In a recent case, the Beijing Internet Court (BIC) applied the newly introduced data protection provisions of the Anti-Unfair Competition Law and held that the unauthorized acquisition and commercial use of platform user data constituted unfair competition.

Case summary

The plaintiff, a technology company, operates a professional networking platform that contains users' employment-related information, including names, job titles, work experience, and educational backgrounds.

Under the platform's Service Agreement, users are prohibited from registering multiple accounts or using automated tools to collect platform data. The platform also employs technical safeguards such as login verification, access controls, and encrypted parameters.

The defendant, Wang, registered multiple accounts using different mobile phone numbers and purchased premium membership services. By obtaining source code, developing web-scraping programs, and operating an unauthorized website, Wang automatically collected the data at issue from the platform and copied it to a self-operated website. The defendant then sold website access credentials through online second-hand trading platforms.

The plaintiff argued that the defendant had, without authorization, operated and commercialized a website providing access to the platform's data and data-query services, in violation of Article 13(3) of the Anti-Unfair Competition Law, and sought compensation for economic losses and reasonable enforcement expenses.

The defendant contended that the website provided only limited services, including short-term access ranging from one to 15 days and the ability to view professional connections. The defendant argued that the website targeted a different user group and did not constitute a substantial substitute for the plaintiff's platform. The defendant further maintained that there had been no malicious intent, and that the economic losses and reasonable expenses claimed by the plaintiff were excessive.

Court findings

The data at issue constituted lawfully held data

The BIC found that the data at issue had been lawfully collected with users' consent in accordance with the platform's service agreement and privacy policy and there was no evidence indicated of any unlawful processing.

Through substantial investment and operation, the plaintiff had integrated dispersed user information into a commercially valuable data resource. Closely associated with employment, recruitment, and professional networking services, the data served as a core resource supporting the platform's matching services and market competitiveness.

The court therefore held that the data at issue constituted "lawfully held data" protected under Article 13(3) of the Anti-Unfair Competition Law.

The defendant's conduct constituted unfair competition

The BIC found that the defendant intentionally circumvented the platform's technical safeguards by using multiple accounts and deploying automated web-scraping tools to collect data at issue on a large scale before making it publicly available through the self-operated website.

By doing so, the defendant appropriated the plaintiff's data resources, diverted users and market share from the platform, and created a service that substantially substituted for part of the platform's core business. The conduct also created data security risks, harmed the plaintiff's legitimate rights and interests, and disrupted fair competition in the data market.

The court held that such unauthorized acquisition and commercial use of data constituted unfair competition.

Determination of damages

In determining damages, the court comprehensively considered the scope and nature of the infringement, the defendant's degree of fault, the duration of the infringement, and its market impact.

The court noted that the defendant's conduct involved both the unauthorized acquisition and use of virtually all categories of data available on the platform, resulting in a significant impact. As a paid member, the defendant should have been aware of the platform's prohibition against web scraping. Even after their accounts had been suspended, the defendant continued the infringing activities by registering new accounts. The defendant also distributed access credentials through multiple online channels and achieved relatively high sales volumes.

Taking these factors into account, the court determined that the plaintiff's economic losses amounted to 200,000 yuan ($29,543). The court further held that the plaintiff's expenses incurred in protecting their rights were reasonable and should be fully compensated.

Judgment

The BIC ordered the defendant to compensate the plaintiff for economic losses of 200,000 yuan and reimburse more than 30,000 yuan in reasonable expenses incurred in safeguarding its rights. The plaintiff's remaining claims were dismissed.

Neither party appealed. The judgment has become legally effective.