COPYRIGHT CRIMINAL CRIMINAL CASES

China IP,[Copyright]

  CASE 1
  COPYRIGHT INFRINGEMENT CASE INVOLVING CHEN First Instance Case No.: (2014) Pu Xing (Zhi) Chu Zi No. 33 [Keywords] Unauthorised erection of server in substantial similarity with involved online game program and its operation online for illegal profits shall be determined as copyright infringement. This case deters online game private server behaviour, and builds up the international image of Chinese IP protection for online game industry.
  [Synopsis]
  The online game software “The Legend of Mir 2” (Chinese name: 热血传奇, hereinafter referred to as “Legend”) authorises Shanghai Shanda Networking Development Co., Ltd. (Shanda) to exclusively operate in China. From May 2012 on, defendant Chen illegally obtained the source code of Legend and adapted it into Dragon online game without consent of the copyright owner, and in doing so, Chen knew that Shanda is the exclusive legal operator of Legend in China. Moreover, the defendant rent private server in Guangdong, Fujian and other provinces of China, use sl.yuyan99.com domain name to erect game server for publishing his Dragon online game. Players click on the “Charge” button on the game main page and pay for the game by transferring cash to defendant Chen’s bank account and his controlled party Wang’s bank account, through Alipay or Shengpay. Up to the date of litigation, defendant Chen received players’ charge totalling over RMB3,240,000. On July 30, 2014, the defendant Chen surrendered to the police after telephone notice, and confessed to his crime after appearing in court. Entrusted by the police, on August 13, 2014, Shanghai Stars Digital Forensic Center issued Legend Private Server Program Judicial Authentication (Hu Chen Si Jian Zhong Xin (2014) Ji Jian Zi No.188), which compared the similarity between the seized game server program in Legend V1.78 game server programme and found that they are in substantial similarity.Pudong Court finds that defendant Chen for profit purpose reproduces computer software without consent of the copyright owner, his crime is especially serious as infringement on copyright. The prosecutor’s alleged crime is established and supported.The defendant Chen due to his surrender will be subject to a lighter punishment.
  Accordingly, the Court considering the criminal severity, social hazard, confession degree and other factors, under Article 217(1) of the Criminal Law of China, decides that: (1) The defendant Chen commits the crime of copyright infringement, and should be penalised for a sentence of three months in prison and a fine of RMB1.7 million. (2) Chen’s illegal income should be forfeited.(3) The seized three sets of notebook computers and one set of desktop computer should be forfeited. This case has taken legal effect.
  [Judge’s Comment]
  Over recent years, China’s online game industry is soaring, and the market sales value has exceeded RMB100 billion. However, unauthorised erection of game server and profit from it is an important inhibitor of Chinese online game industry. For this regard, it is necessary to take criminal penalisation to crack down private server behaviour with serious subsequences, so as to promote healthy development of online game industry. In this case, the comparison between infringing program and specimen program concludes the substantial similarity in the meaning of Copyright Law, and the defendant Chen’s behaviour also constitutes copyright infringement. Criminal penalisation of online game justice is not only a legal term, but also an urgent need for industry protection, and this decision will be of some reference for future similar cases.
  CASE 2
  COPYRIGHT INFRINGEMENT CASE INVOLVING WANG JIE AMONG 8 OTHERS
  First Instance No.: (2013) Xu Xing (Zhi) Chu Zi No. 20
  [Synopsis]
  In early 2012, defendant Wang Jie, as legal representative of Shanghai Wulong Network Technology Development Ltd. (Wulong), worked with another defendant Wan Zhen who was working for this company, to profit illegally from establishing Shanghai Jiayixing Information Technology Co., Ltd. (Jiayixing) and soliciting former Wulong employees to work with Jiayixing. Jiayixing in an unauthorised approach organised personnel to reproduce Wulong’s software “Wulong School V3.0” illegally into a English learning software named “Jiayu Star”. Jiayixing profits from Internet operation by soliciting agents and selling to agents the infringing software.
