2019 Shanghai Courts Top 10 Cases on Judicial Protection of Intellectual Property Rights

2019 Shanghai Courts Top 10 Cases on Judicial Protection of Intellectual Property Rights

Table of Contents

I. Case on crime of KIEHL’S etc. counterfeiting the registered trademark and crime of selling commodities with counterfeit registered trademarks

II. Case of advance judgment on dispute over infringement upon invention patent

III. Case of dispute over infringement and unfair competition of copyright of "model teaching aid"

IV. Case on copyright infringement and unfair competition of fan-fiction

V. Case of dispute over copyright and unfair competition of the game Legend of Mir

VI. Case of dispute over liability for damage arising from a malicious intellectual property action

VII. Case of dispute over unfair competition involving video click farming

VIII. Case of dispute over copyright of cartoon image "Minions"

IX. Case on rejection of infringement accusation filed by malicious trademark squating against the prior mark

X. Case of administrative litigation on unfair competition in decoration of products named "Qingchuan Xiaoping"

I. Case on crime of KIEHL’S etc. counterfeiting the registered trademark and crime of selling commodities with counterfeit registered trademarks 

Case on crime of the Defendant Xu Zhenwei etc. counterfeiting the registered trademark and crime of the Defendant Wang Bin selling commodities with counterfeit registered trademarks [(2019) H03XC No.55 Criminal Judgment of Shanghai No.3 Intermediate People's Court, and Collegial Panel: Gu Junwei, Gao Weiping and Xu Yulan; (2018) HXZ No. 61 Criminal Verdict of Shanghai High People's Court and Collegial Panel: Zhang Bin, Zhang Ying and Zhang Benyong]

[Case Brief]

 L'ORÉAL Company and Japan Corporation DR.CL：LABO have successively and respectively registered the trademarks "KIEHL’S", "科颜氏" and "LaboLabo" on the cosmetics and other commodities in China. From 2015 to the period of the crime, Xu Zhenwei, for the purpose of unlawful profit-making, without the license of trademark owner, entrusted Huang Jiecheng to research, develop and produce the formula and raw materials of the counterfeit cosmetics of "KIEHL’S" and "LaboLabo", successively entrusted Lu Chengxue or through Zhong Hongbiao entrusted Ning Jiangfei to print the paste trademark and heat transfer printing trademark of fake "KIEHL’S", entrusted others to provide the bottles, bottle caps, paper boxes and other packing materials and in succession employed Zhang Tianzhu, Qin Meihua, Zhang Guibao and Xie Hui to fill in, label, pack, package, receive and ship the cosmetics of fake "KIEHL’S " and "LaboLabo" in the production base, and then Xu Zhenwei sold the cosmetics with the brand of fake "KIEHL’S " and "LaboLabo" to Wang Bin etc. for retail. The amount of commodities with fake registered trademark produced and sold by the Defendants Xu Zhenwei, Huang Jiecheng, Zhang Tianzhu, Zhang Guimao, Qin Meihua and Xie Hui reached more than RMB 4.63 million; the amount of commodities with fake registered trademark in the participation of the Defendant Lu Chengxue reached more than RMB 4.15 million; the amount of commodities with fake registered trademark illegally sold by Wang Bin reached more than RMB 4.10 million; and the amount of commodities with fake registered trademark in the participation of the Defendants Zhong Hongbiao and Ning Jiangfei reached RMB 450,000.

[Adjudication]

The court of first instance held that the Defendants Xu Zhenwei and other eight people, without the license of registered trademark owners, used the trademarks identical to the registered trademarks on the same commodities and sold those to the public, with particularly serious circumstances, and their behavior had already constituted the crime of counterfeiting the registered trademark. In a joint crime, the Defendants Xu Zhenwei and Huang Jiecheng were prime culprit, and they shall be given a punishment according to all the crimes that they participated in or organized or commanded; The Defendants Lu Chengxue, Zhang Tianzhu, Zhang Guibao, Qin Meihua, Xie Hui, Zhong Hongbiao, Ning Jiangfei participated in the joint crime and were accomplices and they shall be legally reduced punishment according to the criminal amount that they participated in. The Defendant Wang Bin sold the commodities that were evidently using the forged registered trademark, with huge amount of sales, thus his behavior had constituted the crime of selling commodities bearing counterfeit registered trademarks. The court of first instance, on the ground of the crime of counterfeiting registered trademarks, decided that the Defendant Xu Zhenwei be sentenced to four years and six months in prison and also be fined RMB 2.20 million; the Defendant Huang Jiecheng be sentenced to three years in prison and be fined RMB 330,000; the Defendant Lu Chengxue be sentenced to one year and ten months in prison and be fined RMB 80,000; the Defendants Zhang Tianzhu, Zhang Guibao, Qin Meihua, Xie Hui and Zhong Hongbiao be respectively sentenced to one year and four months and be fined RMB 70,000 to RMB 50,000; the Defendant Ning Jiangfei be sentenced to one year and four months, suspended for two years and fined RMB 50,000; on the ground of the crime of selling commodities bearing counterfeit registered trademarks, the Defendant Wang Bin be sentenced to four years and fined RMB 2.10 million; the documented infringing products and infringing trademarks shall be seized; the counterfeiting tools, communication tools etc. used in crime shall be confiscated; and the illegal gains of the Defendants shall be recovered.

After the judgment of first instance, the Defendants Xu Zhenwei and Lu Chengxue filed an appeal as they thought the sentences at first instance were excessive. The court of the second instance holds that, in the original judgment, the Defendants Xu Zhenwei, Lu Chengxue and the other eight people were recognized as having committed the crime of counterfeiting  registered trademarks and the Defendant Wang Bin was recognized as having committed the crime of selling goods with counterfeit registered trademarks, with clear facts, reliable and complete evidences, correct application of laws and proper sentencing criterion and legal trial procedure. Therefore, it rules that the appeal is rejected and the first instance decision is upheld.

