Top Ten Cases on Judicial Protection of IP Rights By Shanghai Courts in 2018

Table of Contents

I. Dispute over the Copyright of Nan Huai-Chin’s Works 3

II. Pre-action Behavior Preservation Case over Unfair Competition Dispute Arising from Broadcast of Youku Videos by MoreTV Video Software 6

III. Unfair Competition Case over Kingsoft AntiVirus’s hijacking User Browser Homepage 10

IV. Dispute over Infringement of the Invention Patent of BRITA's Filter Kettle 13

V. "乐高" and "LEGO" Trademark Infringement and Unfair Competition Dispute 16

VI. A Commercial Secret Dispute Case Involving Purchase Intention of One Single Potential Customer 19

VII. Trademark Infringement and Unfair Competition Disputes Involving the Name of the Old School 22

VIII. "CATIA" Computer Software Infringement Dispute 26

IX. Case on Copycat "HEYTEA" Operator’s Refusal to Accept the Trademark Infringement Administrative Punishment 30

X. Case of Counterfeiting Shanghai Jahwa Corporation “MAXAM” Registered Trademark 33

I. Dispute over the Copyright of Nan Huai-Chin’s Works

Nan Pinren filed a lawsuit against Fudan University Press Co., Ltd., Laogu Culture Enterprise Co., Ltd. (“Laogu Company”), Shanghai Laogu Culture Education Co., Ltd. for infringement of property rights in a work [Civil Judgment (2014) HYZMW (Z) CZ No. 170 of Shanghai No. 1 Intermediate People's Court, members of collegiate panel: Hu Zhenyuan, Gui Jia, Chen Rongxiang; Civil Judgment (2017) HMZ No.233 of Shanghai High People's Court, members of collegiate panel: Wang Jing, Xu Zhuobin, Kong Liming]

[Case Brief] 

On January 31, 2001, Nan Huai-Chin and Guo Hengyan signed a Power of Attorney stating that "I have entrusted Guo Hengyan as my special authorized agent, who shall have the sole authority to represent me in handling all copyright matters of all my works in the Chinese mainland. Agency authorities include signing copyright licensing contracts, dealing with other affairs related to copyright licensing on my behalf, and dealing with all other legal matters related to the copyright of all my works in the Chinese mainland on my behalf. All documents signed by the agent within the authority of the agent will be recognized by me – Nan Huai-Chin. The agent shall have the right of sub-entrustment.” Guo Hengyan submitted the “Licensed Use Certificate” dated June 8, 2001, which states that “1. The exclusive licensed use right of Mr. Nan’s works in China shall belong to Laogu Company, who may use or permit any third parties to use such works. 2. The license period enjoyed by Laogu Company shall coincide with the copyright period of Mr. Nan's works under law. 3. The royalties to be paid by Laogu Company shall be fully used for the establishment and operation of Shanghai Laogu Cultural Undertakings." After that, Nan Huai-Chin's works were published in Mainland China by Fudan University Press, Oriental Publishing House, The Shanghai People's Publishing House and other publishing houses under the authorization by either Laogu Company or Nan Huai-Chin, and some of the royalties were collected by Nan Huai-Chin, and some were collected by Shanghai Laogu Company. The above situation is known to both Nan Huai-Chin and Guo Hengyan.

In October 2014, Nan Xiaoshun, the son of Nan Huai-Chin, filed a lawsuit, claiming that he inherited the property rights of Nan Huai-Chin’s works in Mainland China. Because Fudan University Press did not pay part of the copyright royalties after publishing many works of Nan Huai-Chin, he required Laogu Company and Fudan Publishing House jointly compensate for economic losses of RMB 9.88 million and reasonable expenses of over RMB 350,000. Laogu Company filed a counterclaim requesting for confirming that it had copyright to Nan Huai-Chin's works.

[Adjudication]

The court of first instance held that, Fudan University Press had paid the royalties to Shanghai Laogu Company for publishing Nan Huai-Chin’s works before July 2012. The fact was known by Nan Huai-Chin, so Fudan University Press did not commit infringement. The outstanding royalties of RMB 1.36 million  arising after the death of Nan Huai-Chin was the payment for the use of other people's works, which constituted an infringement. As Fudan University Press had no subjective fault, it should not be required to bear the right protection expenses. The counterclaim of Laogu Company was rejected. After the judgment of the first instance, Laogu Company and Fudan University Press filed an appeal. The court of second instance held that the Licensed Use Certificate shall not be considered as a sub-entrustment in the nature of law, and Laogu Company can authorize Fudan University Press to publish the works of Nan Huai-Chin based thereon. Fudan University Press’s payment of the royalties to Nan Huai-Chin in the early period and Shanghai Laogu Company in the late period per the instructions of the Laogu Company was a normal performance and was not in violation of Nan Huai-Chin’s will. Therefore, Fudan University Press did not infringe copyright. Accordingly, the court of second instance upheld the first-instance judgment, rejected all the counterclaims of Laogu Company, and changed the judgment to reject all the claims of Nan Pinren (the successor of the lawsuit after the death of Nan Xiaoshun).