  During operation, the defendants Jin Wenbing, Lou Bo, Sun Guolong, Shen Liangjun, Huang Wenfeng, An Minghao among other former Wulong employees, knowing the illegality, followed the defendants Wang Jie and Wan Zhen’s arrangements to reproduce lots of files under the server and client end program of “Wulong School V3.0”, and form teir own “Jiayu Star” software for operation. After verification, Jiayu Star is substantially similar with Wulong School V3.0 in respect of server end program and client end program.In May-December 2012, the eight defendants including Wang Jie gained illegal income from operating Jiayu Star in the name of Jiayixing totally more than RMB1 million.
  On September 30, 2013, Xuhui District People’s Procuratorate by law prosecuted the 8 persons including Wang Jie for copyright infringement; On July 25, 2014, Xuhui District People’s Court, for the crime of copyright infringement, sentenced the defendants Wang Jie, Wan Zhen, Lou Bo six months to three years in prison, suspended for one year or so, each fined RMB100 thousand to 10 thousand; the remaining defendants were exempted from criminal punishment. Wang Jie and other defendants appealed, on May 20, 2015, Shanghai First Intermediate People’s Court upheld the original verdict.
  [Judge’s Comment]
  The case is related to computer software, professional, highly technical, featured by complex electronic evidence, and difficult evidence verification. Meanwhile, eight criminals are all well-educated computer professionals, who try to conceal the fact of infringement by inclusion of some re-development program in infringing software, modus operandi very subtle. The prosecutor, in order to accurately identify the facts of the case, guides the appraisal bodies to set up and compare than on the environment, changes the traditional practice of simple comparison and percentage of same files in total files, and identifies crime fact by confirming the core software program from a substantial similarity. In case the defendant applies for expert witnesses to appear in court, the prosecutor makes careful pre-trial preparations to apply for witness, appraiser to appear in the court, for cross-examination by the prosecution and defense, which effectively solves the core technical problems affecting conviction, and strongly refutes the technical defense, and achieves good trial results, offering a new idea for similar cases. Regarding to light punishment for intellectual property crime, high rate of cases of probation, the prosecutor, through strong allegations, sentenced the defendant Wang to three years in prison, which demonstrates how effectively the Criminal Law can punish serious IP crimes and protect IP.
  CASE 3
  COPYRIGHT INFRINGEMENT CASE INVOLVING HUA RUZHONG AND SHANGHAI DUSHEN BUSINESS CONSULTING CO., LTD.
  First Instance No.: (2014) Hai Xing Chu Zi No. 1986 Second Instance No.: (2015) Yi Zhong Xing Zhong Zi No. 272
  [Synopsis]
  In 2005, the defendant Hua Ruzhong registered Shanghai Dushen Business Consulting Co., Ltd. (Dushen) in Shanghai, and developed “Wenbaishi” standard automatic update management software, and registered the computer software copyr ight for the software. The software includes effective information and bibliography of various architectural standards, with data management and retrieval functions, which can collect the relevant entry criteria, construction portfolio and other specific content based on the customer’s individual requirements.From August 2007 to October 2013, the defendant Hua Ruzhong purchased or procured the purchase of construction atlas, standards books published by China Institute of Building Standard Design & Research, China Building Industry Press, China Planning Press, and scanned them or otherwise into electronic data to be included in the company database, and the corresponding data is bound to customer’s directory according to customer demand for server data and client data synchronization.As of October 2013, Dushen sold a number of the infringing software to China Light Industry International Engineering Co., Ltd. , Beijing Urban Construction Exploration & Surveying Design Research Institute Co., Ltd., among others.
  On October 21, 2013, the police received a report from China Institute of Building Standard Design & Research, and on October 28, arrested the defendant Hua Ruzhong.After verification, Dushen standard automatic update management software reproduced and distributed more than 700 publications of China Institute of Building Standard Design & Research, China Building Industry Press, China Planning Press, in an unauthorised way.
