*AI-generated translation, for reference only.

[Keywords]

Civil; Computer software copyright; Substantive similarity; Obstruction of evidence preservation; Adverse consequences; Damages compensation

[Judgment Digest]

1. In disputes over infringement of computer software copyrights, if the software copyright owner can provide evidence to prove that the accused infringing software has the same name, version number, rights holder information, or other distinctive information as the copyrighted software, or that the software interface design is highly similar, the court generally does not need to compare the software codes to determine that the two software are substantially similar，unless the accused infringer presents sufficient evidence to the contrary to rebut such finding.

2. In disputes over infringement of intellectual property rights, if the accused infringer uses violence, threats, or other methods to obstruct the court's evidence preservation, the court may make a factual presumption unfavorable to the accused, including determining that the products that were not lawfully preserved constitute infringement, and when determining the specific amount of compensation, considering the act of obstructing evidence preservation as an infringement circumstance. 

[Case Facts]

Xi [REDACTED] Industrial Software Co., Ltd. (hereinafter referred to as Xi Software Company) claimed that it was the copyright owner of the NX series of computer software (hereinafter referred to as the involved software). This series of software is computer software for the manufacturing industry, which can be used for 3D design, digital simulation testing and auxiliary manufacturing. Guangzhou Wo [REDACTED]Mould Co., Ltd. (hereinafter referred to as Wo Mould Company) mainly engages in the manufacturing of mould products. It copied and commercially used the involved software of Xi Software Company without permission, infringing upon the copyright of the involved software of Xi Software Company, and should bear the legal responsibility of ceasing infringement and compensating for losses. Xi Software Company claimed that the actual losses should be determined by multiplying the number of infringing software by the price of the genuine subject software. Therefore, it filed a lawsuit with the Guangzhou Intellectual Property Court, requesting that Wo Mould Company cease infringement and compensate for economic losses and reasonable expenses for legal maintenance of 2,712,827 yuan (the same currency).

According to Xi Software Company's application, the Guangzhou Intellectual Property Court went to Wo Mould Company for evidence preservation and detailed explained to the on-site management personnel of the company the proposed preservation measures and the legal consequences of refusing to cooperate with evidence preservation. After on-site statistics, there were 26 computers in the office of Wo Mould Company. After the Guangzhou Intellectual Property Court completed the preservation of 17 computers and found that 9 of them were installed with 13 sets of NX series computer software, Wo Mould Company suddenly took countermeasures, obstructing the evidence preservation work by refusing to open some computers and cutting off power supply, resulting in the forced termination of the evidence preservation work by the Guangzhou Intellectual Property Court, and the remaining 9 computers were not completed with evidence preservation. During the first instance trial, the Guangzhou Intellectual Property Court admonished Wo Mould Company for obstructing evidence preservation, and Wo Mould Company also submitted a "Self-Examination Letter" to the court, admitting and apologizing for its obstructive behavior of evidence preservation.

[Judgement]

On October 17, 2019, the Guangzhou Intellectual Property Court issued the civil judgment (2018) Yue 73 MC 1099: 1. Wo Mould Company shall immediately cease the infringement of the software copyright of the case involved by Xi Software Company; 2. Wo Mould Company shall compensate Xi Software Company with economic losses of 500,000 yuan and reasonable expenses for legal maintenance of 100,000 yuan； 3. Xi Software Company's other litigation requests shall be rejected. After the judgment was announced, both parties filed appeals. The Supreme People's Court issued (2020) SPC IP Civil Final 155 on November 19, 2020: 1. Maintain the first item of the civil judgment (2018) Yue 73 MC 1099 of the Guangzhou Intellectual Property Court；2. Revoke the third item of the civil judgment (2018) Yue 73 MC 1099 of the Guangzhou Intellectual Property Court; 3. Change the second item of the civil judgment (2018) Yue 73 MC 1099 of the Guangzhou Intellectual Property Court to that Wo Mould Company shall compensate Xi Software Company with economic losses of 2,612,827 yuan and reasonable expenses for legal maintenance of 100,000 yuan. Wo Mould Company was dissatisfied and applied for a retrial to the Supreme People's Court. The Supreme People's Court issued the civil ruling (2021) MS 4246 on November 18, 2021, rejecting Wo Mould Company's application for retrial.

[Judge's Opinion]

The main points of dispute in this case are two issues: first, whether Wo Mould Company infringed the software copyright involved in this case; second, how to determine the quantity of the infringing software and the amount of compensation.