[Typical Significance]

This case involves the dispute over the ownership of Nan Huai-Chin's works, and attracts attentions from all sectors of society and the Chinese both at home and abroad. The facts of this case are intricate and the legal relationship is complicated. The second-instance judgment of this case, by exploring the true meaning of Nan Huai-Chin's pre-life will, accurately defined the legal significance of the parties' behaviors, and rationally allocated the relevant rights and interests of the parties involved in the case in line with Nan Huai-Chin's willingness, and has achieved a balance of interests between the parties. After the second instance judgment was pronounced, all parties accepted it, and the verdict received favorable comment from all sectors of society, achieving good legal and social effects.

Picture: Nan Huai-Chin's works

II. Pre-action Behavior Preservation Case over Unfair Competition Dispute Arising from Broadcast of Youku Videos by MoreTV Video Software 

Applicant Youku Information Technology (Beijing) Co., Ltd. sued the Respondent Shanghai Qianshan Network Technology Development Co., Ltd. to stop the infringement of intellectual property rights before the action [Civil Ruling Paper (2018) H 0115 XB No. 1 of Pudong New Area People’s Court of Shanghai, members of collegiate panel: members of collegiate panel: Gong Xiaoyan, Yang Jie, Jiang Guangrui]

[Case Brief]  

Applicant Youku Company purchases genuine video content for users to watch or download on Youku. At the same time, it makes profits by charging advertising fees by advertising before the video plays, when the video pauses or when the page peripheral contents are played, or providing paid membership services to users, or charging special videos. The MoreTV video software developed and operated by the Respondent Qianshan Company is the video aggregation software that provides video on demand services to smart TV users. The Applicant sued that the MoreTV video software obtained a specific key value that can only be generated by the Applicant's background service program through technical means. That act undermined the Applicant's technical protection measures and illegally stole the Applicant's video storage link, finally realizing the purpose of providing the video contents of the Youku.com to the MoreTV video users in the form of blocking the Applicant's pre-film advertisement and suspending the advertisement; which act is based on the video contents purchased by the Applicant with huge expenditure, and imposes the bandwidth cost generated by video transmission on the Applicant, destroying the normal commercial operation activities of the Applicant of advertise before video, seriously interfering with the normal business activities of the Applicant, and has constituted unfair competition; which will cause irreparable damage to the Applicant if not being stopped in time. Therefore, it applied to the court to order the Respondent to immediately stop the unfair competition conducted by the MoreTV video software.

[Adjudication]

After review, the court held that the evidence provided by the Applicant could be used to preliminarily prove that MoreTV video software bypassed the pre-film and video pause advertisements set by the Applicant on Youku.com when linking hundreds of movies and TV works from Youku.com. As both MoreTV video software and Youku.com provide video playback services to consumers, there is a direct competition relationship between the two parties. The above behavior of the Respondent is essentially to separate the video content of Youku.com from the pre-film and video pause advertisements set by the Applicant as played together with the video content, which has damaged the legitimate rights and interests of the Applicant and may constitute unfair competition. Youku.com is the leading online video platform in China. MoreTV video software also has a large number of users. If the above-mentioned alleged infringements are not stopped in time, it may cause irreparable damage to the Applicant's competitive advantage and market share. The adoption of preservation measures will not harm the public interest, and the Applicant has provided a valid guarantee. In summary, it was ruled that the Respondent immediately stop the act of bypassing the pre-film and video pause advertisements set by the Applicant at Youku.com when playing the videos from Youku.com through the MoreTV video software link. After the ruling was made, the Respondent actively fulfilled the ruling and took the initiative to disconnect the more than 600 films and TV works involved in the MoreTV video software.

[Typical Significance]

Accurate application of the injunction on behavior before and during the trial is an important legal means for timely protection of intellectual property rights. This case is the first case on pre-action injunction for the video aggregation software unfair competition dispute. The Applicant had made sufficient evidence collection preparations before filing an application for pre-action behavior preservation. The ruling made by the court was based on clear facts and all-round grounds. Therefore, the Respondent consciously fulfilled the ruling, the possible subsequent intellectual property infringements were timely stopped, the loss of the Applicant were prevented from further expanding, and the legal rights and interests of the Applicant were protected in a timely manner. Thus, it is a judicial demonstration made for constructing a good business environment and market competition order.

Picture: the MoreTV video software operated by the respondent

III. Unfair Competition Case over Kingsoft AntiVirus’s hijacking User Browser Homepage

Plaintiff Shanghai 2345 Network Technology Co., Ltd. filed a lawsuit against Defendants Beijing Cheetah Network Technology Co., Ltd., Beijing Cheetah Mobile Technology Co., Ltd., Beijing Jinshan Security Software Co., Ltd. for unfair competition [Civil Judgment (2016) H0115MC No. 5555 of Pudong New Area People's Court of Shanghai, members of collegiate panel: Gong Xiaoyan, Yang Jie, Sun Baoxiang. Civil Judgment (2018) H73MZ No. 5 of Shanghai IP Court, members of collegiate panel: Ding Wenlian, Yang Fuyu, Yi Jia]

[Case Brief]

