On April 23, 2024, the People’s Court of Haidian District (the Court) in Beijing issued its intellectual property trial report for 2024, including ten typical cases of IP disputes regarding digital economy which refers to taking advantage of data to promote economic development.
It is worth mentioning that, as a primary court, the People’s Court of Haidian District also has jurisdiction over certain intellectual property cases. In accordance with the Several Provisions of the Supreme People's Court on the Original Jurisdiction over Civil and Administrative Cases Involving Intellectual Property and the Notice by the Supreme People's Court of Issuing the Standards for Civil and Administrative Cases Involving Intellectual Property Rights under Original Jurisdiction of the Primary People's Courts, “civil and administrative cases of the first instance of disputes over the ownership and infringement of patents for inventions, patents for utility models, new varieties of plants, layout designs of integrated circuits, technological secrets, computer software, and disputes over monopolization shall be under the jurisdiction of the courts for intellectual property rights, the intermediate people's courts at the seat of the people's governments of provinces, autonomous regions, and province-level municipalities directly under the central government, and the intermediate people's courts as determined by the Supreme People's Court (Article 1)”. “Disputes over the ownership and infringement of design patents, as well as civil and administrative cases of first instance involving the determination of well-known trademarks, shall be under the jurisdiction of the intellectual property court and the intermediate people's court; subject to the approval of the Supreme People's Court, they may also be under the jurisdiction of the primary people's court, with the exception of administrative cases concerning design patents. Where the subject matter of litigation in intellectual property cases of first instance other than those provided for in Article 1 of these Provisions and paragraph 1 of this Article is above the amount determined by the Supreme People's Court, and where administrative acts of a department of the State Council, a local people's government at or above the county level, or a customs office are involved, the jurisdiction shall be vested in an intermediate people's court (Article 2)”. “Civil and administrative intellectual property cases of the first instance other than those provided for in Articles 1 and 2 of these Provisions shall be under the jurisdiction of the Primary People's Courts as determined by the Supreme People's Court.” Based on the above, the People’s Court of Haidian District also has the jurisdiction over certain first instance intellectual property cases, and the typical cases mentioned herein were also tried at the People’s Court of Haidian District.
It is reported that the People’s Court of Haidian District in Beijing has accepted 4851 cases that involve digital economical IP cases, which accounts for 56.7% of the total intellectual property cases. There have been 4840 cases that are concluded, including 1447 cases concluded with a judgment, and the highest compensation amount reached about 21 million yuan. In terms of the cases in 2023, there were 2841 new cases accepted, which was an increase of 11.8% year on year; and 3244 cases concluded, which was an increase of 15.2% year on year. Further, there were 1891 cases concluded in a fast-track procedure, which accounts for 58.3% of the total cases (https://bjhdfy.bjcourt.gov.cn/article/detail/2024/04/id/7910990.shtml).
Among the ten issued cases, it involves five unfair competition disputes, three infringements of copyright disputes, one infringement of trade secret dispute, and one infringement of trademark right dispute. Some cases as follows are worth attention:
Trade secret infringement with a punitive compensation
The plaintiff herein is a company that provides online education service via its operated APP, whereas the defendant was an employee thereof who signed a confidentiality agreement with the plaintiff and was in charge of tasks, such as daily data monitoring, specialized data analysis, and so on. During the defendant’s employment, he disclosed more than 60 types of the plaintiff’s operational data (e.g., renewal rate of classes, numbers of signed-ups, etc.) to third parties and allowed others to use such data. In return, the defendant had a gain amounting to RMB 200,000 yuan. Accordingly, the plaintiff claimed that his behavior had constituted infringement of trade secret and such severe infringement should apply the punitive compensation, and the total amount should be at RMB 500,000 yuan, which was the illegal gain plus 1.5 times of the illegal gain as the punitive compensation (200,000 + 200,000 * 1.5 = 500,000).
According to the Court, the more than 60 types of data claimed by the plaintiff should be considered as trade secret protected by laws, as such data have reflected the plaintiff’s operation with commercial value and were protected by relevant confidentiality measures adopted by the plaintiff. As an employee, the defendant’s disclosure of the company’s data and his permission for others to use it had violated the confidentiality obligation and infringed the plaintiff’s trade secret.