[Typical Significance]

The trademarks "KIEHL’S", "科颜氏" and "LaboLabo" respectively are ones registered by the world famous cosmetic company L'ORÉAL Company and Japan Corporation DR.CL: LABO in China. The Defendants Xu Zhenwei etc. committed the "one-package" crimes of counterfeiting registered trademarks and of selling goods with counterfeit registered trademarks, with especially huge crime amount and bad social impact. The court, pursuant to the theory of joint crime and relevant legal provisions, precisely determined the amount of joint crime that the Defendants participated in, and based on their position and role in the joint crime, distinguished the principal and accessorial criminals, gave the punishment of personal liberty to the extent permitted by law, and imposed a fine according to more than 50% of and less than double the illegal operating amount, in which the conviction is accurate, the sentencing is appropriate, and the legitimate rights and interests of foreign trademark owners are strictly and equally protected. It is of exemplary and referential significance to the trial of such cases for the determination of the criminal character and crime amount of the Defendants, scientific distinction of principal and accessorial criminals and strict application of penalty punishment in this Case. After the judgment is pronounced in the second instance, the diplomatic note of French Embassy in China is sent to Shanghai High People's Court to showing gratitude, in which it held that the judgment of this Case is helpful to enhance the confidence of foreign companies in the business environment of China. The injured company L'Oreal (China) Co., Ltd. wrote a thank-you note, in which it held that the judgment of this Case witnessed the determination of Chinese judiciary authorities to punish severely intellectual property crimes, strengthen the intellectual property protection, safeguard the benefits of enterprises and consumers and optimize the business market.

Picture: Commodity Faking “KIEHL’S” Registered Trademark

II. Case of advance judgment on dispute over infringement upon invention patent 

VALEO SYSTEMES D'ESSUYAGE v. Xiamen Lukasi Automobile Parts Co., Ltd., Xiamen Fuke Automobile Parts Co., Ltd., and Chen Shaoqiang (case of dispute over infringement upon invention patent rights) [(2016) H73MC No.859 Civil Judgment of Shanghai Intellectual Property Court, Collegial Panel: Xu Fei, Yang Fuyu, Cheng Xiaoming; (2019) ZGFZMZ No.2 Civil Judgment of the Supreme People’s Court, Collegial Panel: Luo Dongchuan, Wang Chuang, Zhu Li, Xu Zhuobin, Ren Xiaolan]

[Case Brief]

VALEO SYSTEMES D'ESSUYAGE (hereinafter referred to as "VALEO") is the patentee of the patent for invention named "wiper connector and corresponding connecting device for motor vehicle". VALEO found that the wiper products manufactured, sold, promised to be sold by Xiamen Lukasi Automobile Parts Co., Ltd. (hereinafter referred to as "Lukasi"), Xiamen Fuke Automobile Parts Co., Ltd. (hereinafter referred to as "Fuke") and Chen Shaoqiang without permission fell into the scope of protection of the involved patent claims 1-10, which constituted an infringement upon its patent rights, and thus, it filed a lawsuit to the court and requested the court to order that Lukasi, Fuke and Chen Shaoqiang immediately stop infringing act and compensate for the economic losses and reasonable expenses with a total amount of RMB 6 million. During the trial of first instance, VALEO held that the charged infringing act was continuing, and seriously affected the sales of its patented products; the pending litigation prejudiced its marketing business and thus the application was made to the court that it shall first recognize the charged infringing products falling into the scope of protection of the involved patent claims 1-10 and order that Lukasi, Fuke and Chen Shaoqiang immediately stop infringing act.

[Adjudication]

The court of first instance held that it was more controversial for both parties that whether the charged infringing products fell into the scope of protection of the involved patent claims 1-10, and such controversy was core issue of this Case, and was directly related to relevant problems including whether Lukasi, Fuke and Chen Shaoqiang should assume liability for tort or not and the determination of the amount of compensation; VALEO applied to the court to first make identification with respect to such problem, which conforms to the law and is helpful to determine the necessity of further examination and recognition of a large amount of compensation evidence in this case so as to save the judicial resources, and which can be supported. It was determined upon trial that the charged infringing products fell into the scope of protection of the involved patent claims 1-3 and 6-10; Lukasi and Fuke conducted the production, sale and promise to sell the patent products; and that it was first judged according to law that Lukasi and Fuke immediately stop the said infringing act. After the judgment of first instance, Lukasi and Fuke filed an appeal, and the court of second instance affirmed the original judgment.

[Typical Significance]

This is the first case of Shanghai court that the judgment on the patent infringement is made in advance and the parties involved separately file an appeal with respect to the advance judgment, which attracts wide attention and has great influence both at home and abroad. In the patent infringement cases, the key point of trial is whether the charged infringing products fall into the scope of protection of the involved patent or not and the determination of amount of compensation. And in the cases that the patentee claims huge amount of compensation, it often takes more time to determine the amount of compensation, during which if the charged infringing act is continuing, the loss of the patentee would be further expanded. The first judgment trial mechanism is introduced in this case, and based on the ascertained facts. The judgment on whether the charged infringing products fall into the scope of protection of the involved patent, namely whether charged infringing products constitute an infringement will be made in advance, and the parties involved are allowed to separately file an appeal with respect to such judgment, which is in favor of timely stopping the infringing act and facilitates the settlement on the basis of confirmation of infringement, and it is of guiding and referential significance to similar cases.