The Plaintiff is the operator of 2345 URL navigation and 2345 ace browser, of which 2345 URL navigation ranks in the forefront of the Chinese website navigation market. The three Defendants jointly operated Kingsoft AntiVirus software, and changed the 2345 URL navigation homepage set by the end users to the Kingsoft AntiVirus Website hosted by the Defendant Beijing Cheetah Mobile Technology Co., Ltd. through the following actions: changing the browser homepage through the "garbage cleanup" function of Kingsoft AntiVirus; making the option of "Immediately lock the Kingsoft AntiVirus Website as the browser homepage and protect the browser homepage from being tampered with" ticked by default through the "one-click cleanup" pop-up of Kingsoft AntiVirus upgrade program, where regardless of whether the user cancels the option, the browser homepage will be changed; changing the browser homepage by Kingsoft AntiVirus's "one-click cloud killing", "version upgrade", "browser protection" and other functions, and different browsers are treated differently; making the option of “Set the Kingsoft Virus navigation as the browser homepage” ticked by default through the “Installation Complete” pop-up of Kingsoft AntiVirus, where regardless of whether the user cancels the option, the browser homepage will be changed; inducing the users to click "one-click to open" to change the browser home page through Kingsoft AntiVirus’ pop-up of “turn on the secure URL navigation to prevent open the malicious website by mistake"; tampering with the user's computer registry data to change the browser homepage through the Kingsoft AntiVirus uninstall program. The Plaintiff pleaded to the court to order that: 1. The three Defendants immediately stop the unfair competition against the Plaintiff of tampering with the homepage, hijacking the traffic, etc.; 2. the three Defendants publicly clarify the facts and eliminate the impact; 3. the three Defendants jointly compensate the Plaintiff’s economic loss of RMB 10 million and the Plaintiff’s notary fee of RMB 13,060.

[Adjudication]

The court of first instance held that, the three Defendants, as operators of security software and software that directly compete with the general terminal software operated by the Plaintiff, failed to take necessary and reasonable methods to play the normal functions of the security software, which is an act that interferes with the operation of other software beyond reasonable extent. The three Defendants had directly infringed the internet users' right to know and the right to choose by utilizing the internet users' trust in it as the security software operator, or changing the users' browser homepages without informing them, or through false pop-ups and intimidating pop-ups, which had caused real harm to the legitimate rights and good reputation of the Plaintiff while making illegal profits. In addition, the three Defendants’ act of making a distinction in the process of changing the internet users’ browser homepages through Kingsoft AntiVirus software may cause differences in the experience of different browsers for internet users, and improperly affect the users’ experience of the 2345 Browser as operated by the Plaintiff. In summary, the three Defendants' competition behavior not only violated the principle of good faith and generally recognized business ethics, but also violated the principle of equal competition. Therefore, the three Defendants were ordered to immediately stop the act of unfair competition, publish a statement to eliminate the impact, and jointly compensate the Plaintiff for economic losses of RMB 3 million and reasonable expenses of RMB 13,060. After the first instance judgment was announced, the three Defendants filed an appeal. The court of second instance dismissed the appeal and upheld the original judgment.

[Typical Significance]

The judgment of this case found that the security software operator, in the name of guaranteeing the security of the computer system, arbitrarily changed or induced the user to change the browser homepage through false pop-ups, intimidating pop-ups, etc., thereby improperly robbing the traffic interests, which not only harms the legitimate rights and interests of other operators but also infringes the end users’ right to know and choose, and violates the principle of good faith and generally recognized business ethics. The trial of this case not only maintains the market order, but also safeguards the interests of legitimate operators and internet users. It is of positive significance for regulating traffic competition and establishing competition rules in the Internet field.

Picture: Pop-up of Kingsoft AntiVirus

IV. Dispute over Infringement of the Invention Patent of BRITA's Filter Kettle 

Plaintiff BRITA Co., Ltd. filed a lawsuit against the Defendant Ningbo Qingqing Environmental Protection Electric Co., Ltd. for infringement of invention patent [Civil Judgment (2015) HZMCZ No.753 of Shanghai IP Court, members of collegiate panel: Hu Mi, Xu Fei, Gao Weiping. Civil Judgment (2017) HMZ No.146 of Shanghai High People's Court, members of collegiate panel: Wang Jing, Tao Ye, Cao Wenjia]

[Case Brief]

The Plaintiff is engaged in the R&D and manufacture of water dispensers. On April 27, 2005, it applied to the State Intellectual Property Office for the invention patent entitled “Filter Cartridge and Device for Filtration of Liquids” and was granted with the patent on May 12, 2010. The Defendant displayed and promised to sell the alleged infringing products at the Eighth Shanghai International Water Show. At the same time, it distributed the publicity materials and introductions of the alleged infringing products, and also highlighted the alleged infringing products on its website. It also sold the alleged infringing products at its web store and publicly claimed that the alleged infringing products were the imitations of the Plaintiff's Brita products. The Plaintiff sued the court to order that: 1. the Defendant immediately stop the infringement, including stopping manufacturing, selling, and promising to sell the alleged infringing products; 2. the Defendant destroy the special mold for the manufacture of the alleged infringing product; 3. the Defendant compensate for the Plaintiff's economic loss of RMB 1 million and reasonable expenses of RMB 300,000.