Regarding the application of the punitive compensation, the Court considered that the defendant was obviously in bad faith, as he acknowledged that the involved data are trade secrets but still disclosed those to third parties for profit. Further, during the defendant’s employment for almost three years, his infringement lasted for 15 months and disclosed the involved data to more than 80 enterprises for the profit of RMB 200,000 yuan, which was considered infringements that were high frequency, multiple times, long lasting time, and extensive scope of disclosure” and fell into the scope of the severe circumstance. Based on the above, the Court considered that it was reasonable for the plaintiff to claim punitive compensation on the basis of 1.5 times of the illegal profit and fully supported such a claim. Although the defendant appealed the said judgment, the second instance court maintained it and the judgment has come into effect.
[Comment]
According to the Court, various operational data of a company is important to understand such company’s operation status, as well as the market change and trend for further making competitive strategy and scientific decision, and such data can be protected as a trade secret provided that they fulfill the conditions of constituting a trade secret. The case herein provides strong judicial protection to enterprises’ operation data and has a deterrent effect on those selling enterprise data by recognizing the infringement of trade secret and applying the punitive compensation.
Unfair competition dispute by setting up a false live streaming title
The plaintiff is a network company that has the exclusive right to broadcast a sports game and is entitled to maintain its right within mainland China. The defendant company set up live stream titles, such as “Live streaming the opening ceremony of the game, Chinese delegation enters in the 110th,” on its website, however, when clicked the said titles, it played entertainment programs made by the defendant itself, and it was about the invited guest watching the game opening ceremony while eating hot pot. The plaintiff considered such a behavior constituted unfair competition, as it would mislead the public to consider the defendant was live streaming the opening ceremony while inducing the public to click and watch their own program. Thus, the plaintiff claimed an economical loss of RMB 1 million yuan plus a reasonable cost of RMB 50,865 yuan.
The Court considered that the plaintiff’s right and interest to broadcast the sports game for attracting visitors, commercial opportunities, operational gains, competition advantages, and so on, should be protected by the Anti-unfair Competition Law. The defendant’s behaviors above were easy to mislead the public to consider it providing live stream of the opening ceremony and therefore click into the involved web page. There were also characters in “Sports Game Opening Ceremony” who had the intention to cause the public misinterpretation, and the comments on the program’s live page had shown that it in fact caused the misinterpretation from the public. Thus, the Court considered the defendant had constituted false advertisement under the Anti-unfair Competition Law by setting up a false advertising title to attract misled visitors for more website traffic and interest. The Court ordered the defendant to compensate the plaintiff RMB 500,000 yuan plus a reasonable cost of 20,000 yuan, which was maintained by the second instance court.
[Comment]
According to the Court, this is a typical case of unfair competition by setting up a false live streaming title. The case made a detailed analysis on issues, such as the correspondence between the involved live streaming title and the content, whether the advertising content was one-sided, ambiguous, or misleading, etc., and effectively prevented the defendant from obtaining traffic in a false or misleading manner.
Copyright infringement of a web novel by a web skits
The plaintiff company owns the exclusive right to adapt and shoot a novel into a movie, TV or video, as well as the right to cease infringement upon authorization. The plaintiff used to send the involved novel via an intermediate party to the two defendant companies for shooting it into a skit, but the latter two parties refused to do so. Nevertheless, during making its own plan to shoot the skits, the plaintiff found that the two defendants had shot the involved novel into a skit that was broadcasted on one of the defendant’s platform. The plaintiff considered the defendants severely infringed its copyright and sued them for ceasing the infringement, eliminating the effect, and compensating the economical loss of RMB 2 million yuan plus a reasonable cost of RMB 44,540 yuan.
The Court considered that without evidence provided otherwise, it can be recognized that the plaintiff had the right to adapt and shoot the involved novel into a movie/TV/video etc., as well as the right to maintain its right. Upon comparing both parties’ opinions, there are substantial similarities between the involved novel and the infringing skits in terms of characters, character relations, storylines, etc., and the evidence at hand is sufficient to prove that the infringing skits used the original expression of the novel. Thus, the said skits have infringed the novel’s right to adapt and shoot. Both defendants were ordered to cease the infringement and compensate the plaintiff’s economical loss of RMB 200,000 yuan plus a reasonable cost of 44,540 yuan. The said judgment was maintained by a second instance court.
