Photo: Alizila
Alibaba subsidiaries Taobao, Tmall, and Taobao Software (hereinafter referred to as "the plaintiffs") have secured a significant legal victory against the defendants who deployed "parasitic software" to scrape vast amounts of data from their platforms and sell it. This comes after a judgment recently released by the Nanjing Intermediate People's Court.
In a ruling dated June 12, the court determined that the defendants' actions infringed upon the plaintiffs' business secrets and constituted unfair competition. The plaintiffs were awarded 30 million yuan in damages.
The case dates back to 2023, when Taobao, Tmall, and Taobao Software filed a lawsuit with the Nanjing Intermediate People's Court, asserting that they held exclusive data rights and competitive interests over the data they had collected, organized, and processed. Through user agreements, the plaintiffs obtained "ownership and usage rights" to this data, which included transaction data, marketing data, browsing histories, and collection data. Once processed and analyzed, this data falls under the plaintiffs' "processing and usage rights." The data is encrypted and protected by access restrictions, making it inaccessible to the public and thus qualifying as business secrets under the Anti-Unfair Competition Law.
Taobao, Tmall, and Taobao Software accused the defendants, including Taoshu XX Company, Taishu XX Company, Li XX, Lin XX, Guangdong Tianqin XX Company, and Meizhou Tianqin XX Company, of using the "Index One-Click Restore" function in their software "Xiaowangshen" to parasitize the plaintiffs' merchant data platform, "Business Assistant." This tactic was used to redirect traffic to the defendants' site, while simultaneously employing destructive technical means to monitor and acquire business data. By bypassing the "Business Assistant," the defendants effectively gained traffic and financial benefits, causing substantial and irreversible damage to the plaintiffs. As a result, the plaintiffs sought compensation of 30 million yuan.
The defendants contested the jurisdiction but ultimately failed in their challenge.
The Nanjing Intermediate People's Court, in its June 12 ruling, found that the defendants used technical methods to access data closely resembling the proprietary data of the plaintiffs’ platforms. Their actions violated user privacy and exposed the plaintiffs' business secrets. This breach disrupted the plaintiffs' business model and damaged the delicate balance between data security and utilization, directly harming the plaintiffs' interests and infringing on user rights.
The court further ruled that the "Index One-Click Restore" function of Xiaowangshen, which diverted traffic away from the plaintiffs’ business model, gave the defendants an unfair competitive advantage. This violated Article 9 of the Anti-Unfair Competition Law and amounted to the unlawful acquisition of the plaintiffs' business secrets. Additionally, the “Competitive Product Monitoring” and “Material Download” features of Xiaowangshen were found to infringe Article 12 of the Law, further constituting unfair competition.
On June 12, the Nanjing Intermediate People's Court issued a first-instance ruling that applied double punitive damages, fully supporting the plaintiffs' claim for 30 million yuan in compensation.
This ruling is a landmark decision in China’s legal history, as it is the first to legally protect multiple categories of data through a layered mechanism that includes rights confirmation, punitive damages and piercing the corporate veil in a single infringement case. It establishes legal definitions for data rights and ownership, safeguards public interests, and represents the first comprehensive legal protection of data in the country.
“Data is the core asset in e-commerce,” said a Chinese e-commerce expert who has closely followed the case. “The theft of business secrets and the infringement of data rights leads to chaotic, price-cutting competition throughout the industry and should be regulated by law. This judgment will help create a fairer competitive environment for the e-commerce ecosystem.”