[Adjudication]

The court of first instance held that, the “first fixed structure” and the “second fixed structure” in the patent involved were functional technical features. According to the description of the Plaintiff’s patent specification and the attached figure, the structure of such two technical features shall include the first inner convex portion set on the filter cartridge and the second inner convex portion set on the bottom wall of the receiving chamber, both of which are inwardly turned, and the two inward turning portions may realize plug fitting, that is, the second inward turning portion on the bottom wall of the filter cartridge must fit the first inward turning portion on the bottom wall of the receiving chamber, and the mandrel of the second inward turning portion must pass the first inward turning portion, to achieve the technical effect of determining the right location of the filter cartridge when the filter cartridge is inserted into the receiving chamber. There is an inwardly projecting cylindrical hollow body at the bottom of the receiving chamber of the alleged infringing product in this case, an inwardly extending annular flange with a notch at the top of the hollow body. The lower part of the filter cartridge of the alleged infringing product has an inwardly projecting hollow cylindrical portion. The top end of the cylinder has an outwardly extending mandrel which also has a notch. There are four symmetric spacer ribs beside the mandrel at the top of the cylinder. When the filter cartridge is inserted into the receiving chamber, the two inwardly projecting cylindrical hollow bodies can partially overlap to produce a wrap effect, and the mandrel on the filter cartridge can pass through the discharge port of the receiving chamber. With the cooperation between the hollow bodies and the mandrel, the function and effect of guiding positioning and throttling liquid can be realized. Upon comparison, the technical features of the alleged infringing product fall within the scope of patent protection involved in this case. Therefore, the Defendant was ordered to stop the infringement and compensate the Plaintiff for an economic loss of RMB 400,000 and reasonable expenses of RMB 100,000. After the judgment of the first instance, the Defendant filed an appeal. The court of second instance dismissed the appeal and upheld the original judgment.

[Typical Significance]

This case is a patent infringement dispute involving functional technical features. The specific embodiments stated in the invention patent claims and the descriptions involved in this case are complicated. When determining the content of the relevant functional technical features, the court clarified the relationship between the different embodiment schemes and various alternative embodiment means according to the contents of the specifications. In the technical comparison, the court distinguished whether the difference in specific details was processing defect or technical solution avoidance, and made legal and reasonable judgment combining design tolerances, processing errors and other considerations in the manufacturing and processing industry, providing an idea for reference in the identification of technical facts in the trial of similar cases.

Picture: the alleged infringing product

V. "乐高" and "LEGO" Trademark Infringement and Unfair Competition Dispute

Plaintiff LEGO Juris A/S filed a lawsuit against Defendant Shanghai Tonghui Culture Communication Co., Ltd. for trademark infringement and unfair competition [Civil Judgment (2017) H 0107 MC No. 18141 of Shanghai Putuo District People's Court, members of the collegial panel: Yan Weixiong, Zhou Chanjuan, Yu Miaokang]

[Case Brief]

The Plaintiff is the owner of a series of trademarks such as “LEGO” and “乐高” and is the owner of the domain names of lego.com and lego.com.cn. The Defendant opened two “Lego Activity Centers” and used the LEGO series of trademarks in the business activities and publicity of the two centers, including using LEGO trademarks in the decoration of the stores, posters, course introductions, contract receipts, etc.; opening a website with www.legosh.com" as the domain name and using LEGO trademarks on the pages; using LEGO trademarks on Weibo and WeChat public accounts. In addition, the Defendant also stated in the publicity that it was the “Lego Activity Center” authorized by the Plaintiff and used information related to LEGO Education. The Plaintiff requested the court to order the Defendant to immediately stop the infringement, cancel the relevant domain name and compensate the losses. The Defendant denied the existence of trademark infringement and false propaganda on the grounds that it had obtained authorization to sell LEGO brand products and conduct after-sales instruction.

[Adjudication]

The court of first instance found that the Defendant’s use in its shop decoration, promotional materials, course price list, official website, etc. constituted trademark infringement. With respect to the Defendant’s argument that it had the right to use the trademark under the authorization it had got for the sale of the LEGO toys, the court of first instance held that the use by the Defendant had exceeded the scope necessary for the sale of the goods and it failed to attach other identifiers to distinguish the source of the service as it used the Trademarks at dispute, which was enough to cause confusion among the public. With respect to the relevant claims on the domain name, the court of first instance found that the domain name at dispute which was registered by the Defendant constituted infringement of the “LEGO” trademark of the Plaintiff. Besides, the Defendant's domain name was similar to the main body of the Plaintiff's domain name "lego," which was enough to cause misunderstanding and thus had constituted unfair competition. At the same time, the Defendant tried to establish an association relationship with the Plaintiff in the propaganda, so as to obtain the relevant competitive advantage, which behavior had constituted false propaganda. The judgment of the first instance: the Defendant shall immediately stop the infringement and wrote off the domain name of www.legosh.com, and compensate the Plaintiff for economic losses and reasonable expenses totaling RMB 500,000. After the judgment of the first instance, neither party appealed.

[Typical Significance]

This case is a trademark infringement and unfair competition case involving multiple trademarks and featuring complicated infringement. The court analyzes and considers each accused behavior separately. Considering that the accused, under the circumstance that it has obtained the authorization to sell the products, uses a series of educational service trademarks of others with high reputation in its store layout, curriculum setting, website construction and marketing promotion, it should have the intention to establish a false connection to the trademarks of the Plaintiff, whose act can easily lead to consumer confusion, seriously damage the interests of the right holder, and thus has constituted infringement. The judgment of this case clarified the boundary of the indicative use of trademarks, protected the legitimate rights and interests of the trademark owner, and maintained the order of market competition.