[Comment]
According to the Court, there are many web skit makers using storylines and characters from others’ works to make profits, which are problematic in terms of copycatting and infringement. The recognition of copyright infringement in the use of the original expression of the involved novel herein is helpful to warn and prevent similar copyright infringement and protect the creators’ rights and interests.
Trademark infringement in live stream sales
The plaintiff company owns a trademark right in relation to shoes in Class 25. The two defendants are a company that opened an online shop on a platform operated by the other defendant, and the former was selling shoes with the identical or similar mark to the plaintiff’s registered trademark, as well as displaying and selling the said shoes on a live stream account, etc. Thus, the plaintiff sued the former for infringing its trademark right and the latter as the platform for failure to fulfill the reasonable duty of care, which constitutes the help to infringement. In a word, both defendants were sued for economical compensation of RMB 40,500 yuan plus a reasonable cost of RMB 59,500 yuan.
The Court considered that, upon comparison, it can recognize that the sued goods were not manufactured by the plaintiff upon authorization and were infringing goods, and the sales of such goods by the defendant company had constituted trademark infringement. In case a seller knows or should have known its sold goods are infringing others’ trademark rights, it could not use the defense of legal source to claim exemption from liability. Given that 1) the involved trademark right has certain fame and its branded goods have an extensive sales scope and channels; 2) the defendant company had been selling via its shops and live stream for a long time and should have the ability to distinguish the goods’ brand, quality, price, etc.; 3) the purchasing and selling prices of the infringing goods were relatively low and there was lacking evidence that the defendant company had checked the source and authorization of the sold goods, there was no factual ground that the defendant company did not know the sold goods were infringing. Thus, it was reasonable to request the defendant company to compensate. On the other hand, there was no evidence showing that the platform company had known or should have known the existence of the infringement in its platform, and it had checked and ceased the relevant display upon receipt of the litigation, the Court considered that the defendant platform had taken the duty of care and should not be liable. In a word, the defendant company was ordered to compensate the plaintiff’s economical loss of RMB 40, 000 yuan plus a reasonable cost of RMB 4,000 yuan. The said judgment has come into effect.
[Comment]
According to the Court, this case reminds of the intellectual property risk during the live streaming sales, analyzes the behavior nature and scope of liability of the involved parties (e.g., the seller, the platform), and guides the parties in the market to regulate themselves.
It is worth mentioning that, as a primary court, the People’s Court of Haidian District also has jurisdiction over certain intellectual property cases. In accordance with the Several Provisions of the Supreme People's Court on the Original Jurisdiction over Civil and Administrative Cases Involving Intellectual Property and the Notice by the Supreme People's Court of Issuing the Standards for Civil and Administrative Cases Involving Intellectual Property Rights under Original Jurisdiction of the Primary People's Courts, “civil and administrative cases of the first instance of disputes over the ownership and infringement of patents for inventions, patents for utility models, new varieties of plants, layout designs of integrated circuits, technological secrets, computer software, and disputes over monopolization shall be under the jurisdiction of the courts for intellectual property rights, the intermediate people's courts at the seat of the people's governments of provinces, autonomous regions, and province-level municipalities directly under the central government, and the intermediate people's courts as determined by the Supreme People's Court (Article 1)”. “Disputes over the ownership and infringement of design patents, as well as civil and administrative cases of first instance involving the determination of well-known trademarks, shall be under the jurisdiction of the intellectual property court and the intermediate people's court; subject to the approval of the Supreme People's Court, they may also be under the jurisdiction of the primary people's court, with the exception of administrative cases concerning design patents. Where the subject matter of litigation in intellectual property cases of first instance other than those provided for in Article 1 of these Provisions and paragraph 1 of this Article is above the amount determined by the Supreme People's Court, and where administrative acts of a department of the State Council, a local people's government at or above the county level, or a customs office are involved, the jurisdiction shall be vested in an intermediate people's court (Article 2)”. “Civil and administrative intellectual property cases of the first instance other than those provided for in Articles 1 and 2 of these Provisions shall be under the jurisdiction of the Primary People's Courts as determined by the Supreme People's Court.” Based on the above, the People’s Court of Haidian District also has the jurisdiction over certain first instance intellectual property cases, and the typical cases mentioned herein were also tried at the People’s Court of Haidian District.
