*AI-generated translation, for reference only.

Keywords: civil; copyright ownership and infringement; infringement of computer software copyright; installation time; creation time; infringement damages

Case Facts

[REDACTED] U.S. Company (hereinafter "U.S. [REDACTED] Company") alleged as follows: U.S. [REDACTED] Company is the copyright holder of the AutoCAD series of computer software. Dongguan [REDACTED] Company (hereinafter "Dongguan [REDACTED] Company"), without authorization, reproduced, installed, and commercially used the computer software in the series at issue in its production and business operations, thereby constituting infringement. U.S. [REDACTED] Company accordingly requested that the court order: (1) Dongguan [REDACTED] Company to immediately cease reproducing, installing, and using the AutoCAD series of computer software in which U.S. [REDACTED] Company holds copyright without authorization, and to delete or destroy all infringing copies and the media containing such infringing copies in its possession or under its control; (2) Dongguan [REDACTED] Company to compensate U.S. [REDACTED] Company for economic losses and reasonable expenses paid to stop the infringement, including investigation and evidence collection fees, attorney's fees, and notarization fees, totaling a provisional amount of RMB 500,000; (3) Dongguan [REDACTED] Company to issue a written apology to U.S. [REDACTED] Company in a prominent location in *People's Daily* (in a position other than the center fold) and on the homepage of its official website (www.dglifeng.com); and (4) Dongguan [REDACTED] Company to bear the litigation costs of this case.

Dongguan [REDACTED] Company defended as follows: U.S. [REDACTED] Company is not the lawful copyright holder of the AutoCAD series of computer software and is therefore not a proper party to this case.

The court found through trial as follows: U.S. [REDACTED] Company is the copyright holder of the AutoCAD series of computer software. Dongguan [REDACTED] Company installed and used the AutoCAD series of computer software on computers at its business premises. During the evidence preservation conducted by the court of first instance at Dongguan [REDACTED] Company's business premises, the head of Dongguan [REDACTED] Company's human resources department stated that the design-related business departments included the project department, the design department, and the data room, with a total of 21 computers in these departments. The evidence preservation checklist compiled by the court of first instance listed 14 computers numbered 1 through 14; of these, computers No. 2 and No. 3 did not have AutoCAD software installed; computers No. 12 through No. 14 were noted as "not powered on, old computers, unoccupied office"; computer No. 6 had 2 copies of AutoCAD software installed; and the remaining 8 computers each had 1 copy installed. Photographs taken at the evidence preservation site showed the software's creation times and access times: creation times ranged from February 9, 2009 to November 19, 2021, and access times ranged from July 25, 2018 to November 19, 2021. The installation time column of the evidence preservation checklist recorded AutoCAD software installation dates ranging from February 9, 2009 to November 19, 2021. Notarial certificates submitted by U.S. [REDACTED] Company stated: the market price of AutoCAD 2010 software was RMB 20,000 per copy; the market price of AutoCAD 2014 software was RMB 16,200 per copy; and beginning in 2018, the market price of AutoCAD software was generally RMB 21,800 per copy. U.S. [REDACTED] Company paid RMB 2,500 in evidence preservation guarantee fees and RMB 20,000 in attorney's fees.

On December 21, 2022, the Guangzhou Intellectual Property Court rendered Civil Judgment (2021) Yue 73 Zhi Min Chu No. 664: (1) ordering Dongguan [REDACTED] Company to cease infringing U.S. [REDACTED] Company's copyrights in the AutoCAD 2010, AutoCAD 2014, and AutoCAD 2019 computer software programs, and to uninstall and delete the said software from its computer systems; (2) ordering Dongguan [REDACTED] Company to compensate U.S. [REDACTED] Company for economic losses of RMB 272,000 and reasonable rights-protection expenses of RMB 22,500; and (3) dismissing U.S. [REDACTED] Company's other claims. Dongguan [REDACTED] Company appealed. On February 26, 2024, the Supreme People's Court rendered Civil Judgment (2023) SPC IP Civ Final No. 1126, dismissing the appeal and affirming the original judgment.