Picture: Defendant’s promotional material

VI. A Trade Secret Dispute over Purchase Intention of One Single Potential Customer 

Plaintiff Magnettike Control System (Shanghai) Co., Ltd. filed a lawsuit against Defendant Li Jianbin et al for infringement of trade secrets and other unfair competition [Civil Judgment (2016) H0110MC No. 6392 of Shanghai Yangpu District People's Court, members of the collegial panel: Zhang Qian, Liu Yanping, Wu Kuili. Civil Judgment (2017) H73MZ No.250 of Shanghai IP Court, members of the collegial panel: Li Shulan, He Yuan, Fan Jingbo]

[Case Brief]

The Plaintiff authorized the outsider Shenzhen Dashi Intelligent Co., Ltd. (hereinafter referred to as Dashi Company) to participate in the bidding for the Shenzhen Metro Project. Defendants Li Jianbin, Zhang Jiarong, and Shi Huiling were the employees of the Plaintiff, whose confidentiality obligations were stipulated in their employment contracts. Defendant Li Jianbin used the convenience of being the sales manager of the Plaintiff to tell Dashi Company that the Defendant Emère (Hong Kong) Automation Control Technology and Services Co., Ltd. (hereinafter referred to as MA Hong Kong) was the affiliate of the Plaintiff, and Dashi Company signed the contract with MA Hong Kong as a result. It was found that Defendant Zhu Jiawen, former wife of Li Jianbin, was the sole shareholder of MA Hong Kong Company. The Defendants Li Jianbin, Zhang Jiarong and Shi Huiling resigned from the Plaintiff and went to the Defendant, Maotuo Automation Control Systems (Shanghai) Co., Ltd. (hereinafter referred to as the Maotuo Company), which assisted MA Hong Kong Company in performing the contract. The shareholder and legal representative of the Defendant Maotuo Company was Defendant Pan Shirong, the Defendant Li Jianbin's father. The Plaintiff filed a lawsuit to the court, claiming that: Li Jianbin, Zhang Jiarong, and Shi Huiling illegally disclosed the Plaintiff’s trade secrets to Zhu Jiawen and MA Hong Kong Company and allowed them to use it. Maotuo Company and Pan Shirong provided cooperation and assistance. The actions of the seven Defendants had seriously infringed the Plaintiff’s trade secrets, which violated the principles of good faith and business ethics, and had constituted unfair competition. The Plaintiff requested the court to order the Defendants to stop the infringement and jointly compensate the Plaintiff for economic losses of RMB 1,840,453.34 and reasonable expenses of RMB 2,041.92.

[Adjudication]

The court of first instance held that the actual trade information held by the Plaintiff, that is, the fact of Dashi Company’s purchase of the pedestrian access door module products produced by Magnetek Germany in the Shenzhen Metro Project, meets the provisions of Article 10, paragraph 3 of the Anti-Unfair Competition Law, and shall belong to the Plaintiff’s trade secrets. Li Jianbin and Zhang Jiarong learned the Plaintiff’s trade secrets during the period they worked for the Plaintiff. The products provided by MA Hong Kong Company were essentially the same as the content of the Plaintiff’s trade secrets involved in this case and no legal source can be provided. Maotuo Company used the trade secrets involved in this case to assist in the performance of the contract while it knew that such trade secrets were owned by the Plaintiff. The actions of the Defendants Li Jianbin, Zhang Jiarong, MA Hong Kong Company, and Maotuo Company jointly infringed the Plaintiff's trade secrets.  Therefore, it was ruled that the Defendants Li Jianbin, Zhang Jiarong, MA Hong Kong Company and Maotuo Company jointly compensated the Plaintiff for economic losses of RMB 1,400,000 and reasonable expenses of RMB 1,641.92 and issued a statement to eliminate the impact; the Defendants Zhu Jiawen and Pan Shirong respectively shall bear joint and several liability for the payment obligation of the Defendant MA Hong Kong Company and Maotuo Company. After the judgment of the first instance was issued, both parties refused to accept the judgment and filed appeals. The court of second instance dismissed the appeal sand upheld the original judgment.

[Typical Significance]

This case is a dispute over trade secrets and other unfair competition caused by employees' disclosure of the purchase intentions of potential customers of the company to their relatives. This case explores whether the purchase intention of a single potential customer constitutes a trade secret. The court believes that the purchase intention of a single potential customer obtained through certain efforts and efforts can bring certain value or competitive advantage to the right holder; if it conforms to the characteristics of secret, value and confidentiality of trade secrets, the protection of same as trade secret can promote fair and orderly competition.

VII. Trademark Infringement and Unfair Competition Disputes Involving the Name of the Old School

Plaintiff University of Shanghai for Science and Technology filed a lawsuit against the Defendant Hujiang Education Technology (Shanghai) Co., Ltd. for infringement of trademark right and unfair competition [Civil Judgment (2016) H73 MC No. 368 of Shanghai IP Court, members of the collegial panel: He Yuan, Fan Jingbo, Zhang Yanpei. Civil Judgment (2017) HMZ No. 350 of Shanghai Higher People's Court, members of the collegial panel: Zhang Benyong, Xu Zhuobin, Zhu Jiaping]

[Case Brief]