It is reported that the People’s Court of Haidian District in Beijing has accepted 4851 cases that involve digital economical IP cases, which accounts for 56.7% of the total intellectual property cases. There have been 4840 cases that are concluded, including 1447 cases concluded with a judgment, and the highest compensation amount reached about 21 million yuan. In terms of the cases in 2023, there were 2841 new cases accepted, which was an increase of 11.8% year on year; and 3244 cases concluded, which was an increase of 15.2% year on year. Further, there were 1891 cases concluded in a fast-track procedure, which accounts for 58.3% of the total cases (https://bjhdfy.bjcourt.gov.cn/article/detail/2024/04/id/7910990.shtml).
Among the ten issued cases, it involves five unfair competition disputes, three infringements of copyright disputes, one infringement of trade secret dispute, and one infringement of trademark right dispute. Some cases as follows are worth attention:
Trade secret infringement with a punitive compensation
The plaintiff herein is a company that provides online education service via its operated APP, whereas the defendant was an employee thereof who signed a confidentiality agreement with the plaintiff and was in charge of tasks, such as daily data monitoring, specialized data analysis, and so on. During the defendant’s employment, he disclosed more than 60 types of the plaintiff’s operational data (e.g., renewal rate of classes, numbers of signed-ups, etc.) to third parties and allowed others to use such data. In return, the defendant had a gain amounting to RMB 200,000 yuan. Accordingly, the plaintiff claimed that his behavior had constituted infringement of trade secret and such severe infringement should apply the punitive compensation, and the total amount should be at RMB 500,000 yuan, which was the illegal gain plus 1.5 times of the illegal gain as the punitive compensation (200,000 + 200,000 * 1.5 = 500,000).
According to the Court, the more than 60 types of data claimed by the plaintiff should be considered as trade secret protected by laws, as such data have reflected the plaintiff’s operation with commercial value and were protected by relevant confidentiality measures adopted by the plaintiff. As an employee, the defendant’s disclosure of the company’s data and his permission for others to use it had violated the confidentiality obligation and infringed the plaintiff’s trade secret.
Regarding the application of the punitive compensation, the Court considered that the defendant was obviously in bad faith, as he acknowledged that the involved data are trade secrets but still disclosed those to third parties for profit. Further, during the defendant’s employment for almost three years, his infringement lasted for 15 months and disclosed the involved data to more than 80 enterprises for the profit of RMB 200,000 yuan, which was considered infringements that were high frequency, multiple times, long lasting time, and extensive scope of disclosure” and fell into the scope of the severe circumstance. Based on the above, the Court considered that it was reasonable for the plaintiff to claim punitive compensation on the basis of 1.5 times of the illegal profit and fully supported such a claim. Although the defendant appealed the said judgment, the second instance court maintained it and the judgment has come into effect.
[Comment]
According to the Court, various operational data of a company is important to understand such company’s operation status, as well as the market change and trend for further making competitive strategy and scientific decision, and such data can be protected as a trade secret provided that they fulfill the conditions of constituting a trade secret. The case herein provides strong judicial protection to enterprises’ operation data and has a deterrent effect on those selling enterprise data by recognizing the infringement of trade secret and applying the punitive compensation.
Unfair competition dispute by setting up a false live streaming title
The plaintiff is a network company that has the exclusive right to broadcast a sports game and is entitled to maintain its right within mainland China. The defendant company set up live stream titles, such as “Live streaming the opening ceremony of the game, Chinese delegation enters in the 110th,” on its website, however, when clicked the said titles, it played entertainment programs made by the defendant itself, and it was about the invited guest watching the game opening ceremony while eating hot pot. The plaintiff considered such a behavior constituted unfair competition, as it would mislead the public to consider the defendant was live streaming the opening ceremony while inducing the public to click and watch their own program. Thus, the plaintiff claimed an economical loss of RMB 1 million yuan plus a reasonable cost of RMB 50,865 yuan.
The Court considered that the plaintiff’s right and interest to broadcast the sports game for attracting visitors, commercial opportunities, operational gains, competition advantages, and so on, should be protected by the Anti-unfair Competition Law. The defendant’s behaviors above were easy to mislead the public to consider it providing live stream of the opening ceremony and therefore click into the involved web page. There were also characters in “Sports Game Opening Ceremony” who had the intention to cause the public misinterpretation, and the comments on the program’s live page had shown that it in fact caused the misinterpretation from the public. Thus, the Court considered the defendant had constituted false advertisement under the Anti-unfair Competition Law by setting up a false advertising title to attract misled visitors for more website traffic and interest. The Court ordered the defendant to compensate the plaintiff RMB 500,000 yuan plus a reasonable cost of 20,000 yuan, which was maintained by the second instance court.
