Judicial Determination of Hardware Manufacturer’s Joint Infringement Liability - Shanghai Intellectual Property Court Adjudicate the Case of Dispute over Copyright Infringement and Unfair Competition

Judicial Determination of Hardware Manufacturer’s Joint Infringement Liability - Shanghai Intellectual Property Court Adjudicate the Case of Dispute over Copyright Infringement and Unfair Competition (CCTV International v. Kaiboer, et al)

 

April 26, 2018   People’s Court Daily   Page 6

 

Judgment Summary

Generally speaking, hardware product itself can’t provide network services. The player has to download and install third-party software to achieve the above function. Therefore, the manufacturer didn’t commit the infringement if there’s no pre-installed software. However, hardware manufacturer and seller shall bear joint infringement liability if evidences show that the hardware manufacturer knows the seller installed the infringing software. User perception isn’t a criterion for recognizing network dissemination of information, however, the external manifestations of the behavior has an important influence on the allocation of burden of proof.

 

Case Review

CCTV, the operator of CCTV channels, produced a number of programs such as Law Report Today and Life of Arts, and has licensed the copyright of all TV channels and corresponding TV programs to CCTV International Network Co., Ltd. (hereinafter referred to as “CCTV International”). CCTV International bought a K760 Kaiboer player from the Tmall store of Shanghai Cloverfield International Trade Co., Ltd. (hereinafter referred to as “Cloverfield”), which was manufactured by Shenzhen Kaiboer Technology Co., Ltd. (hereinafter referred to as “Kaiboer”) and contained software that can broadcast CCTV programs live, on demand and playback. Cloverfield recognized that the player was bare when bought from Kaiboer and the infringing software was installed by itself. Kaiboer declared on its official website that Cloverfield is its general agent in Shanghai, and that the player involved contained a wealth of online resources, with multiple online platforms and video shows built in. It also demonstrated the live broadcast, broadcast on-demand and playback functions through videos, and provided downloading and updating services of related software. Cloverfield’s website had similar advertising.

CCTV International held that two defendants had infringed upon its copyright and committed an act of unfair competition by broadcasting live, on demand and playing back the CCTV programs without authorization. It’s requested that two defendants should stop the infringement, eliminate the effects and jointly compensate for the economic losses totaling RMB 1 million and reasonable expenses totaling RMB 50, 000.

Judgment

After the trial, Putuo District People’s Court of Shanghai held that Kaiboer should be jointly liable for the infringement as it acquiesced in and supported the agent’s act of installing software “on behalf” and obtained benefits through “bare player delivery + software installation by agents.” It’s ruled that Cloverfield and Kaiboer stop the infringement, Kaiboer compensate for the economic losses and reasonable expenses of CCTV International totaling RMB 250,000, and Cloverfield should be jointly liable for RMB 50,000 therein.

Kaiboer filed an appeal against the first-instance judgement. After the trial, Shanghai Intellectual Property Court held that Kaiboer and Cloverfield should be jointly liable for the infringement since their mutually agreed act of installing software in the player involved constituted a joint infringement. The evidences provided by CCTV International proved that the player involved can broadcast live, broadcast on demand and play back the CCTV programs, while Kaiboer failed to provide evidences to support its claim that the software involved provided link services only. Therefore, the court of second instance dismissed the appeal and affirmed the original judgment.

Case Study

1. The nature of network real-time transmission. In current judicial practice, network real-time transmission is very controversial. One view is that network real-time transmission falls into the scope of broadcasting right. It can be inferred from the logical structure of the international treaties and copyright law concluded after the Berne Convention that the word “cable” in the provisions of the copyright law concerning broadcasting right should be interpreted as any line including the Internet. Another view is that network real-time transmission is beyond the scope of broadcasting right but infringes upon the rights in the “Miscellaneous Provisions” of Paragraph 1 (17), Article 10 of the copyright law, i.e. other rights that shall be enjoyed by the copyright owner. There’s also a view that network real-time transmission constitutes unfair competition. In this case, the court of first instance held that network real-time transmission falls into the scope of Paragraph 1 (17), Article 10 of the copyright law and should be protected as other rights enjoyed by the copyright owner.

2. Criteria for determining the joint infringement liability of hardware manufacturer. Should the hardware manufacture be liable for infringement when the player involved was delivered without pre-installed software and the software was installed by the seller? Generally speaking, the player is a hardware product that can’t provide network services by itself, and it has to download and install third-party software to achieve the above function. The manufacturer didn’t commit infringement as it didn’t pre-install relevant software nor provide network services. However, in this case, Kaiboer declared on its official website and in its Tmall flagship store that the player involved contained a wealth of online resources, with multiple online platforms and video shows built in; Kaiboer also demonstrated the live broadcast, broadcast on-demand and playback functions as well as actual effects of the player through videos on its website. The player had built-in firmware “盛世高清” and was installed with “IMS”“HDPfans” and other software that can broadcast live and play back CCTV programs, meanwhile Kaiboer also provided downloading and updating services of related software; besides, Kaiboer declared on its official website that Cloverfield is its general agent in Shanghai and provided links to Cloverfield website, which introduced that the player involved could broadcast live and play back TV programs. All these facts suggested that Kaiboer, the hardware manufacturer, and Cloverfield, the seller who installed the software involved, had reached a consensus on installing the corresponding software in the player, which constituted a joint infringement. Therefore, they shall be jointly liable for the infringement.

3. User perception has an important influence on the allocation of burden of proof. Sever test is a reasonable criterion for recognizing network dissemination of information, while user perception shouldn’t be used as a criterion for recognizing network dissemination of information, however, the external manifestations of the behavior has an important influence on the allocation of burden of proof. In judicial practice, courts often take the external manifestations of the behavior as preliminary evidence of the plaintiff to presume that the accused act is an act of network dissemination of information, and the party claiming provision of link services has the burden of rebuttal. In this case, evidences provided by CCTV International proved that the player involved can broadcast live, broadcast on demand and play back the CCTV programs, and the preliminary burden of proof has been fulfilled. Kaiboer reasoned that “CCTV has so many programs that no one else can master them, except by links,” but it failed to provide evidences proving that the software provides link services merely. Therefore, its claim was rejected.  

 

 

 

Case No.: (2015) Pu Min San (Zhi) Chu Zi No. 312, (2017) Hu 73 Min Zhong No.25

Author: Yang Fuyu, Shanghai Intellectual Property Court

 

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