2011 Top 10 IP Cases in China’s Software Industry:The first

Key points: cooperation on online games, high compensation

Korea Company Claimed Three Million Yuan for Infringement upon Its Game Cabal Online

Case summary: On October 25th, 2011, the Shanghai No.2 Intermediate People’s Court delivered the first instance judgment upon the ESTsoft Corp. (Korea) v. Moliyo Digital Entertainment Limited (Shanghai) case over infringement upon software copyright, requiring the defendant to cease infringing activities immediately and pay the plaintiff three million yuan (including reasonable fees) in compensation for the economic damages.
 
The plaintiff ESTsoft Corp. (ESTsoft) is the copyright holder of the online game Cabal Online while the defendant is its authorized operator in mainland China. According to the agreement between the plaintiff and the defendant, the defendant was only entitled to operate the game for two years, commencing on the date when the commercial operation began. The agreement provided that if the defendant achieved a gross income of over 200 million yuan in the first year, the authorization would be extended to three years automatically. However, the defendant failed to earn more than 200 million yuan during the authorized two years. The plaintiff then notified the defendant of the end of the agreement, but received no reply from the defendant.
 
Thereafter, not only did the defendant continue to operate the game, it also adopted various technical measures to keep the plaintiff from controlling the game and logging onto the servers which were controlled by the defendant. The court entrusted an accrediting body to verify the plaintiff ’s claims and concluded that the acts of the plaintiff were in line with the industry requirement. Therefore, the court rendered a decision in favor of the plaintiff against the defendant.
 
Expert comments: Chinese companies operating online games often choose to cooperate with foreign companies in order to increase profits. However, this mode has also aroused many disputes. Some of the disputes are caused by infringements generated by violating contracts similar to the above case. Some are generated because some foreign companies think that the games developed independently by Chinese companies infringe upon their copyright.