[Comment]
According to the Court, this is a typical case of unfair competition by setting up a false live streaming title. The case made a detailed analysis on issues, such as the correspondence between the involved live streaming title and the content, whether the advertising content was one-sided, ambiguous, or misleading, etc., and effectively prevented the defendant from obtaining traffic in a false or misleading manner.
Copyright infringement of a web novel by a web skits
The plaintiff company owns the exclusive right to adapt and shoot a novel into a movie, TV or video, as well as the right to cease infringement upon authorization. The plaintiff used to send the involved novel via an intermediate party to the two defendant companies for shooting it into a skit, but the latter two parties refused to do so. Nevertheless, during making its own plan to shoot the skits, the plaintiff found that the two defendants had shot the involved novel into a skit that was broadcasted on one of the defendant’s platform. The plaintiff considered the defendants severely infringed its copyright and sued them for ceasing the infringement, eliminating the effect, and compensating the economical loss of RMB 2 million yuan plus a reasonable cost of RMB 44,540 yuan.
The Court considered that without evidence provided otherwise, it can be recognized that the plaintiff had the right to adapt and shoot the involved novel into a movie/TV/video etc., as well as the right to maintain its right. Upon comparing both parties’ opinions, there are substantial similarities between the involved novel and the infringing skits in terms of characters, character relations, storylines, etc., and the evidence at hand is sufficient to prove that the infringing skits used the original expression of the novel. Thus, the said skits have infringed the novel’s right to adapt and shoot. Both defendants were ordered to cease the infringement and compensate the plaintiff’s economical loss of RMB 200,000 yuan plus a reasonable cost of 44,540 yuan. The said judgment was maintained by a second instance court.
[Comment]
According to the Court, there are many web skit makers using storylines and characters from others’ works to make profits, which are problematic in terms of copycatting and infringement. The recognition of copyright infringement in the use of the original expression of the involved novel herein is helpful to warn and prevent similar copyright infringement and protect the creators’ rights and interests.
Trademark infringement in live stream sales
The plaintiff company owns a trademark right in relation to shoes in Class 25. The two defendants are a company that opened an online shop on a platform operated by the other defendant, and the former was selling shoes with the identical or similar mark to the plaintiff’s registered trademark, as well as displaying and selling the said shoes on a live stream account, etc. Thus, the plaintiff sued the former for infringing its trademark right and the latter as the platform for failure to fulfill the reasonable duty of care, which constitutes the help to infringement. In a word, both defendants were sued for economical compensation of RMB 40,500 yuan plus a reasonable cost of RMB 59,500 yuan.
The Court considered that, upon comparison, it can recognize that the sued goods were not manufactured by the plaintiff upon authorization and were infringing goods, and the sales of such goods by the defendant company had constituted trademark infringement. In case a seller knows or should have known its sold goods are infringing others’ trademark rights, it could not use the defense of legal source to claim exemption from liability. Given that 1) the involved trademark right has certain fame and its branded goods have an extensive sales scope and channels; 2) the defendant company had been selling via its shops and live stream for a long time and should have the ability to distinguish the goods’ brand, quality, price, etc.; 3) the purchasing and selling prices of the infringing goods were relatively low and there was lacking evidence that the defendant company had checked the source and authorization of the sold goods, there was no factual ground that the defendant company did not know the sold goods were infringing. Thus, it was reasonable to request the defendant company to compensate. On the other hand, there was no evidence showing that the platform company had known or should have known the existence of the infringement in its platform, and it had checked and ceased the relevant display upon receipt of the litigation, the Court considered that the defendant platform had taken the duty of care and should not be liable. In a word, the defendant company was ordered to compensate the plaintiff’s economical loss of RMB 40, 000 yuan plus a reasonable cost of RMB 4,000 yuan. The said judgment has come into effect.
[Comment]
According to the Court, this case reminds of the intellectual property risk during the live streaming sales, analyzes the behavior nature and scope of liability of the involved parties (e.g., the seller, the platform), and guides the parties in the market to regulate themselves.