Picture: Connector of Wiper Accused of Infringement

III. Case of dispute over infringement and unfair competition of copyright of "model teaching aid" 

Fischertechnik GmbH v. Shanghai Dongfang Teaching Aid Co., Ltd. and Shanghai Yaxun Intelligent Robot Technology Co. Ltd. (case of dispute over copyright infringement and unfair competition) [(2016) H0104MC No.24421 Civil Judgment of Shanghai Xuhui District People's Court，Collegial Panel: Sun Mi, Yu Shi, Han Guoqin; (2018) H73MZ No. 268 Civil Judgment of Shanghai Intellectual Property Court, Collegial Panel: Chen Huizhen, Shang Jiangang, Yang Fuyu]

[Case Brief]

The Plaintiff Fischertechnik GmbH is a German enterprise, which is engaged in the research and development, manufacturing and sale of creative combination models. Since 2000, its products have been entered into the market in China, which are mainly used for teaching practice of innovative education for college students and have certain popularity in the national university. In 2004, the copyright product containing the assembly components and installation instructions was launched, and the consumers can respectively build 30 three-dimensional models showing different mechanical structure principles in accordance with the assembly steps contained in the installation instructions and also can build modelling based on their own originality in addition to 30 models above. The charged infringing products manufactured and sold by two Defendants Dongfang Teaching Aid and Yaxun Technology also contained the assembly components and assembly manual that were the same as the copyright products. Part of completed three-dimensional modeling displayed by two Defendants at the exhibition was the same as the copyright products. Fischertechnik held that 30 three-dimensional models in the copyright products constituted the three-dimensional works; Both 30 display patterns of completed static models and 102 display legends of assembly components as set forth in the installation instructions constituted the product design drawings; The assembly steps of components constituted the sketch map. The conduct of two Defendants infringed upon the rights of authorship, reproduction and distribution of above works, and was enough to cause mistaking and confusion among the relevant public, which constituted unfair competition. Therefore, a lawsuit is filed to the court to request to order that two Defendants stop infringing act and compensate the Plaintiff for economic losses with a total amount of RMB 1 million.

[Adjudication]

The court of first instance held that 102 display legends of assembly components, 30 patterns of static models and 30 diagrams of assembly steps for components constituted the graphic works. The corresponding patterns as stated in the assembly manual of the charged infringing products constituted substantially the same as the above-mentioned works, and two Defendants' reproduction and release of the assembly manual constituted the infringement upon the rights of the reproduction, distribution and authorship of the above-mentioned works. Due to a lack of key external expression of "having built and completed", 30 three-dimensional models remained in the realm of thought and did not constitute works. The claim made by the Plaintiff with respect to the Defendants' unfair competition was also rejected. The court of first instance decided that two Defendants stop infringement and compensate for economic losses, property preservation application fee and reasonable expenses with a total amount of RMB 160,000, and other claims submitted by the Plaintiff be rejected.

After the judgment of first instance, Fischertechnik refused to accept the judgment as final and hence filed an appeal.  The court of second instance held that the judgment on unfair competition made by the court of first instance should be maintained. As regard to the copyright infringement, the involved 30 three-dimensional models which can be fixed in a tangible way and also conforms to the key components of model works shall be recognized as the model works; The Defendants without the permission of the Plaintiff, manufactured and sold the involved commodities in the same way, and they substantially exercised the right of permission to reproduce 30 model works, which infringed upon the right of reproduction in 30 model works enjoyed by the Plaintiff. On this basis, the judgment on amount of compensation in this case shall be also amended. The court of second instance judged that two Defendants stop infringement and compensate for RMB 500,000 of economic losses and RMB 75,000 of the property preservation application fees and other reasonable expenses, and other claims of Fischertechnik shall be rejected.

[Typical Significance]

This case involves the problem of intellectual property protection of building-type model teaching aids. The court explores the problems, such as the originality of model works and their key components, relation between the plane graphic works and three-dimensional model works and judgment of relevant infringing acts. The judgment of second instance of this case specifies requirements for judicial determination of model works and reveals the essence of the Defendants' infringing acts, which has certain reference value to the trial of similar cases.

Pictures: Model Picture and Built Model of the Obligee

IV. Case on copyright infringement and unfair competition of fan-fiction 

Shanghai Xuanting Entertainment Information Technology Co., Ltd. v. Beijing Xinhua Pioneer Culture & Media Co., Ltd., Beijing Xinhua Pioneer Publishing Technology Co., Ltd. Qunyan Press, Shanghai XinHua Media Co., Ltd. (case of dispute over copyright infringement and unfair competition) [(2015) PMS (Z) CZ No.838 Civil Judgment of Pudong New Area People's Court of Shanghai, Collegial Panel: Xu Jun, Du Lingyan, Zhang Yi]

[Case Brief]

The Defendant Zhang Muye wrote a series of novels, "Ghost Blows Out the Candle" and signed an agreement with the Plaintiff Xuanting in April 2006, under which the property right in the copyright of the said novel would be transferred to the Plaintiff in the whole. In July 2011, the Plaintiff signed a copyright licensing agreement with the third party Wanda, under which the Plaintiff granted the rights of reproduction, adaptation and filming to the Ghost Blows Out the Candle II in the series novels to the third party for use. The third party then adapted and filmed the movie Mojin: The Lost Legend based on this novel. The movie Mojin: The Lost Legend adapted from the Ghost Blows Out the Candle was released on December 18, 2015 and won the good public praise and box office. On April 12, 2014, Zhang Muye and the Defendant Pioneer Publishing signed an agreement with respect to the novel Mojin Captain (hereinafter referred to as the Charged Infringing Book) under which Zhang Muye granted to Pioneer Publishing the exclusive rights including the rights of publishing and releasing and right of sublicense. On September 27, 2015, Pioneer Publishing authorized Qunyan Press to publish and distribute the above novel in the form of paper books. On November 23, 2015, the third party granted the poster of the movie Mojin: The Lost Legend to Pioneer Culture & Media to be used for the publicity of the Charged Infringing Book. The Defendant Pioneer Culture & Media, after obtaining the said authorization, designed the cover of Charged Infringing Book, and the Defendant Pioneer Publishing was responsible for the production of the verbal content of the Charged Infringing Book, and after such two companies completed the production of the cover and verbal content of the Charged Infringing Book, the same would be delivered to the Defendant Qunyan Press for publication. Since December 1, 2015, the Charged Infringing Book has been sold on JDcom, Dangdang and other online sales platforms and meanwhile, was sold in paper books in all major bookstores in China.

