Marketers in China to face new legal readings of consumer data

The interpretation of data for marketing purposes has taken a new turn in one particular May 2016 court case brought by lifestyle information site Dianping against Baidu. It was nominated by The Internet Society of China as one of the 10 most influential incidents in internet regulation in China.

Baidu was found to have 'scraped' consumer reviews from Dianping and presented some of the reviews in full on Baidu Maps and Baidu Zhidao (a Q&A service) without the authorisation of Dianping.

This practice allowed Baidu users access to the consumer reviews without visiting Dianping. 

Long story short, Dianping won the case, and the Pudong New Area People’s Court ruled that Baidu should pay more than 3 million yuan in compensation to Dianping’s parent company, Shanghai Hantao.

Before the ruling, Baidu argued that it was a search service, while Dianping was a classified information site that provides independent reviews of local services such as restaurants and hotels—thus not a competitor. It also said the user comments on Dianping were not created by Dianping itself and therefore were not copyrighted material.

But the court rejected these arguments, ruling that the information offered by the two companies was similar and thus they should be considered competitors.

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The court found that Baidu's use of Dianping's data reduced the number of Dianping users, causing a financial loss to Dianping, and also breached business ethics.

According to Andy Huang, a Beijing associate at law firm Hogan Lovells, a key element in the court’s analysis was that Dianping had made significant efforts in the collection and use of the original data, even if the authors of the reviews were individual consumers and even if it did not own them.

The court decision suggests that companies that target the same group of consumers may be viewed as competitors, regardless of the nature of the specific services they provide, Huang said.

This judgment has implications for the production, collection and use of consumer-related information by both internet players and non-internet brands, especially if the information at stake had commercial value and conferred an unfair competitive advantage.