In the nationwide faculty adjustment in 1952, the original faculty of University of Shanghai (in Chinese, this name is pronounced “Hujiang”) was merged into four schools including the Shanghai Industrial School. The campus and attached houses were all assigned to the Shanghai Industrial School. After that, Shanghai Industrial School was renamed several times and merged with Shanghai Mechanical College in 1996 to form the University of Shanghai for Science and Technology. The University of Shanghai Alumni Association of was changed to the University of Shanghai for Science and Technology Alumni Association in 2011. The School of Foreign Languages of that university opened the Hujiang Foreign Language Training Center in 2007. In 2009, Fu Cairui, a graduate of the school, established Shanghai Mutual Culture Communication Co., Ltd., and changed its name to Hujiang Education Technology (Shanghai) Co., Ltd. (hereinafter referred to as Hujiang Company) in 2016. Fu Cairui and Hujiang Company successively applied for registration of trademarks such as “Hujiang English,” “Hujiang” and “Hujiang Japanese,” and used the words “Hujiang” in online education activities. Hujiang Company wrote in the article "What about Hujiang and Cambridge" issued at its WeChat public account: "Several years ago, Xu Zhimo, the most famous student of Hujiang University, had a fate with Cambridge... Now the Internet platform Hujiang becomes attached to Cambridge once again to bring a high-quality course experience to Chinese learners...”; and stated on its official website that “University of Shanghai is a church university located in Shanghai in the first half of the 20th century. After liberation, it has faded away. People are delighted to see that the Hujiang Online School was born...". The University of Shanghai for Science and Technology files a lawsuit to the court, claiming that Hujiang Company had infringed the unregistered well-known trademark rights of the University of Shanghai for Science and Technology, which had constituted unfair competition, requesting that Hujiang Company stop the act of infringing its trademark rights and unfair competition.

[Adjudication]

The court of first instance held that although the University of Shanghai for Science and Technology had a certain historical relationship with University of Shanghai, it cannot prove that “Hujiang” has become an unregistered well-known trademark of the University of Shanghai for Science and Technology. As to the application of Hujiang Company for registration of “Hujiang” and the trademark containing the word “Hujiang,” the University of Shanghai for Science and Technology can resolve such issue through administrative procedures. Although the “Hujiang.com” operated by Hujiang Company has no historical relationship with University of Shanghai, it deliberately built the relationship between them in its propaganda, with an obvious intention of taking advantage of the reputation of “University of Shanghai”, and the relevant expressions constituted misleading false propaganda. Therefore, the court ruled that Hujiang Company should immediately stop the unfair competition of false propaganda and rejected the other claims of the University of Shanghai for Science and Technology. After the judgment of the first instance, both the Plaintiff and the Defendant filed appeals. The court of second instance held that the “Hujiang” logo of the University of Shanghai for Science and Technology did not meet the standard for well-known trademark, and “Hujiang” was neither the name nor the trade name of the University of Shanghai for Science and Technology, hence its request for protecting the “Hujiang” logo as an unregistered well-known trademark or company name was not supported. Although the relevant propaganda content released by Hujiang Company was not fictitious, it carried out propaganda by comparing the “Hujiang.com” with the original University of Shanghai. With these propaganda, the company built sufficient grounds for the public to believe mistakenly that there was a relationship between the two, and such act damaged the legal rights and interests of other related operators, disrupted the market competition order and constituted false propaganda. Based on the aforesaid grounds, the court dismissed the appeal and upheld the original judgment.

[Typical Significance]

This case involves the protection of intellectual property rights of the old school name. The court has made a useful exploration on whether the old school name can be legally protected as the name of the relevant institution, and the relevant colleges use the old school name as a commercial mark, and the examination standards for seeking trademark protection. It plays a certain guiding role in the trial of related cases, and at the same time corrects the behavior of the market operators who improperly use the old school name when propagating goods or services, having achieved good legal effects and social effects.

Picture: Gate of Hujiang University（now the gate of the University of Shanghai for Science and Technology）

VIII. "CATIA" Computer Software Infringement Dispute 

Plaintiff Dassault Systems Co., Ltd. filed a lawsuit against Defendant Shanghai Zhidou Electric Vehicle Technology Co., Ltd. for infringement of computer software copyright [Civil Judgment (2018) H73 MC No. 81 OF Shanghai IP Court, members of the collegial panel: Qian Guangwen, Wu Yingzhe, Huang Tianhua. Civil Judgment (2018) HMZ No. 429 of Shanghai High People's Court, members of the collegial panel: Tang Zhen, Tao Ye, Xu Zhuobin]

[Case Brief]

The Plaintiff is the copyright owner of the computer software CATIA V5 R20. The Plaintiff had complained to the Cultural Law Enforcement Corps in February 2017 for the Defendant's use of the infringing software. During the administrative law enforcement process, 8 sets of infringing software were discovered by Zhidou Company. During that period, the two parties reached a settlement and signed a genuine software purchase contract. The Cultural Law Enforcement Corps therefore mitigated the administrative penalty upon the Defendant according to law, but the Defendant did not pay the software purchase payment according to the contract. In November of the same year, the Plaintiff applied to the court for evidence preservation. In the process of preservation, with the consent of the Plaintiff, the court conducted evidence preservation on the installation of the software involved in the computer by determining the random sampling rate and random inspection, and then calculated the quantity of software involved installed in all of the computers in the business premises according to the proportion of the software involved installed in the computers inspected at random. Upon the inventory, there were 73 computers in the Defendant's business premises, and 15 of them were installed with the software involved. The Plaintiff instituted a lawsuit to the court, requesting that the Defendant should stop the infringement and compensate the economic losses and attorney fees, totaling more than RMB 18 million.