The Plaintiff held that the Defendants wrote, published and distributed the Charged Infringing Book by extensive using the originality expression elements of Plaintiff's works, which infringed upon the copyright of the Plaintiff and constituted the unfair competition. In addition, the Defendants using the words such as "Ghost Blows Out the Candle (鬼吹灯)", "Hu Bayi (胡八一)", "Shirley Yang (shirley杨)", and "Wang Pangzi (王胖子)" at the time of publicizing and popularizing the Charged Infringing Book and relevant advertising and promotion of the movie Mojin: The Lost Legend constituted the act of unfair competition of unauthorized using the names peculiar to Plaintiff's well-know commodity and false publicity. Thus, a lawsuit was filed to request to order that the Defendants immediately stop infringement; the Defendants Pioneer Culture & Media, Pioneer Publishing, Qunyan Press and Zhang Muye publish the statement to eliminate the influence and jointly indemnify the Plaintiff for economic losses and reasonable expenses totaling RMB 20 million.

[Adjudication]

The court of first instance held that, although the Charged Infringing Book used the same character names, relationships, tomb rules and other elements as the Plaintiff's works, the Charged Infringing Book had its own independent plot and expression content and it forms a brand-new story by combining these elements with its own plot and the content of such story was not the same as or similar to that of the Plaintiff's works in terms of plot, without any continuation relationship, which did not constitute the infringement upon the Plaintiff's copyright. First, the character images and other elements claimed by the Plaintiff in this case were created by the author himself, namely the Defendant Zhang Muye, and in the absence of clear agreements to exclude Zhang Muye's corresponding rights and interests, Zhang Muye, as the author of the original work, shall have the right to use these elements in his original novel to create a new works.

Although the use of poster of the movie Mojin: The Lost Legend in the cover of the Charged Infringing Book was authorized by the film's producer, the Defendants directly or indirectly passed on to the relevant public the information on the relevance between the Charged Infringing Book and the movie Mojin: The Lost Legend, by means of the popularity of the movie Mojin: The Lost Legend, during a particular period of hot showing of the movie, whether by way of the direct combination of the Charged Infringing Book and movie posters or trailer videos, or by  releasing the relevant content on watching movies with novels, or by marking the book with information about the movie release, etc., and it easily made the relevant public to mistake the Charged Infringing Book for the original work of the film Mojin: The Lost Legend or in relation to the content of the original work, which might cause the consequence of replacing the position of the original novel of the film, and cause substantial damage to the interests of the Plaintiff so as to constitute misleading false publicity.

The court of first instance thus ordered that the Defendants Xinhua Culture, Pioneer Publishing and Qunyan Press stop false publicity and publish a statement to eliminate the effect; the Defendant Xinhua stop selling the alleged books; the Defendants Pioneer Culture & Media and Pioneer Publishing compensate Xuanting for economic losses at an amount of RMB 900,000, among which Qunyan Press shall be jointly and severally liable for RMB 600,000, and three Defendants jointly assume the reasonable expenses of RMB 106,000; the remaining claims of the Plaintiff shall be rejected.

After the judgment of the first instance, the Plaintiff and the Defendants Pioneer Culture & Media, Pioneer Publishing, Qunyan Press refused the same and they filed an appeal. Afterwards, the parties withdrew the appeal to the court of second instance, and the judgment of first instance remains in force and effect.

[Typical Significance]

This is the case of dispute over copyright infringement and unfair competition of the fan works, which involves the determination of the protective range of characters in literary works. This case received wide attention after the judgment. The judge of this case pointed out that the characters in literary works were often just a medium to evolve the plot and a tool for the author to narrate the story, and the character names and relationships that left the plot of the work were hardly protected by copyright law as the expression. To judge whether the use of character images in original works at the time of writing a new work is proper and constitutes the unfair competition, the factors including the identity of the user, the purpose of use, the nature of the original work, the potential impact of use on the original work market shall be taken into consideration; on the one hand, the legitimate rights and interests of original work shall be fully respected; on the other hand, the freedom of creation and criticism shall be also safeguarded.

Picture: Cover Page of Book Accused of Infringement

V. Case of dispute over copyright and unfair competition of the game Legend of Mir 

Wemade Entertainment Co., Ltd., ChuanQi IP Co., Ltd., Actoz Soft Co., Ltd. v. Shanghai Xinshuo Network Technology Co., Ltd., Zhejiang Huanyou Network Technology Co., Ltd., Shanghai Kaiying Network Technology Co., Ltd. and  St·Hero' Network Technology Co. Ltd. (case of dispute over copyright infringement and unfair competition) [(2017) H0107MZ No.24009 Civil Judgment of Shanghai Putuo District People’s Court, Collegial Panel: lu Jun, Zhang Jialu, Qian Chunlin]

[Case Brief]

The game Legend of Mir has been continuously operated for more than ten years in the market of China, which has a large number of players, with a high popularity and reputation, and its copyright owners Wemade Entertainment Co., Ltd. (hereinafter referred to as "Wemade") and ChuanQi IP Co., Ltd. (hereinafter referred to as "Chuanqi IP") alleged that dynamic game scene of the Game constitutes the works created in a manner similar to filmmaking. In May 2017, Wemade found that the mobile game The Legend of the King developed and operated by Shanghai Xinshuo Network Technology Co., Ltd. (hereinafter referred to as "Xinshuo") and its affiliated companies was totally identical and highly approximate to the Legend of Mir with respect to the role setting, images, attributes, skills, weapons, clothing, jewelry, treasures, monsters etc. and fully plagiarized the game form, content, core elements etc. which infringed upon the right of adaptation, right of dissemination of information network and other copyrights of the Game Legend of Mir; Meanwhile, in the relevant promotion, the Game also used the "official legal version", "the strongest legend", "review the classic" and other confusing statements, which was suspected of constituting the unfair competition of false publicity. In September 2017, Wemade and Chuanqi IP filed a lawsuit for this case, requesting Xinshuo etc. to stop infringing act and jointly and severally indemnified the Plaintiff for the economic losses of RMB 100 million and reasonable expenses of more than RMB 310,000.

