How will cross-border e-commerce companies cope with the US ban regime

Source: China Trade News By mu Qingfeng 2022-06-08 09:20:12

In recent years, cross-border e-commerce companies have frequently encountered intellectual property lawsuits in the United States, and may face consequences such as product removal, account closure, account fund execution, and forced store closure. At a seminar recently held on the challenge and response of enterprises facing infringement lawsuits in the United States, Zhang Xingyue, a lawyer from Zhejiang Hongda Law Firm, said that many small and medium-sized enterprises have weak awareness of intellectual property rights and face a higher risk of being sued. The US ban regime, in particular, will suffer if it is not dealt with in a timely and effective manner.

It is understood that the American injunction system is a restriction measure made by the American court that orders the infringer to stop all infringing acts during the period of right, which is divided into permanent injunction and intermediate injunction. Intermediate ban is divided into initial ban and temporary ban. While preliminary injunctions must be given notice and approved by the hearing process, provisional injunctions are at the discretion of the judge and do not require the defendant to be given notice or an evidentiary hearing. As a result, US plaintiffs tend first to seek temporary injunctions from US courts against alleged infringements under us federal civil procedure law. After the provisional injunction is issued, the accounts and assets of the alleged infringer are quickly frozen. After the account is frozen, merchants will receive a notice from the cross-border e-commerce platform simultaneously, informing them of the reason for the freeze, and providing links to relevant documents and the contact information of the plaintiff's lawyer. The overall process of a temporary injunction is swift and restrictive, and the court usually makes a judgment within one and a half months after receiving the plaintiff's filing.

Why can American law govern Chinese businesses across borders? According to Wei Xinshu, a lawyer at Beijing Jingshi Law Firm (Shanghai), on the one hand, this is because the principle of personal jurisdiction exists in the Civil Procedure Law of the United States, and the sale of goods by Chinese cross-border e-commerce companies to the United States constitutes the minimum contact requirement of personal jurisdiction. Therefore, the courts in the U.S. state to which the goods are sold are granted jurisdiction by the U.S. Constitution in cases of alleged infringement. On the other hand, in the legal relationship between the merchant and the platform, the suspected infringement of the merchant or violation of the agreement, rules or policies related to the cross-border e-commerce platform, including but not limited to the Notice to Users and Intellectual Property Protection Policy signed by the merchant before entering the platform. The Platform will, based on the facts of infringement identified in the interim injunction, apply penalties in accordance with the platform's relevant agreements and policies.

On the picture, for instance, in May 2021, cross-border platform for zhejiang merchants in speed sell tong platform on the lighters, fishing forensics GBC law firms by the United States, the law firm lawyers to fixed evidence, for the purpose of buying a businessman lighters, and citing convenient transfer, ask merchants to provide PayPal account, and fixed the web page screenshots, links, sales records and other evidence. The GBC law firm filed a lawsuit against the merchant in the U.S. Court of Northern Illinois, claiming that the merchant infringed trademark rights and applied for a temporary injunction to freeze the Paypal account. After receiving the GBC lawyer's letter and the court's email notification, the merchant finally gave up the lawsuit after considering the cost of overseas litigation. As a result, the court ruled in default that the funds frozen in the Paypal account should be awarded to the plaintiff, and the aliExpress store was permanently closed.

Wei Xinshu said that the notice of temporary injunction is only the beginning of the legal process of the entire infringement case. Plaintiffs typically seek higher sums, ranging from $100,000 to $2 million, while frozen accounts range from a few thousand dollars to tens of thousands of dollars, and infringing merchants face much higher damages than their frozen accounts. At the same time, because Chinese merchants are not familiar with the language, laws and judicial procedures of the United States, for the consideration of cost and probability of winning the lawsuit, there are certain practical obstacles for Chinese merchants to respond to the lawsuit in the United States. If they fail to respond to the lawsuit in time, all the frozen amount may be deducted.

Zhang Xingyue said, if the frozen amount of the store is very small, the value is not big, do not want the store can directly give up; Companies can Sue directly if they determine there is no infringement and if they have enough money and time. When there are large-scale malicious lawsuits against domestic merchants, we can also consider uniting many sellers to communicate with Amazon and other platforms.

At the same time, reconciliation is also an effective way. "Although settlement is not the fairest solution, it is the most efficient and direct solution for most cross-border e-commerce merchants. After both parties sign a settlement agreement and pay compensation, the case can be withdrawn as soon as possible, thus helping merchants to unblock their accounts and return to normal operation. However, it is also important to choose the timing of the settlement. Although both parties can choose to settle out of court even after the judgment is announced, the plaintiff's settlement strategy is naturally different at different stages, which should be fully considered in light of the facts of the specific case suspected of infringement." Wei Xinshu said.

Responsible editor: Ge Yan