Abstract: This case was selected as one of the "50 Typical Cases of Intellectual Property Judicial Protection in Chinese Courts" by the Supreme People's Court in 2018, the "Top 10 Cases of Intellectual Property Judicial Protection in Shanghai Courts" by the Shanghai Higher People's Court in 2018, and the "Top 10 Typical Cases of Shanghai Copyright" by the Shanghai Copyright Bureau in 2018
Lingyun Yongran's client discovered that a certain electric vehicle technology company in Shanghai (the "defendant") installed and commercially used its copyrighted CATIA software without authorization. In order to safeguard their own rights and interests, the client has entrusted the legal team of Shanghai Lingyun Yongran Law Firm ("Lingyun Yongran") to file a complaint with the Shanghai Cultural Market Administrative Law Enforcement Corps ("Cultural Law Enforcement Corps"). Afterwards, both parties reached a settlement agreement and signed a software procurement contract. However, the defendant did not make payment according to the settlement agreement and continued to use the software involved on a large scale. Therefore, the client once again entrusted the lawyer team of Ling Yunyongran to file a lawsuit and handle related matters.
Before the lawsuit, the Cultural Law Enforcement Corps seized a total of 8 sets of infringing software at the defendant's location; By the time of evidence preservation in the lawsuit, the number of installations of infringing software had increased to 73 and were all in use. According to the settlement agreement previously reached by both parties, the defendant should cease infringement and sign a procurement contract with the authorized agent of the customer. At the same time, more attention will be paid to establishing and improving software asset verification and management systems to ensure the legal use of customer software. At the same time, considering that both parties have reached a settlement, the Cultural Law Enforcement Corps has therefore reduced the administrative penalty for the defendant in accordance with the law. However, it not only failed to fulfill its obligations according to the settlement agreement, but also concealed the continued use of infringing software by customers and expanded the scale of use, with obvious subjective malice. The defendant's behavior also reflects to a certain extent the widespread use of infringing software in the market at that time. In the context of frequent external sales of customer software, the outcome of this case is of great significance for other rights protection lawsuits that customers may bring in the future.
However, it is difficult to apply punitive damages in this case, and the customer's losses may be difficult to fill. According to relevant laws and regulations, the core points for applying punitive damages in intellectual property infringement cases are "the determined actual loss/profit amount, the subjective malice of the infringer, and the severity of the circumstances." Due to the defendant's continuous infringement and lack of repentance, the court has recognized the viewpoint put forward by the lawyer team of Ling Yunyong that the defendant has subjective malice and the circumstances are serious. However, there is considerable controversy over the determination of the amount of loss in this case.
And there are many evidences and controversies in determining the software unit price in this case. The sales contract signed between the authorized agent and Company A submitted by the customer indicates that the price of the software involved in the case is over 250000 yuan per set. However, the evidence provided by the defendant proves that Company B purchased the same software from a customer agent at a price of less than 190000 yuan per set. The punishment decision issued by the Cultural Law Enforcement Corps shows that the unit price of the software is only 81000 yuan. The evidence submitted by both parties conflicts with third-party evidence, and the price difference is very obvious. There is also no more detailed evidence to prove the specific losses suffered by the customer. Based on this, without being able to determine the software unit price, it is also impossible to determine the customer's losses, resulting in the failure to meet the applicable conditions of the statutory punitive damages system in this case. In addition, there was no precedent in China at that time for applying the punitive damages system (the specific name of the "discretionary damages system" referred to later) to copyright disputes, making it difficult for Ling Yunyong to protect customer rights by advocating for the application of this system.
According to the statutory maximum compensation for copyright infringement of 500000 yuan, if punitive damages cannot be applied in this case to obtain sufficient compensation for the client, the client will face relatively high losses. In addition, the compensation amount is slightly insufficient in deterring similar infringements, and may not be able to combat the negative trend of software infringement in the market.
The lawyer team of Ling Yun Yongran organized evidence in detail and clarified to the court the necessity of applying punitive damages in this case by comparing the precedent with the circumstances of this case. In the end, although the actual losses suffered by the client could not be specifically determined, the court found that the existing evidence was sufficient to prove that the client's losses were significantly higher than the statutory maximum compensation amount. Considering the subjective malice and serious circumstances of the defendant's infringement, the court ultimately applied a discretionary compensation system and ruled that the defendant should pay a total of 9 million yuan in economic losses and other expenses to the client.
The result of obtaining 9 million yuan in compensation and other expenses far exceeded the client's expectations, and the client expressed high satisfaction with the strong assistance of the Ling Yun Yongran legal team in this case. After this case, the client has cooperated with Lingyun Yongran multiple times and handed over the rights protection matters of other software under its umbrella to the law firm for handling. The two parties have been cooperating in a friendly manner until now.
This case is the first intellectual property infringement case in Shanghai that applies discretionary compensation, which is of great guiding significance for similar cases. This case is a typical example of the court applying the discretionary compensation system in accordance with the law to increase the compensation for intellectual property infringement and safeguard the legitimate rights and interests of rights holders. It is not only beneficial to further eliminate the negative trend of using infringing software in the market, but also to guide and remind the public to use genuine software.
This case was selected as one of the "50 Typical Cases of Intellectual Property Judicial Protection in Chinese Courts" by the Supreme People's Court in 2018, the "Top 10 Cases of Intellectual Property Judicial Protection in Shanghai Courts" by the Shanghai High People's Court in 2018, and the "Top 10 Typical Cases of Shanghai Copyright" by the Shanghai Copyright Bureau in 2018.