[Adjudication]

After the trial of the court of first instance, the Defendant install the software involved in the computers in the business premises without the permission of the Plaintiff, infringing the Plaintiff's right to copy the software involved. Although the actual losses of the Plaintiff and the illegal income of the Defendant are difficult to determine, the existing evidence can prove that the Plaintiff’s losses have exceeded the upper limit of the statutory compensation amount specified in the Copyright Law, i.e. RMB 500,000. Therefore, the court determined the amount of compensation beyond the maximum amount of statutory compensation, and imposed RMB 9 million on the Defendant as the compensation for the economic losses and legal fees of the Plaintiff after comprehensively analyzing the evidences of the case and considering the unit price of the software under the sales contract submitted by both parties, the time of infringement, the number of computers installing the infringing software, and the subjective malice of the Defendant by expanding the infringement scale after the infringement software had been seized by the administrative organ. After the judgment of the first instance, the Defendant refused to accept the judgment and filed an appeal. The court of second instance held that the Plaintiff and the Defendant in the case had reached a settlement agreement on the infringement found by the Cultural Law Enforcement Corps. Subsequently, the Defendant failed to implement the settlement agreement, but instead expanded the scale of the infringement. There were repeated infringements, the subjective malice of infringement was obvious, and the actual losses suffered by the Plaintiff had obviously exceeded the maximum limit of statutory compensation. Therefore, compensation should be determined beyond the maximum amount of statutory compensation. Therefore it is ruled that the appeal was rejected and the original judgment was upheld.

[Typical Significance]  

This is a typical case where the court increases damages of intellectual property infringement according to law. The court determined the amount that the Defendant should compensate for the economic losses of the Plaintiff beyond the maximum amount of statutory compensation and fully support the reasonable expenses claimed by the Plaintiff by comprehensively considering the evidence of the case, and enhanced the protection of the right holder according to the law, which provided a certain reference for the trial of other similar cases and reflected the attitude and determination of the court to continuously strengthen the judicial protection of intellectual property rights. At the same time, the judgment of this case will advocate the public to use genuine software in an all-round way, respect the labor and efforts of software developers, promote the legalization of enterprise software, and form a business environment that respects and protects intellectual property, encourages and develops innovation.

Picture: the computer software CATIA V5

IX. Case on Copycat "HEYTEA" Operator’s Refusal to Accept the Trademark Infringement Administrative Punishment 

Plaintiffs Chen Xiaolong, Chen Liliang and Wang Huagui refused to accept the Defendant's trademark infringement administrative punishment made by Shanghai Pudong New Area Intellectual Property Office [Administrative Judgment (2018) H 0115 XC No. 373-375 of Pudong New Area People's Court of Shanghai, members of the collegial panel: Jin Minzhen, Ni Hongxia Lu Guangyi]

[Case Brief]

On December 15, 2017, Shanghai Pudong New Area Intellectual Property Office issued administrative penalty decisions to the Plaintiffs Chen Xiaolong, Chen Liliang and Wang Huagui, stating that the tea shop that the three Plaintiffs jointly invested in and operated was officially opened for business on September 17, 2017, which marked with “” in the store signboard, the store's promotional banners, price lists and tea cups. The third person, Meixixi Catering Company, registered the trademarks No. "19122315" “” and No. 13595312 “” for the approved services of the 43rd category of cafes, teahouses, restaurants, etc. The three Plaintiffs, without the permission of the trademark registrant, use the logo similar to the registered trademark of the trademark owner in their store signboard, in-store promotional banners, price lists, and milk tea cups on the same kind of service, which may easily lead to confusion and has constituted the act as stipulated in Article 57(2) of the Trademark Law. According to the provisions of Article 60, Paragraph 2 of the Trademark Law, the three Plaintiffs were ordered to immediately stop the infringement and each was imposed a fine of RMB 4,000. The three Plaintiffs dissatisfied with the administrative punishment and filed a lawsuit to the court respectively, arguing that the alleged infringing trademark was authorized by Kaizhimei Catering Company to use by the three Plaintiffs. The two parties signed a catering service agreement ((franchising contract), and Kaizhimei Catering Company charged the Plaintiffs franchise fee and issued a license. The Plaintiffs used the infringing trademark only for one month without knowing the true condition and without the intention of infringement. Therefore, their illegal act was slight and did not cause harmful consequences. They requested the court to revoke the decision made by the Defendant, and exempt the Plaintiffs from the fine imposed on them.  

[Adjudication]

The court of first instance held that the Defendant has the statutory power to investigate and handle complaints and reports of violations of the exclusive right to use registered trademarks within its jurisdiction. In the three cases, the Defendant Shanghai Pudong New Area Intellectual Property Office carried out the work of accepting, investigating, inquiring, and feedbacking the complaints of the citizens. The law enforcement procedures were in compliance with the relevant regulations. The focus of the dispute in the three cases was whether the Defendant’s administrative penalties for the trademark infringement of the three Plaintiffs were correct in terms of application of law and whether the amount of punishment was legal. Firstly, the penalty exemption stipulated in Article 27, Paragraph 2 of the Administrative Punishment Law is that no penalty will be imposed on an act of administrative offence for it does not meet the penalty requirements. The actions of the three Plaintiffs have not yet met the three elements of “slight violation”, “timely correction” and “no harmful consequence”. Secondly, the amount of penalty imposed by the Defendant on the three Plaintiffs was legal. Each Plaintiff invested 1/3 to open a store, and the turnover gained from the official opening date of the store to the investigation date was RMB12,000. The decision, according to such situation and based on the investment ratios and income share ratios of the three Plaintiffs, determining that the illegal business amount of each Plaintiff shall be 1/3 of RMB 12,000, i.e. RMB 4,000, and making corresponding administrative penalties, was not in violation of the law. In summary, the judgment rejected the Plaintiffs’ claim. After the judgment of the first instance, none of the parties appealed, and the first-instance judgment took effect.

