Shanghai High Court Issues Final Judgment in a Landmark Software IP Case
Published 28 August 2025
Yu Du
On 30 July 2025, the Shanghai High People’s Court issued its final judgment in a closely watched dispute over software copyright and unfair competition between a leading restaurant ERP provider and a payment services company. The case arose from allegations that the defendant developed and distributed a “Shouqianba” plug-in which was installed on the plaintiff’s 2DFire POS devices without authorization. According to the plaintiff, the plug-in bypassed its whitelist system by disguising itself as an approved application, used Android accessibility functions to capture on-screen transaction data, and diverted payment flows away from 2DFire’s built-in channels, thereby depriving the plaintiff of legitimate business opportunities.
Case History
Back to 2022, the plaintiff brought suit before the Shanghai Intellectual Property Court, claiming infringement of computer software copyright, misappropriation of trade secrets, and acts of unfair competition, and seeking injunctive relief, damages of RMB 10 million, punitive damages, and a public apology. The court of first instance rejected the copyright and trade secret claims, holding that the whitelist and package-name verification measures served to restrict third-party installations but did not qualify as “technical measures” protected by the Copyright Law, and that the plaintiff failed to establish the originality of its POS interface as a compilation work or the secrecy of the whitelist contents. However, the court found that the defendant’s conduct constituted unfair competition under Article 12 of the Anti-Unfair Competition Law. By impersonating an approved application to install its plug-in, displaying a floating icon to entice merchants, and redirecting payment transactions, the defendant interfered with the normal operation of the 2DFire system and breached the principle of fair dealing. The court ordered the defendant to cease the unfair competition, awarded RMB 2 million in damages and RMB 150,000 in reasonable expenses, and dismissed other claims such as punitive damages and an apology. The affiliated Company 3 was not found jointly liable due to lack of evidence of direct participation.
Appeal and Final Ruling
In October 2024, the defendant appealed the first-instance judgment to the Shanghai High People’s Court, challenging both the factual findings and the legal conclusions. On appeal, the defendant argued that merchants freely chose to install the “Shouqianba” plug-in and that such voluntary installation broke any causal link between its actions and any alleged harm to the plaintiff. It further claimed that the plaintiff had no legally protectable interest in the merchants’ payment transactions and that allowing merchants to add alternative payment channels promoted market competition and consumer welfare.
The plaintiff countered by defending the first-instance judgment, stressing that its closed system and whitelist measures were legitimate business practices designed to ensure security and reliability. It maintained that the defendant’s conduct circumvented its system protections and disrupted the proper operation of its software and business model.
On 30 July 2025, the High Court rendered its final judgment. It agreed with the lower court that the defendant’s technical methods - including the use of a false package name and interference with the system’s integrity through screen scraping and floating prompts - were dishonest and constituted unfair competition under Article 12 of the Anti-Unfair Competition Law, regardless of any purported merchant consent. However, the High Court partially upheld the defendant’s appeal regarding the damages amount, finding the original award excessive and lacking sufficient evidentiary support. The High Court therefore reversed the first-instance judgment, ordered the defendant to stop the unfair competition, and reduced the damages to RMB 500,000 plus RMB 150,000 in reasonable expenses, while rejecting all other claims and appeals.
The High Court emphasized that merchant consent obtained through circumvention of system protections does not legitimize the conduct. By adjusting the damages while affirming liability, the judgment underscores that plaintiffs must substantiate claimed losses with evidence. The case reinforces that digital market participants must compete fairly and respect the legitimate business models of others; while end-users have freedom of choice, competitors cannot bypass security or system controls through deceptive technical means.
Comment
The decision clarifies the boundary between technical measures that protect copyrighted works and business-oriented system restrictions; not every system limitation automatically merits copyright protection. It also illustrates the flexibility of the Anti-Unfair Competition Law in addressing dishonest technological interference even where copyright or trade secret claims fail. Importantly, the High Court’s adjustment of damages highlights the need for robust proof of loss. For companies in the payment and SaaS sectors, the ruling signals that closed ecosystems can be legally protected against unauthorized interference, but plaintiffs must select the correct legal basis and provide solid evidence for damages.
Case History
Back to 2022, the plaintiff brought suit before the Shanghai Intellectual Property Court, claiming infringement of computer software copyright, misappropriation of trade secrets, and acts of unfair competition, and seeking injunctive relief, damages of RMB 10 million, punitive damages, and a public apology. The court of first instance rejected the copyright and trade secret claims, holding that the whitelist and package-name verification measures served to restrict third-party installations but did not qualify as “technical measures” protected by the Copyright Law, and that the plaintiff failed to establish the originality of its POS interface as a compilation work or the secrecy of the whitelist contents. However, the court found that the defendant’s conduct constituted unfair competition under Article 12 of the Anti-Unfair Competition Law. By impersonating an approved application to install its plug-in, displaying a floating icon to entice merchants, and redirecting payment transactions, the defendant interfered with the normal operation of the 2DFire system and breached the principle of fair dealing. The court ordered the defendant to cease the unfair competition, awarded RMB 2 million in damages and RMB 150,000 in reasonable expenses, and dismissed other claims such as punitive damages and an apology. The affiliated Company 3 was not found jointly liable due to lack of evidence of direct participation.
Appeal and Final Ruling
In October 2024, the defendant appealed the first-instance judgment to the Shanghai High People’s Court, challenging both the factual findings and the legal conclusions. On appeal, the defendant argued that merchants freely chose to install the “Shouqianba” plug-in and that such voluntary installation broke any causal link between its actions and any alleged harm to the plaintiff. It further claimed that the plaintiff had no legally protectable interest in the merchants’ payment transactions and that allowing merchants to add alternative payment channels promoted market competition and consumer welfare.
The plaintiff countered by defending the first-instance judgment, stressing that its closed system and whitelist measures were legitimate business practices designed to ensure security and reliability. It maintained that the defendant’s conduct circumvented its system protections and disrupted the proper operation of its software and business model.
On 30 July 2025, the High Court rendered its final judgment. It agreed with the lower court that the defendant’s technical methods - including the use of a false package name and interference with the system’s integrity through screen scraping and floating prompts - were dishonest and constituted unfair competition under Article 12 of the Anti-Unfair Competition Law, regardless of any purported merchant consent. However, the High Court partially upheld the defendant’s appeal regarding the damages amount, finding the original award excessive and lacking sufficient evidentiary support. The High Court therefore reversed the first-instance judgment, ordered the defendant to stop the unfair competition, and reduced the damages to RMB 500,000 plus RMB 150,000 in reasonable expenses, while rejecting all other claims and appeals.
The High Court emphasized that merchant consent obtained through circumvention of system protections does not legitimize the conduct. By adjusting the damages while affirming liability, the judgment underscores that plaintiffs must substantiate claimed losses with evidence. The case reinforces that digital market participants must compete fairly and respect the legitimate business models of others; while end-users have freedom of choice, competitors cannot bypass security or system controls through deceptive technical means.
Comment
The decision clarifies the boundary between technical measures that protect copyrighted works and business-oriented system restrictions; not every system limitation automatically merits copyright protection. It also illustrates the flexibility of the Anti-Unfair Competition Law in addressing dishonest technological interference even where copyright or trade secret claims fail. Importantly, the High Court’s adjustment of damages highlights the need for robust proof of loss. For companies in the payment and SaaS sectors, the ruling signals that closed ecosystems can be legally protected against unauthorized interference, but plaintiffs must select the correct legal basis and provide solid evidence for damages.