[Adjudication]

The court of first instance held that, the Legend of Mir, as a role-playing online games, contained a plenty of original game components and promoted the game narrative plot through continuous dynamic images; the players can experience a series of game events and scenarios such as character selection, growth, and battle, and get an audio-visual experience; therefore, the overall operation scene of the Game Legend of Mir constituted the film-like works, and its originality was embodied in the combination, choice, selection, arrangement of character profession, parameter setting, appearance, weapons, costumes and skills and organic combination of the individual elements and other elements corresponding to function and distribution. And based on the general spatial layout habits, functional design needs, players operating habits and other forms of the game general design, it was not protected by the copyright law. By comparing, the mobile game The Legend of the King was substantially similar to the game Legend of Mir in terms of the names and appearances of specific elements such as characters, props, skills, NPC, monsters, scenes, maps, buildings, and core expressions including corresponding properties, parameters, scenes, interfaces, skills, and function settings, and can advance the game narrative plot by way of dynamic modes such as interface conversion, function design, continuous operation, continuous screen, which has reached the standard of film-like substantial similarity. Although the mobile game The Legend of the King contained new elements, this did not affect the determination that it constituted an infringement upon the right of adaptation and the right of information network dissemination, because of its use of misleading publicity terms in the promotion, which constituted unfair competition behavior of false publicity. In respect of indemnification, by reference of the flow income of the mobile game The Legend of the King and in combination with the factors including types and popularity of the works involved, the actual operating subjects and operating conditions, the mode of use of the infringement by the Defendants, duration, research and development costs, the degree of contribution of intellectual property factors, the proportion structure of operating costs, the degree of conversion of current revenue and profit, the average profit margin, the profits gained by the infringers were identified to be obviously in excess of the maximum amount of legal compensation and the determination was made at its discretion that they jointly and severally indemnified the right owners for the economic losses of RMB 25 million and reasonable expenses of RMB 250,000. After the judgment of first instance, the parties involved filed no appeal, and the judgment of first instance cams into effect.

[Typical Significance]

In recent years, the dispute over copyright infringement of online game increasingly receives attention from the society, and the definition of the type of game works, the delineation of the scope of copyright protection, the comparison method of substantial similarity and the calculation of damages are all hot and difficult issues in judicial practice. In this case, the court determined that the overall operating pictures of the role-playing game involved in the case constituted a film-like work based on various game elements and plot progression and identified that the original contents in it were protected by copyright law, having excluded the general design part of the game and having given consideration to the balance between copyright protection and the development of game industry; In aspect of determination of substantial similarity, in addition to the comparison of features of static elements, the emphasis is also put on the comparison method and standard of dynamic pictures of film-like works. In aspect of amount of compensation, with the market value of intellectual property as the guidance, comprehensively considering the game industry profit model and other market factors, the high compensation made above the maximum amount of the legal compensation reflects the strength of the judicial protection of intellectual property rights.

Picture: Mobile Game Accused of Infringement

VI. Case of dispute over liability for damage arising from a malicious intellectual property action 

Shenzhen Jooan Technology Co., Ltd. v. Zhang Zhimin, Shanghai KaiCong Electronic Technology Co., Ltd. (case of dispute over liability for damage arising from a malicious intellectual property action and from the application for property preservation in litigation) [(2017) H73MC No.379 Civil Judgment of Shanghai Intellectual Property Court, Collegial Panel: Hu Mi, Xu Fei and Wu Huili; (2019) HMZ No.139 Civil Judgment of Shanghai High People's Court, Collegial Panel: Tang Zhen, Tao Ye and Zhu Jiaping]

[Case Brief]

The Defendant Zhang Zhipin was the former legal representative of Kaicong, and he made an application named the design patent of "surveillance camera (S421C)" (hereinafter referred to as the "Alleged Patent") to China National Intellectual Property Administration on January 9, 2014, and was granted the authorization on June 25, 2014. On January 6, 2016, Zhang Zhimin filed a lawsuit against the Plaintiff Jooan to Shanghai Intellectual Property Court with respect to the dispute over infringement upon design patent right (hereinafter referred to as "Case No. 18"), asserting that "Jooan 1200-Pixel Surveillance Camera" infringed upon its alleged design patent right and requesting through the lawsuit to compensate for the economic losses of RMB 10 million and applying to the court for the property preservation. On January 25 of the same year, Shanghai Intellectual Property Court ruled to freeze RMB 10 million in Jooan's bank accounts and Alipay accounts. On July 29 of the same year, Shanghai Intellectual Property Court made the judgment of first instance that the claims of Zhang Zhimin was rejected and after the judgment came into force, the court relieved the above-mentioned property preservation measures in August of the same year. On September 18 of the same year, the Patent Reexamination Board of China National Intellectual Property Administration made a decision on the examination of a request for invalidation to declare that all the patent rights involved shall be invalid.

Jooan filed a lawsuit to the court, asserting that as early as December 2013, the Defendant Kaicong had publicly sold surveillance camera products of "421C Kaicong". Having known that the 421C surveillance camera had been publicly sold, the Defendant Zhang Zhimin still applied for the design patent on this basis, filed a litigation of patent infringement and applied for property preservation, which, in the name of protecting patent rights, attacked commercial competitors and caused huge economic losses to the Plaintiff Jooan. Thus, the court was requested to order that: 1. two Defendants jointly and severally compensate the Plaintiff for the economic losses of RMB 1 million; 2. two Defendants make public apology to the Plaintiff and eliminate the impact.

[Adjudication]

The court of first instance held that, Zhang Zhimin, having known perfectly well that the involved design patent lacked the right basis, still instituted a litigation of patent infringement to the court, causing economic losses to Jooan, which belonged to abuse of litigation rights and constituted a malicious intellectual property litigation. In the judgment of first instance, the Defendant Zhang Zhimin shall indemnify the Plaintiff Jooan for the economic loss totaling RMB 254,000. After the first-instance judgment, the Defendant Zhang Zhimin refused to accept this judgment as final and filed an appeal.

