of China” (hereinafter referred to as the Interpretation of the Anti-Unfair Competition Law) implemented on March 20, 2022, “This interpretation applies to cases that have not been finalized after the implementation of this interpretation”, so this case also applies to the Interpretation of the Anti-Unfair Competition Law implemented on March 20, 2022.

According to the arguments of both parties to the case, the focus of the dispute in the second instance of this case is: 1. Whether Weimeng enjoys the legal rights and interests protected by the 2019 Anti-Unfair Competition Law; 2. Whether the accused behavior implemented by Douyin constitutes unfair competition; 3. If the accused behavior constitutes unfair competition, whether the legal responsibility that the first-instance judgment determined that Douyin should bear is appropriate.

The court of second instance held that Douyin, without the permission of Weimeng, adopted improper means, crawled the Weibo content involved in the case and directly “transplanted” it to the Toutiao platform for alternative or homogeneous commercial use, which obviously violated the principle of honesty and credit and business ethics. It not only damaged Weimeng’s legal rights and interests, but also disrupted the market competition order and harmed consumer interests. It has constituted the unfair competition behavior regulated by Article 2 of the 2019 Anti-Unfair Competition Law. Douyin’s relevant appeal claims lack factual and legal basis and are not supported. The court of first instance comprehensively considered the scale and user number of both platforms, the influence and reading volume of the users and content involved in the case, the loss caused by Weimeng due to user loss, the substitution effect of the content involved in the case, Douyin’s refusal to submit evidence of the income obtained and the accused behavior. Factors such as continuing, and combined with the calculation method of information flow advertising revenue proposed by Weimeng, it was determined that Douyin should compensate Weimeng for economic losses of 20 million yuan, which was not improper. At the same time, the court of first instance, based on the corresponding invoices, agency agreements and other evidence submitted by Weimeng, and combined with the characteristics of strong professionalism, complexity, evidence collection, data statistics, and professional analysis of lawyers in this case, fully supported Weimeng’s claim for notarization fees, agency service fees, and lawyer fees. Reasonable expenses, there is no impropriety, and it should be confirmed. Therefore, Douyin’s appeal request cannot be established and is rejected.

The court of second instance held that the facts of the first-instance judgment were clear and the handling results were correct, but because Douyin’s company name had changed, the results of the first-instance judgment were changed accordingly. According to the “Anti-Unfair Competition Law of the People’s Republic of China” implemented on April 23, 2019, Articles 2 and 17, the “Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Anti-Unfair Competition Law of the People’s Republic of China” Articles 2 and 29, paragraph 2, the “Personal Information Protection Law of the People’s Republic of China” Article 45, paragraph 3, and the “Civil Procedure Law of the People’s Republic of China” Article 177, paragraph 1, item 2, the final judgment was made: Maintain the fourth item of the civil judgment (2017) Jing 0108 Min Chu 24530 of the Haidian District People’s Court of Beijing, change the first item of the civil judgment (2017) Jing 0108 Min Chu 24530 of the Haidian District People’s Court of Beijing to: from the date of effectiveness of this judgment , Beijing Douyin Information Service Co., Ltd. immediately stopped the unfair competition behavior involved in the case; change the second item of the civil judgment (2017) Jing 0108 Min Chu 24530 of the Haidian District People’s Court of Beijing to: within three days from the date of effectiveness of this judgment, Beijing Douyin Information Service Co., Ltd. posted a statement on the homepage of Toutiao.com (www.toutiao.com) and its official Weibo account “Toutiao” (UID: 2745813247) for seven consecutive days to eliminate the impact of the unfair competition behavior involved in the case for Beijing Weimeng Chuangke Network Technology Co., Ltd. (The statement content needs to be reviewed by the Haidian District People’s Court of Beijing. If it fails to perform within the time limit, the relevant content of this judgment will be announced according to the application of Beijing Weimeng Chuangke Network Technology Co., Ltd., and the cost will be borne by Beijing Douyin Information Service Co., Ltd.; change the third item of　the civil judgment (2017) Jing 0108 Min Chu 24530 of the Haidian District People’s Court of Beijing to: within ten days from the date of effectiveness of this judgment, Beijing Douyin Information Service Co., Ltd. compensates Beijing Weimeng Chuangke Network Technology Co., Ltd. for economic losses of 20 million yuan and reasonable expenses of 1,156,700 yuan.