Judge's Opinion

U.S. [REDACTED] Company is the copyright holder of the AutoCAD series of computer software. Dongguan [REDACTED] Company admitted to installing and using AutoCAD software without authorization, thereby infringing U.S. [REDACTED] Company's computer software copyright, and shall bear corresponding infringement damages liability. Neither party submitted sufficient evidence to prove U.S. [REDACTED] Company's actual losses or Dongguan [REDACTED] Company's unlawful gains. U.S. [REDACTED] Company sought to calculate the amount of compensation based on the one-time licensing or subscription sale price corresponding to the infringing software versions installed and used by Dongguan [REDACTED] Company, multiplied by the number of infringing copies. However, given that such prices typically include services such as operation training, technical support, and after-sales maintenance, and may vary depending on factors such as version updates, sales volume, duration and number of users, and upgrade and training services, the damages amount cannot be determined directly on that basis, though it may serve as a reference factor.

In computer software copyright infringement cases, the determination of damages typically involves a comprehensive consideration of factors including the type of software at issue, the subjective and objective circumstances of the infringer, the time and number of software installations, the software licensing or sales price, the consequences of infringement, and reasonable expenses. The specific analysis is as follows: First, regarding software type: the AutoCAD series is a computer-aided design (CAD) software program with high practical value for architectural design firms and similar enterprises. Second, regarding the subjective and objective circumstances of Dongguan [REDACTED] Company: Dongguan [REDACTED] Company is an enterprise of a certain scale engaged in steel structure processing, installation, and related businesses, with a commercial need for AutoCAD software in its production and business operations; however, it installed and used AutoCAD software without the rights holder's authorization, demonstrating subjective fault. Third, regarding time and quantity: the creation times of the AutoCAD software installed by Dongguan [REDACTED] Company ranged from February 9, 2009 to November 19, 2021, and access times ranged from July 25, 2018 to November 19, 2021; of 21 computers in the relevant departments of Dongguan [REDACTED] Company, a spot-check of 11 computers revealed that 9 of them had 10 copies of AutoCAD software across 3 versions installed (including 8 copies of AutoCAD 2014). Fourth, regarding software price: according to the notarial certificates, the market prices of AutoCAD 2010 and AutoCAD 2014 at the relevant time were RMB 20,000 per copy and RMB 16,200 per copy, respectively; the software installed by Dongguan [REDACTED] Company was predominantly AutoCAD 2014, which was released at an earlier date and whose market price may have fluctuated; beginning in 2018, the market price of AutoCAD software was generally RMB 21,800 per copy. Fifth, regarding the consequences of infringement: Dongguan [REDACTED] Company's unauthorized installation and use of AutoCAD software infringed U.S. [REDACTED] Company's computer software copyright and impaired U.S. [REDACTED] Company's market and economic interests in licensing or selling the software. Sixth, regarding reasonable expenses: U.S. [REDACTED] Company paid RMB 2,500 in evidence preservation guarantee fees and RMB 20,000 in attorney's fees. Taking all of the foregoing factors into comprehensive consideration, the court of first instance's determination that Dongguan [REDACTED] Company should compensate U.S. [REDACTED] Company for economic losses of RMB 272,000 and reasonable rights-protection expenses of RMB 22,500 was appropriate.

Judgment Digest

In computer software copyright infringement cases, given that the price of the rights software typically includes services such as operation training, technical support, and after-sales maintenance, and may vary depending on factors such as version updates, sales volume, duration and number of users, and service content, such price should generally not be used as a direct basis for determining the amount of damages; however, it may serve as a basis for calculating damages. The determination of the amount of damages typically involves a comprehensive consideration of factors including the type of software at issue and its licensing or sales price, the subjective and objective circumstances of the infringer, and the time and number of installations of the accused infringing software.

Related Index

*Articles 2, 10, 52, 53, and 54* of the *Copyright Law of the People's Republic of China*

*Articles 5, 24, and 25* of the *Regulations on the Protection of Computer Software*

*Articles 21, 24, 25, and 26* of the *Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Cases Involving Copyright* (Fa Shi [2002] No. 31, as amended in 2020)

First Instance: Guangzhou Intellectual Property Court of Guangdong Province, Civil Judgment (2021) Yue 73 Zhi Min Chu No. 664 (December 21, 2022)

Second Instance: Supreme People's Court, Civil Judgment (2023) SPC IP Civ Final No. 1126 (February 26, 2024)