The court of second instance held that, Kaicong had publicly sold the 421C Kaicong Camera basically identical to the Patent prior to the date of patent application, thus, the Alleged Patent was essentially invalid from the outset because of the lack of novelty. Zhang Zhimin, as the legal representative of Kaicong, should have known the prior sale of 421C Kaicong Camera, and still filed patent infringement action with this invalid patent, which belonged to the fact that he was fully aware that his claim lacks basis. Kaicong and Jooan are competitive relationship, and Zhang Zhimin claims in the Case No. 18 as much as RMB 10 million, which obviously exceeds the contribution of design patent to product profits, even though the infringement is established, it will not be fully upheld by the court, and freezing Jooan's funds of RMB 10 million will cause unnecessary losses to Jooan, thus the claim for high compensation proposed by Zhang Zhimin apparently has illegitimate purposes other than safeguarding rights, and also has obviously improper litigation behavior against good faith. To sum up, Zhang Zhimin filing the action of Case No. 18 has subjective malice and causes economic losses to Jooan, which constitutes malicious action.  The appeal was rejected in the judgment of second instance and the original judgment was upheld.

[Typical Significance]

This is a first case that the courts of Shanghai rules that it constitutes malicious action of patent infringement. The court clarifies the boundary between the act of proper protection of intellectual property and that of maliciously infringing upon others in the guise of intellectual property action through accurately mastering the judgment rules of "subjective malice", punishes the behavior of maliciously attacking the competitors by means of intellectual property action and further enhances the judicial guidance in regulating market operations so as to escort the good faith operation of the innovative subjects in the market. The judgment of this case has good legal effects and social effects, which is of importance to promote the construction of good faith in litigation and strengthen the awareness of good faith in litigation.

Picture: Patented Product Publicly Sold Prior to the Date of Application for Patent

VII. Case of dispute over unfair competition involving video click farming

Beijing IQIYI Science & Technology Co., Ltd. v. Hangzhou Feiyi Information Technology Co., Ltd., Mr. Lv and Mr. Hu (case of dispute over unfair competition) [(2017) H0104MC No.18960 Civil Judgment of Shanghai Xuhui District People's Court, Collegial Panel: Wang Limin, Yu Shi, Sun Mi; (2019) H73MZ No.4 of Shanghai Intellectual Property Court, Collegial Panel: Chen Huizhen, He Yuan, Yue Qimu]

[Case Brief]

Hangzhou Feiyi Information Technology Co., Ltd. (hereinafter referred to as "Feiyi") is a company that specializes in providing the service of clicking the video view counts, and Feiyi, together with Lv and Hu, through division of labour, by making use of multiple domain names, constantly changing the access of IP addresses and other ways, continuously visited the videos on the website of IQIYI, through which within a short period of time the video view counts were quickly increased to achieve results of fake video views for the purpose of seeking profits. Beijing IQIYI Science & Technology Co., Ltd. (hereinafter referred to as "IQIYI") alleged that Feiyi's behavior had seriously damaged its legal rights and interests, and disrupted the fair competition order of the video industry; the behaviors of Feiyi, Mr. Lv and Mr. Hu constituted the joint infringement, and the court was requested to order that three Defendants immediately stop the act of unfair competition, publish a statement to eliminate negative effects, and jointly and severally make compensation to IQIYI for economic loss of RMB 5 million. The three Defendants argued that the business scope and profit model of IQIYI and Feiyi were completely different, without competitive relationship, and the involved behavior of clicking was not prohibited in the Anti-unfair Competition Law; thus Feiyi's behavior of making fake video views did not constitute the unfair competition.

[Adjudication]

The court of first instance held that, the three Defendants damaged the view counts of IQIYI website by way of interference through technical means, which was in violation of the recognized business ethics, damaged the legal rights and interests of IQIYI and consumers, and constituted the unfair competition, thus based on the provisions in Article 2 of the Anti-unfair Competition Law, it ordered that Feiyi, Mr. Lv and Mr. Hu jointly and severally make compensation to IQIYI for RMB 500,000, and publish a statement to eliminate negative effects. After the judgment of first instance, Feiyi, Mr. Lv and Mr. Hu refused to accept the judgment as final and filed an appeal. The court of second instance held that, the involved behavior of making fake video views belonged to the unfair competition of "false propaganda" as set forth in Article 9 of the Anti-unfair Competition Law. Based on the ascertained facts, Feiyi, Mr. Lv and Mr. Hu jointly conducted the involved behavior of making video views through division of labor, and they shall assume the joint and several liability. The amount of compensation of RMB 500,000 determined by the court of first instance at its own discretion was reasonable and shall be upheld. Whereby, the court of second instance ruled to reject the appeal and affirm the original judgment.

[Typical Significance]

The behavior of video click farming is a new type of competitive means in internet industry. The judgment of second instance of this case clarified that: when applying the law, first, to determine the nature of the specific behavior; second, to consider whether any specific provision in Chapter II of the Anti-unfair Competition Law can correspond to such behavior and third, to consider whether Article 2 of the Anti-unfair Competition Law is applicable. The behavior of making fake video views substantially is to mistakenly enhance the public's awareness of the quality, quantity and attention of network products, for the purpose of attracting the consumers, which shall be regulated under Article 9 ("False Propaganda") of the Anti-unfair Competition Law. This case has reference value to similar cases in terms of the exploration of applicable conditions of general provisions in the Anti-unfair Competition Law, qualitative of behavior of making fake video views and relevant judgment thinking of anti-unfair competition cases.

Picture: Homepage of the Defendant’s Website

VIII. Case of dispute over copyright of cartoon image "Minions" 

Universal Pictures (Shanghai) Trading Co., Ltd. v. Shanghai Zunan Tonghe Culture Development Co., Ltd., Yongkang Xinshidai Industry Co., Ltd. (case of dispute over copyright infringement) [(2017) H0104MC No.27239 Civil Judgment of Shanghai Xuhui District People's Court，Collegial Panel：Yu Shi, Xu Hao, Liu Peiyao]

[Case Brief]

