Police in Shenzhen, southern China, recently detained three people on suspicion that they blackmailed e-commerce stores with baseless copyright infringement claims, Shenzhen Evening News reported Wednesday.
According to police, the suspected “intellectual property trolls” would contact online stores and claim that they owned copyrights of the photos these shops used to advertise their wares. If they wanted to continue using the pictures, the store owners had to pay a fee or risk being reported to Alibaba, which owns Taobao and Tmall, two of China’s largest e-commerce platforms.
The suspects would back up their claims with forged business licenses, trademark registrations, and other documents, police said.
The scam was successful in part because of China’s tort law, which says that e-commerce websites will not be held responsible for copyright infringement on their platforms if they delete the offending content swiftly once it is reported. Stores targeted by the suspects would thus risk being taken offline for a few days if they refused to pay up and were reported, even if they hadn’t actually violated any copyrights.
The racket was reported to police by a watch shop that had been targeted. That store also chose to pay the 30,000-yuan ($4,600) fee the suspects demanded rather than lose sales.
According to the police investigation, the suspects had successfully blackmailed about 100 e-commerce merchants, targeting shops that sold the most popular products because they stood to lose the most if they didn’t pay up. The scheme netted the suspects at least 1 million yuan, police said, adding that the main suspect had been able to buy a house and a 200,000-yuan car.
Police also acknowledged that the misuse of intellectual property protections to blackmail e-commerce merchants has become a popular new scam. According to official figures from Alibaba, the company investigated more than 5,800 accounts in 2016 for abusing the company’s intellectual property protection system to the tune of 100 million yuan in losses for affected sellers.
Alibaba’s public relations department did not immediately reply to Sixth Tone’s request for comment.
State news agency Xinhua reported in April on a similar racket in which scammers made a business out of trademarking words used to describe popular items — such as “ripped” for jeans with holes in them — and then extorting online merchants.
In May, two brothers who pretended to represent brands and extorted Taobao sellers for a total amount of around 1 million yuan were sentenced to 18 months and eight months, respectively, in prison.
A female university student surnamed Yang, who lives in Paris, told Sixth Tone that she had given up on her Taobao store, where she sold luxury products that she bought in France. It was doing well, she said, but “was frequently reported by some accounts for selling counterfeits or infringing copyrights.” Yang now sells her goods through messaging app WeChat instead. “Though I can appeal and get my store back, it’s really annoying, so I quit doing business on Taobao.”
Editor: Kevin Schoenmakers.
(Header image: A woman shops from her mobile phone in Nanjing, Jiangsu province, May 27, 2016. An Xin/VCG)