AI-Generated Articles by Self-Media Mislead the Public, Court Finds Constitute Unfair Competition

Recently, the People's Court of Binjiang District, Hangzhou City, Zhejiang Province rendered a first-instance judgment in an unfair competition dispute case involving AI-generated content. The plaintiffs, Alibaba Group Holding Limited and Hangzhou Alibaba Advertising Co., Ltd. (collectively referred to as "Alibaba"), alleged that the defendant, Li Moumou, published AI-generated articles on his Baijiahao account "****" which contained false information, constituting unfair competition. After trial, the court held that Li's conduct violated the general principle of Article 2 of the Anti-Unfair Competition Law, constituted unfair competition, and ordered him to publicly eliminate the adverse effects and compensate for economic losses.

The trial focused on three main disputed issues.

First, whether the parties had proper standing and whether there existed a competitive relationship. The court held that the two plaintiffs enjoyed lawful rights and interests in the enterprise name "Alibaba," which, through long-term use, had acquired significant reputation and constituted a "well-known enterprise name with certain influence" protected by law. The defendant Li's "****" account was a professional e-commerce promotion account with tens of thousands of followers that undertook commercial promotions. Its essence was that of a market actor engaging in product sales and promotion through information networks, thus qualifying as an "operator" under the Anti-Unfair Competition Law. Although the parties' business scopes did not directly overlap, in the context of the internet e-commerce ecosystem, the defendant's conduct of attracting traffic and conducting commercial promotions by publishing content created a competitive relationship with the plaintiffs in terms of vying for traffic and business opportunities.

Second, whether the challenged conduct constituted unfair competition. The plaintiffs alleged that the defendant's conduct respectively constituted confusion-causing conduct, false advertising, and a violation of the principle of good faith. The court analyzed each claim and held as follows:

No confusion-causing conduct. Although the defendant's articles used the words "Alibaba" and its logo, such use was necessary to comment on the relationship between relevant companies, and was not directly used to promote the defendant's own goods or services. The relevant public would not easily be misled into believing that there was a specific connection with the plaintiffs.

No false advertising. This provision regulates false advertising about "one's own goods or services." The articles at issue did not involve any goods, and the defendant's act of publishing itself did not constitute commercial advertising.

Constituted unfair competition in violation of the principle of good faith. The court applied the general clause of Article 2 of the Anti-Unfair Competition Law. Subjectively, the defendant, as a self-media operator, published articles to increase followers and attract traffic for commercial gain, yet failed to perform even a minimum level of verification of the truthfulness of the AI-generated content, nor did it prominently label the articles as AI-generated to the public at the front end. Instead, it manually added images bearing the plaintiffs' brand logo. Its subjective fault was evident. Objectively, the articles described a third-party company, "Alibaba Digital Holdings (Shenzhen) Co., Ltd.," as an "important subsidiary of Alibaba Group Holding Limited" and a "key strategic layout" – information that could easily be falsified through a simple business registration inquiry. The dissemination of such false information would mislead the public and negatively impact the plaintiffs' corporate reputation and normal operations, thereby disrupting the order of market competition.

Regarding the defendant's defense that the articles were AI-generated and that he had fulfilled his duty of care, the court did not accept it. The court pointed out that users of generative AI bear a reasonable duty of care with respect to the content they disseminate, including the obligation to review and filter false information or add conspicuous labels. The defendant's argument that he had labeled the articles "Generated by ** Large Model 4.0" in the backend was rejected because such labeling was not visible to the public and did not comply with relevant regulations, and thus could not exempt him from liability.

Based on the above findings, the court ruled that the defendant Li's conduct constituted unfair competition and that he should bear corresponding legal liability. The court ordered Li to publish a court-approved statement within his "****" account for three consecutive days to eliminate the adverse effects, and to pay the two plaintiffs a total of RMB 30,000 in economic damages and reasonable enforcement expenses.

This judgment clarifies that when using AI tools to create and disseminate content, content publishers cannot evade their verification obligations by invoking "technology-generated" excuses. Self-media operators who seek commercial gains through traffic generation must adhere to commercial ethics and be responsible for the truthfulness of the information they disseminate; otherwise, they may face corresponding legal consequences.