The cartoon image "Minions" and relevant fine art works became the current hot, popular copyright IP with the success of the animated film series of "Minions" (including the Despicable Me, Despicable Me 2, Minions and Despicable Me 3). The copyright owner Universal City Studios LLC and its authorized subsidiary Universal Pictures (Shanghai) Trading Co., Ltd. also carried out close cooperation with many commercial entities in China in order to further explore the market value of the IP "Minions". As the former partner of the copyright owner for the cartoon image "Minions", Shanghai Zunan Tonghe Culture Development Co., Ltd. (hereinafter referred to as "Zunan"), on the one hand, for the purpose of obtaining the transaction opportunity, made an utmost effort to recommend to the copyright owner Yongkang Xinshidai Industry Co., Ltd. (hereinafter referred to as "Xinshidai") which was proposed to be the manufacturer of vacuum cup of "Minions", and conducted intermediary consultation and managed in an elaborate manner the necessary factory acceptance and audit for the latter; on the other hand, for the purpose of profit-making in an efficient way, without the authorization, namely, in its own name rashly signed with Xinshidai the contracts on consignment of manufacturing and sales of vacuum cup of "Minions" on a basis of "closed loop of production and sales", and issued a certificate of authorization. And Xinshidai, in the knowledge that Zunan had no rights to sign the said agreements and issue the certificate of authorization, manufactured in great batch and sold the vacuum cup of "Minions" and widely sold the same on various e-commerce platforms, based on the motivation to seize the market quickly, for profit and convenience, deliberately beyond the scope of the contracts on consignment of manufacturing and sales signed with Zunan, with the help of false authorization and ignoring the fact that it had not passed through factory acceptance and audit conducted by the copyright owner. Meanwhile, it also participated in a large scale of national exhibitions to conduct exhibition and marketing on the vacuum cup of "Minions" which was suspected of infringement. Based on the above-said facts, Universal Pictures (Shanghai) Trading Co., Ltd., with the authorization of the copyright owner Universal City Studios LLC, filed a lawsuit in this case, requesting to order that Zunan and Xinshidai stop infringing the copyright of the fine art works of "Minions" and make joint compensation to the Plaintiff for economic losses and reasonable expenses totaling RMB 500,000, publish a statement in the public media to eliminate impacts and destroy the production mould, finished products, semi-finished products and their packages which are used to manufacture the infringing products.

[Adjudication]

The court of first instance held that, the series of behaviors arbitrarily conducted by Xinshidai without the authorization of the copyright owner constituted the infringement upon the rights of reproduction, exhibition and distribution to the animated images and static art works of "Minions"; The unauthorized action conducted by Zunan and the specific infringing act of Xinshidai objectively combined and matched with each other, and led to the same consequence of damage, which constituted the joint infringement. Whereby, it was ruled that Xinshidai stop infringement and make compensation for economic losses and reasonable expenses totaling RMB 480,000 and Zunan assume joint and several liability for compensation in the range of RMB 460,000; Zunan make compensation for economic losses and reasonable expenses totaling RMB 20,000 with respect to its own behavior of infringing upon copyright on a separate basis. After the judgment, the parties involved filed no appeal, and the judgment of first instance came into effect.

[Typical Significance]

The tort pattern of this case is more complex, and the subjective faults of two Defendants are different in aspect of intension and extension, without clear common connection, and the appearance of infringement is reflected in the mutual engagement of act and omission. The judgment of this case sorts out and judges such special common tort pattern, and on a reasonable and fair basis, divides the responsibilities of different infringers, defines the boundary of responsibilities and fully protects the involved copyright, which has a certain significance of reference to the beneficial exploration of the joint tort theory.

Picture: Some Fine Art Works of the Plaintiff

IX. Case on rejection of infringement accusation filed by malicious trademark squatting against the prior mark 

Ambitmicro Technology Limited v. AMBIQ MICRO, INC., Fujitsu Semiconductor (Shanghai) Co., Ltd. (case of dispute over trademark infringement) [(2018) H0115MC No. 46794 Civil Judgment of Pudong New Area People's Court of Shanghai, Collegial Panel: Jin Minzhen, Ni Hongxia, Ye Jufen]

[Case Brief]

The Defendant AMBIQ MICRO, INC. was founded in the United States on January 20, 2010, and applied to US Patent and Trademark Office for registering the trademark "AMBIQ MICRO" (Class 9 Semiconductor Device) on August 19, 2012, which was granted registration on April 30, 2013. Since January 2014, the company has been selling its integrated circuit products through several distributors in China, including the Defendant Shanghai Fujitsu. The existing evidences proved that prior to December 31, 2015, one distributor's five-month payments for goods reached more than USD 60,000 and another distributor imported the charged products for 4 times within 4 months, with the total value reaching about USD 350,000, which received reports from several industry journals and websites.

On December 18, 2015, the Plaintiff Ambitmicro Technology Limited was incorporated in Hong Kong. On December 31 of the same year, the Plaintiff applied to the Trademark Office in China for registering No.18766213 trademark "Ambitmicro", which was granted registration on February 7, 2017, and approved to be used on computer storage devices, computer hardware, chips (integrated circuits), semiconductor devices and other commodities in Class 9. The Plaintiff did not operate upon its establishment, and since May 31, 2017, it began repeatedly to send warning letters to AMBIQ MICRO, INC. and its investors and several distributors, alleging that the Defendant's "Ambiq Micro" chips and other products infringed upon the Plaintiff's exclusive right to use registered trademark. In July of the same year, AMBIQ MICRO, INC. filed the request for invalidation of the Plaintiff's trademark to the Trademark Evaluation Board on the ground of malicious registering action.

In July 2018, the Plaintiff filed the litigation of this case, arguing that "Ambiq Micro" chips and other products manufactured and sold by such two Defendants infringed the Plaintiff's exclusive right to use registered trademark, and requesting to order the two Defendants to stop the infringement; AMBIQ MICRO, INC. should make compensation of RMB 400,000, in which Shanghai Fujitsu should take the joint and several liability for RMB 50,000.

[Adjudication]

The court of first instance held that, AMBIQ MICRO, INC. began to sell the charged products in China through distributors since January 2014, and the Plaintiff had certain sales volume and media coverage before it applied for registering the alleged trademark and conducted publicity in many ways, and the charged trademark has a certain influence in the integrated circuit industry. The charged products were technology-intensive products, and the Plaintiff did not have the technical skills in such industry, and applied for registration of the alleged trademark in the month in which it incorporated, and three months after the trademark registration, it began to send a lot of infringement warning letters specifically against AMBIQ MICRO, INC. and make complaints to the supervision department, and it can be seen that its application for the registration of the alleged trademark was deliberately against AMBIQ MICRO, INC. The Plaintiff did not operate for a long term upon its establishment, and its application for the registration of the alleged trademark did not have a real intention to use, and it did not actually use such trademark; thus, its application for the registration of trademark was for an improper purpose; the behaviors that the Plaintiff distributed the infringement warning letters in batches, made administrative complaints and filed the lawsuit of this case belonged to the abuse of rights. Whereby, the court affirmed that the Plaintiff's application for registration and exercise of trademark rights violated the principle of good faith; thus, it ruled to reject its claims. After the judgment, both parties filed no appeal.