I. Wo Mould Company infringed the computer software copyright involved in this case

According to Article 10 and Article 48 of the "Copyright Law of the People's Republic of China" (Amended in 2010), the right of reproduction refers to the right to produce one or more copies of a work by means of printing, photocopying, lithography, recording, video recording, re-recording, or rephotography. Without the permission of the copyright owner, if such reproduction is made, except as otherwise provided, one shall bear civil liabilities such as cessation of infringement, elimination of the impact, apology, and compensation for losses.

In this case, the Guangzhou Intellectual Property Court, based on the circumstances of evidence preservation, has already ascertained that among the 17 preserved computers of Wo Mould Company, 9 computers displayed the copyright information and version information of 13 sets of NX series computer software. Some software indicated that the copyright owner was Xi Software Company and the version number was NX8, with 8 sets, NX10 with 2 sets, NX11 with 2 sets, and NX12 with 1 set. Under the circumstances where the existing evidence can prove that the infringing software is highly similar to the involved software of Xi Software Company (including having the same name, version number, and copyright owner information), it is not necessary to conduct a software code comparison to infer that Wo Mould Company reproduced the software copyrighted by Xi Software Company. At this time, Wo Mould Company should provide corresponding counter-evidence to refute. However, Wo Mould Company did not provide evidence to prove that it had purchased the involved software, nor did it provide evidence or make a reasonable explanation regarding the differences between the infringing software it installed and the software copyrighted by Xi Software Company, and Wo Mould Company also admitted that the infringing software was downloaded by its employees from the Internet. In conclusion, it can be determined that Wo Mould Company reproduced the software copyrighted by Xi Software Company without the permission of Xi Software Company, infringing Xi Software Company's copyright.

II. Determination of the Number of Infringing Software and the Amount of Compensation

Evidence preservation is an important part of civil litigation  and an important means for people’s courts to exercise judicial adjudicative power. If a party or other person obstructs evidence preservation through violence, threats, or other means, it not only seriously violates the basic principle of litigation integrity, but also constitutesa serious act of obstructing civil proceedings. Such party shall bear corresponding adverse consequences. According to Article 95 of the "Several Provisions of the Supreme People's Court on Evidence in Civil Litigation" (Fa Shi [2001] No. 33, revised in 2019), "If one party controls evidence but refuses to submit it without justifiable reasons, and the party bearing the burden of proof regarding the disputed facts claims that the content of the evidence controlled by the other party is unfavorable to the controller, the people's court may determine that such claim is established." After investigation, during the evidence preservation process in the Guangzhou Intellectual Property Court, after informing Wo Mould Company that if it obstructed evidence preservation, it would be presumed to have installed infringing software and bear corresponding adverse consequences, Wo Mould Company still took obstructive acts and obstructed evidence preservation work of the Guangzhou Intellectual Property Court by refusing to open some computers, cutting off power supply, etc., resulting in the Guangzhou Intellectual Property Court not completing the preservation of the other 9 computers involved in the case. Given that the actual installed software on some already preserved computers was confirmed to be the involved software, according to the above judicial interpretation, it should be presumed that the 9 computers not preserved also installed the involved software, and such presumption shall be considered when determining the amount of compensation for infringement damages.

In this case, the facts of the number of infringing software and the price of the genuine software are relatively clear. Therefore, the amount of compensation for damages can be calculated based on the actual losses suffered by the copyright owner due to the infringement. When calculating, the following factors were given priority consideration: 1. The number of infringements. Since it is presumed that all 9 unpreserved computers have installed the involved software, Wo Mould Company has at least copied 22 sets of the involved software, and the number of infringements is large. 2. The popularity and price of the involved software. the involved software of Xi Software Company is suitable for industrial manufacturing and has a certain level of popularity, with relatively high economic value. 3. The infringement circumstances of Wo Mould Company. Wo Mould Company implemented the act of obstructing the court's evidence preservation in this case, and the circumstances were relatively serious. Based on the above factors, considering that the actual losses of Xi Software Company have clearly exceeded the statutory cap on damages of 500,000 yuan stipulated in Article 49 of the Copyright Law, and its claim for damages has factual basis and legal grounds, therefore, the claim for damages of Xi Software Company is fully supported. The reasonable expenses such as attorney’ fees incurred by Xi Software are objectiv, and the amount claimed by it does not exceed the reasonable range, and therefore, it is also fully supported.

[Legal Provision]

Article 10, Article 53, and Article 54 of the "Copyright Law of the People's Republic of China" (Amended in 2020) (The provisions applicable in this case are Article 10, Article 48, and Article 49 of the "Copyright Law of the People's Republic of China" which was amended in 2010)

Article 95 of the "Provisions of the Supreme People's Court on Civil Litigation Evidence" (Fa Shi [2001] No. 33, Revised in 2019)