[Case Number]
First instance: Shanghai Intellectual Property Court (2021) Hu 73 Zhi Min Chu No. 1424
Second instance: The Supreme People’s Court (2023) Zui Gao Fa Zhi Min Zhong No. 1778
[Basic Facts]
T* Inc. is an industry-leading positioning technology solution provider and the author of the SketchUp series of computer software concerned. T* Inc. found in an investigation that Shanghai B* Architectural Design Consulting Co., Ltd. (hereinafter referred to as “B* Consulting”) et al., without T* Inc.’s authorization and permission, reproduced, installed and used the SketchUp series of computer software, to which T* Inc. legally enjoys the copyright, for commercial purpose in its business activities. T* Inc. sent an attorney’s letter to the defendant B* Consulting et al. respectively in 2019 and 2020, requesting the latter to cease its infringement, but B* Consulting et al. continued the infringement. In July 2021, at the request of T* Inc., the court preserved evidence against B* Consulting et al., during which B* Consulting et al. deliberately delayed the preservation and asked all employees to delete the software involved in the case on the spot. Believing that such act seriously violated the principle of litigation integrity and hindered civil proceedings, accordingly, T* Inc. requested that the defendant B* Consulting et al. should be ordered to pay punitive damages in an amount twice the economic losses it suffered. Since B* Consulting et al. operated business together and shared personnel and business premises, and the preserved computers were under unified management, T* Inc. believed that they jointly committed infringement. Therefore, T* Inc. lodged a complaint with the court, requesting that the defendant B* Consulting be ordered to cease the infringement and B* Consulting et al. should jointly and severally compensate T* Inc. RMB 20,793,000 of economic losses and RMB 190,000 of reasonable expenses.
[Judgment]
Shanghai Intellectual Property Court held the view that T* Inc. legally enjoyed the copyright to the software concerned, which should be protected by Chinese law according to relevant international protocols. B* Consulting et al. installed the software involved in the case on computers in their business premises without T* Inc.’s permission, infringing T* Inc.’s right to reproduce the software. Therefore, B* Consulting et al. should cease their infringement and bear corresponding civil liability for compensation. However, B* Consulting et al. continued the infringement though they knew that they need to obtain the permission from the right holder to use the software, and have received the attorney’s letters sent by the right holder. Moreover, during the evidence preservation period, the court repeatedly informed B* Consulting et al. of the adverse consequences of non-cooperation, but they rejected to cooperate and continued to delete the infringing software, which indicates their deliberate and severe infringement. Therefore, Shanghai Intellectual Property Court determined the license fee for corresponding rights based on the price embodied in the sales contract submitted by the parties and the basis for calculating the amount of punitive damages based on 717 sets of infringing software. Meanwhile, applying double punitive damages, the court finally made a judgment, ordering B* Consulting to cease its infringement and B* Consulting et al. to compensate T* Inc RMB 6 million jointly and severally including economic losses and reasonable expense. B* Consulting et al. refused to accept the judgment of first instance and appealed. The court of second instance dismissed the appeal and affirmed the original statement.
[Significance]
B* Consulting et al. in this case, in spite of knowing that they should obtain the license from the right holder to use the software concerned, continued the infringement even though they had received attorney’s letters sent by the right holder requesting the cessation of infringement. During the evidence preservation period, the court repeatedly informed the defendants of the adverse consequences of non-cooperation, but they still rejected to cooperate and continued to delete the infringing software, which indicate their deliberate and severe infringement. Therefore, Shanghai Intellectual Property Court accurately applied the punitive damages, demonstrating its determination to impose severe punishment on and deter malicious infringement behaviors and intensify judicial protection of innovative achievements.
