[Jiemian News] Shanghai Intellectual Property Court Ordered the Infringer to Compensate RMB 9 Million Yuan in a Copyright Infringement Case

May 31, 2018  Jiemian News

On May 31, Shanghai Intellectual Property Court made a first-instance judgment on a case of dispute over computer software copyright infringement, ordering the infringer to make a compensation of RMB 9 millionyuan, which has beenthe highest penalty imposed by Shanghai Intellectual Property Court since its establishment.

On May 31, Shanghai Intellectual Property Court made a first-instance judgment on a case of dispute over computer software copyright infringement. The defendant, an electric vehicle technology company in Shanghai, was ordered to stop infringing the plaintiff's CATIA V5 R20 computer software copyright immediately and compensate for the plaintiff's economic losses and attorney fees totaling RMB 9 millionyuan, which has beenthe highest penalty imposed by Shanghai Intellectual Property Court since its establishment.

The plaintiff, DassaultSystèmes S.A., is a provider of product lifecycle management (PLM) software and enjoys the copyright of the software CATIA V5 R20 involved. The defendant, founded in February 2015, is an innovative and modern enterprise engaged in the R&D and manufacturing of all-electric vehicles.

In 2016, the plaintiff found that the defendant reproduced, installed and usedwithout permission its copyrighted CATIA software on relevant computers in its business premise in Jiading District, Shanghai. In February 2017, the plaintiff complained about the defendant's infringement to Shanghai Municipal Cultural Market Administrative Law Enforcement Office (hereinafter referred to as the “Cultural Law Enforcement Office”). On February 22 of the same year, Cultural Law Enforcement Office conducted on-site inspection of the computers in the defendant's business premise and found that8 computers were installed with CATIA software.

Later, the plaintiff negotiated with the defendant and signed a settlement agreement. The sales agent authorized by the plaintiff signed a software sales contract with the defendant, but the defendant failed tofulfill the contract. For this reason, the plaintiff applied to Shanghai Intellectual Property Court for pre-litigationevidence preservation. Then, the court carried out spot check onthe computers in the defendant's business premise, and found that among the73 computers in the premise, all the 15 computers inspected were found to have been installed with the software involved.

The plaintiff sued to Shanghai Intellectual Property Court, requesting the defendant to stop the infringement immediately, compensate for its economic losses amounting to more than RMB 18.45 million yuan, and bear its legal expenses incurred in this case totaling RMB 150,000 yuan.

The defendant argued at the pretrial meeting that eight of the software theyhad installed were legally obtained. Following the on-site enforcement by the Cultural Law Enforcement Office, two parties reached a settlement agreement and signed a software sales contract. It failed to perform the contract due to poor internal management rather than unwillingness to make the payment; and not all of the 73 computers in its premise were installed with the software involved.

During the formal trial, the defendant was summoned by the court but refused to attend the hearing without a proper reason.

After the trial, Shanghai Intellectual Property Court held that the copyright of the software involved enjoyed by the plaintiff should be protected by Chinese law. In this case, the defendant's unauthorized installation of the software on its computers in its business premise infringed on the plaintiff's right to reproduce the software involved. Therefore, it should bear the civil liability of stopping the infringement and compensating for the losses according to law. Although it was difficult to determine the plaintiff's actual losses and the defendant's illegal proceeds in this case, the existing evidence provided by the plaintiff was sufficient to prove that the losses suffered by the plaintiff as a result of the infringement exceeded the maximum statutory damages under the CopyrightLaw, i.e. RMB 500,000 yuan.

In view of the above, Shanghai Intellectual Property Court ruled that the defendant, an electric vehicle technology company in Shanghai, should immediately stop infringing the copyright of the plaintiff's CATIA V5R20 computer software as of the date of the judgment, and compensate for the plaintiff's economic losses and attorney fees totaling RMB 9 millionyuan.

After the sentencing, Judge Wu Yingzhe of Shanghai Intellectual Property Court said, “Through this judgment, Shanghai Intellectual Property Court aims to call onthe public to support copyrighted software, and respect the work and efforts of software developers, thus leaving no room for pirated software and building a favorable environment that respects and encourages innovation.”