[Typical Significance]

The three cases exemplified the people's courts’ role in giving full play to the judicial leading role, supporting the administrative organs to actively perform their duties in accordance with the law, comprehensively safeguarding the administrative order of intellectual property rights, and vigorously promoting the administrative protection of intellectual property rights. At the same time, the ruling of these cases suggests that the franchisee should conduct a strict examination of the relevant qualifications of the licensor and the legality of the operating resources before engaging in related operations to protect their rights. These cases are of positive significance for standardizing, purifying the market transaction order, and safeguarding the legitimate rights and interests of consumers.

Picture: Copycat "HEYTEA"

X. Case of Counterfeiting Shanghai Jahwa United Co., Ltd “MAXAM” Registered Trademark 

Case of Counterfeiting Registered Trademark by Defendants Kuayue Biotechnology (Chuzhou) Co., Ltd. and Tong Xuanjun [Criminal Judgment (2018) H03 XC No. 29 of Shanghai No.3 Intermediate People's Court, members of the collegial panel: Zhu Yu, Gao Weiping, Zhang Yanpei. Criminal Ruling (2018) HXZ No. 61 of Shanghai High People's Court, members of the collegial panel: Zhang Benyong, Xu Zhuobin, Tao Ye]

[Case Brief]

Shanghai Jahwa United Co., Ltd is the trademark owner of the registered trademark “MAXAM,” which is approved to be used for such products as hair cream. In September 2016, the Defendants purchased the label, bottle cap and bottle body with the counterfeit registered trademark “MAXAM” without the permission of the trademark owner, and filled the hair cream materials produced by the Defendant, Kuayue Biotechnology (Chuzhou) Co., Ltd into bottles and exported same after attaching such labels. On November 1 of the same year, the batch of hair cream with the counterfeit registered trademark “MAXAM” was exported to the Republic of Yemen and was seized by Shanghai Customs in the process of customs clearance. Totaling 46,080 bottles were seized with the sales amount of US$37,440, equivalent to RMB 253,596.096. On July 3, 2017, the Defendant was cited by the public security organ and truthfully confessed the facts of the crime.

[Adjudication]

The court of first instance held that, the Defendants used the same trademark as the registered trademark on the same commodity without the permission of the registered trademark owner in order to obtain illegal profits. Given the illegal operation gains amounted to more than RMB 250,000, the circumstances were very serious and had constituted a crime of counterfeiting registered trademarks. As the Defendant, who was directly responsible for the Defendant unit, automatically surrendered after committing the crime, truthfully confessed the crime, the acts of the Defendants had constituted surrender and the penalty thus can be lightened or mitigated according to law. Given the Defendant unit had prepaid part of the fine, the penalty imposed to the Defendant’s unit and the Defendant thus may be lightened or mitigated to some extent at discretion. It was ruled that: 1. The Defendant unit had committed the crime of counterfeiting a registered trademark and thus was imposed a fine of RMB 100,000. 2. The Defendant was convicted of counterfeiting a registered trademark and thus was sentenced to one year and eight months in prison and a fine of RMB 50,000. 3. The hair cream with the counterfeit registered trademark seized in the case shall be confiscated. After the judgment of the first instance, both the Defendant unit and the Defendant refused to accept the judgment and made an appeal. The court of second instance held that the Defendant unit and the Defendant independently used the same “MAXAM” trademark logo on the same locations of the bottle cap, the bottom of the bottle and the bottle body without the permission of Shanghai Jahwa United Co., Ltd. The use of "MAXAM" registered trademarks and locations are the same as those used by the hair cream products of the right holder Shanghai Jahwa United Co., Ltd, and the circumstances were particularly serious, having constituted a criminal act of using the same trademark as the registered trademark on the same kind of goods without the permission of the trademark owner. The defender’s opinion that the Defendants’ exporting the products marked with its own trademark and the "MAXAM" was a kind of brand-name processing behavior, and was impossible to cause confusion among the relevant public to the "MAXAM" trademark did not match the objective facts. Therefore, the court dismissed the appeal and upheld the original judgment.

[Typical Significance]

In this case, the court found that the Defendant unit used its own registered trademark “Mekexi” in combination with other person’s registered trademark “MAXAM”, which was misleading to the public and was also a criminal act of counterfeiting registered trademarks, accurately defining the constituent element of “misleading the public” in the case of counterfeiting registered trademarks. In addition, it discusses whether the behavior involved in the case belongs to branding processing, clarifies the behavior of “branding processing” and “trading of goods”, explores the constituent elements of branding processing, and has fully played a leading role in the judiciary of criminalizing and fighting the trademark infringement.

Picture: the batch of hair cream with the counterfeit registered trademark “MAXAM”