[China Intellectual Property News] Court Concluded a Dispute over Whether the Development of a Computer Software Program Involving Face-Recognition Access Control System was Completed–Thanks to the Help of Technical Investigators on a Key Issue
June 27, 2018 China Intellectual Property News Page 10
Feng Fei, Chen Yingying
As a core technology of artificial intelligence, face recognition technology has been widely applied in many areas including identity authentication, security surveillance and so on, but numerous disputes related to intellectual property have arisen with its rapid development.
Recently, Shanghai Intellectual Property Court concluded a dispute over the development of a computer software program involving face recognition access control system. During the trial, how to determine whether the developer has completed the software development in accordance with the contract remained a thorny problem. To tackle this, the court made full use of the technical advantages of technical investigators and invited them to examine the face recognition access control systemon the spot. They concluded that the developer failed to complete the software development according to the contract and should refund the contract amount as well as pay the liquidated damages.
Access control system caused dispute
Shanghai Lanyuneng Information Technology Co., Ltd. (hereinafter referred to as “Lanyuneng”), one of the plaintiffs in this case, won a bid for a smart community project in December 2015, and assigned the project to its affiliated company, Shanghai Lanzheng Information Technology Co., Ltd (hereinafter referred to as “Lanzheng”) subsequently. On January 4, 2016, Lanzheng signed a software development contract with Shenzhen COBBER Information Technology Co., Ltd (hereafter referred to as “COBBER”), stipulating that COBBER will develop a smart community face-recognition access control system for Lanzheng at a cost of RMB 80,000 yuan; the system will be completed and then delivered to Lanzheng within 20 working days from the date of signing the contract.
During the performance of the contract, in order to support software debugging, Lanyuneng signed a hardware purchase contract and a supplementary agreement with COBBER in April 2016 for an X-face recognition analyzer with a contract amount of RMB 26,400 yuan. It’s also agreed in the supplementary agreement that if the equipment fails to meet the technical requirements, Lanyuneng has the right to terminate the contract and demand compensation twice the amount of the hardware purchase contract and software development contract. Upon the signing of the two contracts, Lanyuneng and Lanzheng both paid the contract amount to COBBER that month.
Due to conflicts arising in the development of the software system involved, Lanyuneng and Lanzheng sued COBBER to Shanghai Intellectual Property Court, claiming that COBBER had failed to complete the system development and pass their acceptance test by the date of the suit; they had negotiated with COBBER on the matter many times, but got no positive response; the activities of COBBER had constituted a breach of the contracts. Both the plaintiffs requested that two contracts signed between the plaintiffs and the defendant be rescinded; the defendant refund the contract amount in full, pay the liquidated damages and compensate for the plaintiffs’ economic losses totaling RMB 212,800 yuan.
COBBER argued that it didn’t breach the contract as the access control system involved had been completed and delivered within the agreed period.
Two plaintiffs, on the contrary, claimed that the access control system failed to pass the accepted test due to a series of problems and demanded to test the system in court.
Technical investigation played akey role
Whether the access control system had been completed according to the contract was a dispute focus during the trial of this case, and how to ascertain the progress of software development remained a tough problem. Therefore, the court invited technical investigators to carry out on-site examination.
The reporter learned that according to the contracts, the access control system involved shall be capable of collecting and storing face images, and controlling the access of people via face recognition. It can automatically sense people within the recognition range and capture dynamic face images of people who walk normally without having to stand still or make specific gestures, in support of capturing multiple face images at the same time. It can also provide blacklist and whitelist management, video management and remote management, etc.
Lanyuneng and Lanzheng pointed out that in order to test whether the access control system involved met the contract requirements, it was necessary to provide a test environment as per the contract, namely an outside place with natural light, non-backlight and non-side light irradiation where the front of a face can be recognized.
In order to simulate as vividly as possible the actual environment and method of use of the access control system to present the technical facts more objectively, the court decided to test the system in an outdoor place with light, asksomeone to take photos and collect face data on the spot, and invite real people to demonstrate the functions. Later, COBBER brought the control host, card reader, access control controller, camera, video monitor and other devices comprising the face recognition access control system to the court to set up a test environment.
In the course of testing, the responsible judge selected randomly 10 people from the court staff to collect face recognition data and they simulated passingthrough the gate successively. Technical investigators participated in the demonstration and examined the specific contents, whereas the judge assistant and the clerk videotaped the whole process. After analysis, the collegial panel and technical investigators concluded that the demonstration results failed to prove that COBBER had completed the development of the access control system according to the contract.
Software development remained uncompleted
After the trial, Shanghai Intellectual Property Court held that the software development contract signed between Lanzheng and COBBER and the hardware purchase contract and supplementary agreement signed between Lanyuneng and COBBER represented the true intentions of the parties concerned and should be valid and binding upon all the parties. Each party shall fully fulfill its obligations as agreed.
According to the software development contract, COBBER should deliver the completed software to Lanzheng within 20 working days after the signing of the contract, that is, before February 1, 2016. COBBER argued that it delivered the software to Lanzheng on February 3, 2016 but failed to provide relevant evidence. Although the QQ chat records between COBBER staff and relevant personnel could prove that COBBER delivered the software on April 28, 2016, and Lanzheng admitted that the software involved, together with the hardware, was debugged at the agreed place on that day, the record showed “frequent errors in face acquisition, for example, combining flowerpots and human hands into human faces” during the debugging on April 28, 2016.
In the following days, though COBBER sent several modified versions of the software one after another, by May 24, 2016, it was still arranging the debugging on May 27, 2016, and it failed to provide evidence that the software modified met the contract requirements. In addition, although COBBER submitted the software installation files stored on CDs and demonstrated the software together with the hardware in court, it could neither prove the completion time of the software demonstrated nor demonstrate some functions agreed in the contract. Taking into consideration the on-site demonstration results, technical investigators’ opinions and other evidences, Shanghai Intellectual Property Court determined that COBBER failed to complete the development of the software involved as per the contract requirements within the specified period.
Shanghai Intellectual Property Court held that in this case, COBBER’s breach of contract made it impossible to realize the contract purpose. Hence, Lanzheng’s claim to rescind the software development contract was supported. As the hardware Lanzheng purchased from COBBER was meant to be used in conjunction with the access control system involved and it couldn’t be used any more due to COBBER’s breach of contract, Lanyuneng’s claim to rescind the hardware purchase contract and supplementary agreement was also supported. Given that all the contracts were rescinded because of COBBER’s breach, and the courier documents and other relevant evidence provided by Lanyuneng proved that the hardware involved had been returned to COBBER by express, Shanghai Intellectual Property Court hereby, according to relevant provisions of the Contract Law and the contracts involved, ruled that the software development contract signed between Lanzheng and COBBER and the hardware purchase contract and supplementary agreement signed between Lanyuneng and COBBER are rescinded; COBBER shall refund the contract amount of RMB 80,000 yuan to Lanzheng and pay liquidated damages; COBBER shall refund the contract amount of 26,400 yuan to Lanyuneng.
