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Online Housing Rental Platform Service Provider‘s Citation of Other Competitor’s Housing Listing Information May Constitute Unfair Competition and Torts

If an Internet search-engine service provider embeds a web crawler which allows consumers to search and browse the information from other web pages in the said provider’s website or mobile app, should the provider bear legal liability? In this regard, the Intellectual Property Court expressed its affirmative opinions on a case in the 2018 Min Gong Su Zi No. 8 judgment, recognizing that such act constitutes unfair competition as well as torts in terms of Civil Code and Copyright Act.


The plaintiff in this case is an online housing rental platform and App service provider, which provides advertisers with online paid advertising of their housing for renting or transacting, and users with free inquiries. The defendant in this case is another housing rental App (hereinafter referred to as the "App at dispute") service provider, which acts as a platform on which users and housing advertisers can communicate one another. However, the plaintiff claims that the service content provided by the defendant, such as housing photos, basic information and contact person information, was obtained through a web crawler from the housing listing information on the plaintiff's web pages. Although the App at dispute has gone through three version updates, they differ only in the layout of the housing information on the plaintiff's web pages. Therefore, the plaintiff claimed in this lawsuit that the defendant is to cause the detriment of values of the plaintiff’s website and App when promoting the App at dispute by squeezing the hard work out of the plaintiff. The App at dispute is to violate the stipulation in Article 25 of the Fair Trade Act, constituting torts in terms of Article 184 of the Civil Code, as well as infringing on the economic rights of the plaintiff's web page content because the interface of the App at dispute acquired and utilized words and expressions (compilation work) and photos (photographic works) describing the housing characteristics, ideated by the plaintiff.


The court’s judgment summary of this lawsuit case is presented as follows:


1.     The Defendant’s Act Constitutes Unfair Competition, violating Article 25 of the Fair Trade Act


The defendant argued that the App at dispute is merely a web portal, where users can still access the plaintiff's website through the link therein so that the App at dispute neither blocks the plaintiff's website traffic, nor does it pretend to be or mislead users to identify it as the actual source of information. Moreover, the operation of the App at dispute is similar to that of the common price comparison platform, and its revenue comes from advertisement mainly. As for its profit-making business, it only deals with housing renters, which is totally different from the service subjects, nature and business type of the plaintiff. Both of the parties neither share the same market, nor are competitors with each other. However, the court did not adopt the above argument.


First of all, the court deemed that both the plaintiff and the defendant are the service providers of housing rental information. They share the identical purpose to promote the number of visitors and increase their own advertising revenues, and thus there is a direct competition between them.


Furthermore, the court also deemed that the defendant obtained housing rental information from the major rental housing websites via web crawling and stored the data in the database of the defendant's company. Users thereby may directly browse and download the housing rental information of the plaintiff's website in the App at dispute without visiting the plaintiff's web pages. Even though the second and third version of the App at dispute rectified the links to the plaintiff's web pages, users can still use the App at dispute to browse most of the housing rental information collected by the plaintiff. If users do not click on the selected housing items displayed on the App at dispute any further, the system will not pass the user from the selected housing items to the plaintiff's corresponding web pages. As a result, the App at dispute has affected the number of visitors and advertising revenue of the plaintiff's website, generating an effect that the plaintiff's web pages or App can be replaced in terms of market economic value.


Although the defendant also claimed at the same time that its service is of public interest as it boosts the housing rental market via its services, the court deemed that the App at dispute automatically retrieves data via web crawlers without screening and without digesting the aforesaid collected information so as to benefit users differently from the plaintiff's web pages or App. While the defendant claimed to "allow users to browse information more quickly," the defendant achieved such a goal by means of web crawlers, not by its own efforts. Protection of the defendant's interest is thereby not regarded as necessary.


2.     The Defendant’s Act Constitutes Torts in Terms of Article 184, Paragraph 2 of the Civil Code


As stipulated in Article 184, Paragraph 2 of the Civil Code, “a person, who violates a statutory provision enacted for the protection of others and therefore prejudice to others, is bound to compensate for the injury, except no negligence in his act can be proved.” The court deemed that the "statutory provision enacted for the protection of others" herein should be comprehensively investigated and judged in terms of the factors such as legislative intent, types of legislature, overall legislative structure, legislative value system, desired regulatory effect, and social development. Meanwhile, what is stipulated in Article 25 of the Fair Trade Act is to maintain trade order and consumer interests, and ensure fair competition, which is thusa law for protecting the rights and interests of others. Establishment of the App at dispute by the defendant in this case is in violation of Article 25 of the Fair Trade as mentioned earlier, and the defendant also surely constitutes torts in terms of Article 128, Paragraph 2 of the Civil Code.


However, the court also expressed in this case that "web crawler" is in fact a neutral tool, not a “method against good morals” despite the defendant’s use to divide the legitimate reward through the plaintiff's due efforts and replace the plaintiff's market economic value. Therefore, the defendant still does not constitute torts in terms of the latter part of Article 184, Paragraph 1 of the Civil Code.


3.     The Use of the Plaintiff’s Photographic Works in the Third Version of the App at dispute Infringes on the Plaintiff’s Economic Rights


The court deemed in this case that the words and expressions placed by the plaintiff on the housing rental items (e.g. “new apartment, only 5-minute walk distance from the shopping district of Daan SOGO and Breeze Center, and Zhongxiao Fuxing metro station) show low creativity, making them difficult to be protected in terms of oral and literary works. In addition, the plaintiff fails to prove how it sorts out, classifies and summarizes the housing rental information into complete information according to its knowledge, experience, creativity and ingenuity. Therefore, it is difficult to consider the plaintiff‘s web page content a compilation work. Nevertheless, with regard to the photos of the interior decoration or wall arrangement of all housing rental items made by the plaintiff, they have shown the creativity and originality of the photographer who desires to show the specific visual effect at the time of shooting in terms of the angles of shooting, light adjustment and subject layout. These photos are deemed as original photographic works accordingly.


To state one step further, the defendant's use of such photographic works served for business purposes obviously, and has already resulted in unfair competition with the plaintiff. The defendant's use of the aforesaid photographic works thus does not belong to the fair use in terms of Article 65, Paragraph 2 of the Copyright Act, and still constitutes an infringement on the plaintiff's economic rights.