  On October 21, 2013, the police investigated Hua Ruzhong for the crime of copyright infringement. On December 5, 2013, Haidian District People’s Procuratorate approved the arrest of Hua Ruzhong, and on August 21, 2014, prosecuted Hua Ruzhong and added Dushen as a defendant too. On October 27, Haidian District People’s Court penalised Dushen to pay a fine of RMB100 thousand for the crime of copyright infringement; sentenced the defendant Hua Ruzhong one a year in prison and a fine of RMB50 thousand. Dushen refused to accept the first instance judgment, and filed appeal; On March 4, 2015, Beijing First Intermediate People’s Court upheld the original verdict.
  [Judge’s Comment]
  In this case, the defendant transformed hardcopy in to electronic data and enters them into software and then sold the software. This is a new kind of copyright infringement . The infringed works are building atlas and building industry standards, so the prosecutor carefully sorted the titles, copyright pages, editorial notes and other materials to determine whether the “standards” are protected by Copyright Law, and finally, the prosecutor deducted “compulsory standards” from the involved “standards”, to ensure the accuracy of facts and penalization.In the proceedings, the prosecutor found that Dushen should be a corporate criminal, but the police omitted it, so the prosecutor guided the police to transfer the corporate criminal, and ensure the correct application of laws.
  CASE 4
  COPYRIGHT INFRINGEMENT ON SALES OF COMPUTER SOFTWARE ENCRYPTION LOCKS
  [Synopsis]
  The victim Glodon Inc. (Glodon) is a software development company whose official website offers free download of the legitimate software, the users who have downloaded software have to buy encryption locks from Glodon in order to use the software properly. Since April 2013, the defendant Huo Hongwei as legal representative and actual principal of Anyang Weijie E-Commerce Co., Ltd. (Weijie), and the defendant’s employees Wu Sumei, Duan Yuting, Hao Limeng, Shen Ling, and Liu Yifei, without permission of the copyright owner, use Glodon’s encryption locks and software crack driver for the substantial purpose of selling Glodon’s software. Their illegal turnover amounted RMB274,944.The defendant Liu Yifei participated in the above crime since June 2013, profiting illegally RMB180,436. On October 28, 2013, the defendants Huo Hongwei, Wu Sumei, Duan Yuting, Hao Limeng, Shen Ling and Liu Yifei were arrested by the police. Under arrest, the defendant Huo Hongwei compensated Glodon RMB500 thousand, and Glodon expressed understanding to him.
  The court finds that the defendants Huo Hongwei, Wu Sumei, Duan Yuting, Hao Limeng, Shen Ling, and Liu Yifei, as principal and staff of Weijie, profit from unauthorised issue of other’s computer software, infringing other’s copyright, and among them, Huo Hongwei, Wu Sumei, Duan Yuting, Hao Limeng and Shen Ling’s behaviours are especially serious, Liu Yifei’s behaviour is serious, and all their behaviours constitute copyright infringement crime, and should be punished, and the prosecutor’s conviction is established hereby.As to the defendant Huo Hongwei’s defence against reproduction right infringement, it is shown in the existing evidence that the defendant sells Glodon’s computer software by selling Glodon’s encryption locks and crack driver, and in fact the defendant’s behaviour constitutes distribution of other’s works, and should be deemed as copyright infringement crime, and thus rejects the above defence.
  [Judge’s Comment]
  Current computer software infringement is mainly represented by: encryption locks sales in order for software sales, control over software supply and obtain consideration income from channel. encryption locks piracy is actually using pirated encryption locks to evade copyright owner’s technical protection, so the software copyright is infringed. In this case, the defendant’s pirated encryption locks is different from the licensed encryption locks, the pirated encryption locks is first unlock and then relock, realising the encryption and decryption functions of licensed software with recoding and other technical approaches. To determine whether the alleged behaviour is copyright infringement behaviour or not should consider the computer software infringement model, and recognise the behaviour of “distribution” stated in the Criminal Law of China. This defendant modifies and cancels the encryption program of the licensed software by selling the recoded encryption program, which is a disguised sales of copyrighted software products, therefore, the behaviour falls in the definition of “distribution” behaviour under the Criminal Law, and constitutes a copyright infringement crime. This case is a typical new computer software infringement crime, and the conviction has broken through all previous “works distribution” meanings, and focused on the nature of criminal behaviours, which is typical of objects of crime and infringement manners.
  (Translated by Liu Xiaoyu)

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