[Typical Significance]

This is a typical case in which the prior use defense is used to regulate trademark malicious squatting. The court effectively combats the trademark malicious squatting in violation of good faith by rejecting the Plaintiff's claims, and reflects China's judicial attitude towards equal protection of international and domestic rights subjects and enhances the confidence of foreign companies to invest, produce and operate in China.

Picture: “Ambiq Micro” Chip of the Defendant

X. Case of administrative litigation on unfair competition in decoration of products named "Qingchuan Xiaoping" 

Case of Shanghai Xiaoping Wine Sales Co., Ltd.'s refusal of decision of administrative penalty of Shanghai Pudong New Area Market Supervision Administration and decision of administrative review of Pudong New Area People's Court of Shanghai [(2019) H0115XC No.245 Administrative Decision of Pudong New Area People's Court of Shanghai, Collegial Panel: Xu Jun, Ni Hongxia, Lu Guangyi]

[Case Brief]

As early as 2011, the third party Guyuelongshan has successively developed the series products of "Qingchuan (清醇)" and obtained No. 7582830 registered trademark of "Qingchuan Junlang (清醇俊郎)" in Category 33 Commodity "Yellow Rice Wine" on April 7, 2012. Such Yellow Rice Wine is mainly sold in original Nanhui District of Shanghai and the cumulative sales volume reached 3.3 million bottles for 2016 and 2017. The Plaintiff Shanghai Xiaoping Wine Sales Co., Ltd. (hereinafter referred to as "Xiaoping Wine") entrusted the manufacturer to produce the light yellow wine of "Qingchuan Xiaoping (清醇晓萍)" in December 2017, and requested the manufacturer to design such wine by reference to the labeling style of light yellow wine of "Qingchuan Junlang (清醇俊郎)" and produce the same product upon its approval, and subsequently such wine was sold in the original Nanhui District of Shanghai. The Defendant, the Municipal Supervision Bureau of Pudong conducted the investigation after receiving the whistle-blowing from the third party Guyuelongshan, and recognized that: the light yellow wine of "Qingchuan Junlang (清醇俊郎)" had certain influence in Nanhui Area, and the package and decoration of the light yellow wine of "Qingchuan Xiaoping (清醇晓萍)" was similar to that of the light yellow wine of "Qingchuan Junlang (清醇俊郎)", and the behavior of the Plaintiff violated the provisions in Article 6(I) of the Anti-unfair Competition Law, and thus, it made decisions to order to stop the illegal behaviors, confiscate 272 cases of the light yellow wine of "Qingchuan Xiaoping (清醇晓萍)" and impose an administrative penalty of RMB 97,758. The Plaintiff Xiaoping Wine refused the judgment and after the decision of administrative penalty was maintained upon review of the Defendant the Government of Pudong New Area, it filed an administrative litigation to the court against the Municipal Supervision Bureau of Pudong and the Government of Pudong New Area.

[Adjudication]

The court of first instance held that, the existing exhibits proved that before the Plaintiff entrusted others to manufacture the alleged yellow wine of "Qingchuan Xiaoping (清醇晓萍)", the yellow wine of "Qingchuan Junlang (清醇俊郎)" from the third party has received the recognition of relevant public in the specific area through a long-term sales. The label of the yellow wine of "Qingchuan Junlang (清醇俊郎)" has certain aesthetic perception in design and upon long-term and stable use, plays the role in identifying the source of goods. Therefore, the decoration of the yellow wine of "Qingchuan Junlang (清醇俊郎)" belongs to the decoration with certain influence. The commodity decoration that has certain influence can be protected within the geographical range of its influence. However, the bottles of the yellow wine of "Qingchuan Junlang (清醇俊郎)" are common wine bottles, and do not generate the characteristic in identifying the source of goods in the process of use; thus, they do not belong to packages with certain influence. As regard to the light yellow wine of "Qingchuan Xiaoping (清醇晓萍)" of the Plaintiff, the shape, size, font, color, color assortment and other aspects of such product label are basically identical to those of the yellow wine of "Qingchuan Junlang (清醇俊郎)", especially the use of words "Qingchun (清醇)" in a prominent manner on the label; the Plaintiff used the words and non-routine fonts that are completely identical to those of the third party, and thus, the difference between the product decorations of the Plaintiff and the third party in the visual effect is not obvious, and it is extremely easy for consumers to confuse such two products, and they should be identified as approximate. And the Plaintiff has the subjective intention of "free rider". To sum up, the behavior of the Plaintiff belongs to that of using others' commodity decoration with certain influence on a unauthorized basis. The decision of administrative penalty and the reconsideration decision made by two Defendants against the Plaintiff are legal and appropriate. Thus, it is ruled to reject the claims of the Plaintiff Xiaoping Wine. After the judgment, neither Party filed an appeal.

[Typical Significance]

This case involves the judgment on the geographical area of products with "certain influence" in the Anti-unfair Competition Law, and the judgment of this case specifies that the "certain influence" as stipulated in the Anti-unfair Competition Law does not request that the commodity has to be nationally known, while such commodity can be known to relevant public in certain territory, which means that it has "certain influence"; such commodity is protected by the Anti-unfair Competition Law within such certain territory. In this case, the court legally supervises and supports the administrative organs' active performance of their duties, practically safeguards the administrative order of intellectual property rights and effectively promotes the administrative protection of intellectual property rights. Meanwhile, the disposal of this case has a positive significance to curb the unfair competition behavior of "free riders" and purify the market operation order.

Picture: Accused Yellow Rice Wine Produced and Sold by the Plaintiff