New Trends in IP Trials at the Beijing High People’s Court in 2007 (III)

Issue 26, By IP Division, Beijing High People’s Court,[Copyright]

III. New developments in copyright trials


1. Determining infringement liability of NSPs that provide search engines and linking services


For network service providers (NSPs) that provide storage, search engines, and links to information, rights owners who believe that their rights to network dissemination of information has been infringed upon, may notify the NSP in writing, requesting deletion of such works, and/or disconnection of the links. Upon receiving such notice, the NSP should immediately delete the alleged infringing works, performances or audio/video recordings or disconnect the alleged infringing links, and simultaneously, forward the notice to whom such works are targeted, or if the targets of the URLs are not clear and forwarding is impossible, publicize the notice on the network. If the NSP takes the above measures in a timely and legal manner, it will not be held liable for damages for such infringing information or links. However, if the NSP knows or should have known that the works, performances or audio/video recordings that it links creates an infringement, they should be held jointly liable for the infringement. In judicial practice, it is worth noting whether the NSP is liable for compensatory damages should be hinged upon the notice from the rights proprietor.


In the case of Universal Music Group (UMG) v. Beijing Alibaba Information Technology Co., Ltd. (“Alibaba”) alleging infringement of music makers’ rights, 1 UMG is the maker of the musical production of “Beautiful Day” and 9 other songs. Yahoo China, operated by Alibaba, provided search services, trial listening and downloading of the 9 songs. On April 10, 2006, UMG wrote to Alibaba, requesting deletion of all infringing links within 7 days of receipt of the letter regarding the musical productions, together with a list of the members and official website where the information could be sought. On July 4, 2006, UMG once again wrote to Alibaba, demanding that within 7 days of receipt of the letter, Alibaba delete all infringing links in connection with the singers and albums in the letter. The letter listed 34 singers and 48 albums, and insisted that they provide, for exemplification purposes, one concrete infringing URL for each song, totaling 136 songs which included Beautiful Day and another 7 songs, together with screen shots of the infringing links. On July 20 and 28, 2006, Alibaba responded hoping that UMG would provide an electronic version of the URLs, saying that the manual deletion of the links to the URLs had begun. On July 26, 2008, UMG had collected enough evidence illustrating that Yahoo China had failed to delete all the infringing links to the original 9 songs initially claimed by UMG. On August 2, 2006, Alibaba wrote to UMG, saying that only the links to the URLs listed in the UMG attorney letter could be deleted. On August 3 and 10, 2006, UMG responded to Alibaba stressing that any and all links of Yahoo China to the songs concerned with the case were infringing links and requested that in addition to the URLs in the lawyers’ letter, any and all music search results of Yahoo China regarding those songs should be deleted. The first-instance court ruled that Alibaba should delete the search links in the Yahoo Music Search and compensate for the financial loss incurred by UMG.


The Beijing High People’s Court held that the audio recordings on third-party websites were unlicensed. Alibaba, by providing search links to those infringing audio recordings, created a channel and facilitates, and in so doing, in effect, participated and contributed to the third parties’ dissemination of those infringing audio recordings. Article 23 of the Regulation on Protection of the Right to Network Dissemination of Information of the People’s Republic of China provides that “a network service provider that provides searching or linking services to a service object, and has disconnected the link to a work, performance, or audio-visual recording infringing on an other’s right after receiving notification from the owner, shall not be liable for compensation.However, if it knew or should have known that the linked work, performance, or audio-visual recording has infringed upon another’s right, it shall be jointly liable for the infringement.” On the basis of the provision, even if the rights proprietor does not provide the notice to the NSP according to the Regulation, the NSP should be held liable nonetheless for infringement provided that it knows or should have known the audio recordings that it links are infringing products, but continues to provide the search and linking services. An NSP’s infringement liability is based on fault, which is determined by an inquiry into whether the actor could have, or should have, foreseen the unlawful consequences flowing from his conduct; it is determined by the capacity and the range of the foreseeability of the actor, and distinction must be drawn between foreseeability of an ordinary person and that of an expert.


For the music search service of Yahoo China, Alibaba collected, sorted, and categorized related music information, and on that basis, provided categorization information of various standards. As a search engine provider, Alibaba operates the music search service, as well as other services, and provides users with music searches and profits from such services. With regards to the standard of fault, Alibaba should know whether the audio recordings for which it provides search and linking services is legal or not. Particularly after being notified by UMG in written form several times of the infringing nature of the audio recordings of the 9 songs concerned with the case and links, Alibaba should have noticed the illegality of the audio recordings and taken relevant actions. Consequently, Alibaba only deleted 7 search links for which UMG had provided URLs. Obviously Alibaba failed to effect its obligation of due care and left the realization of the infringing consequences. Therefore, it should be decided that Alibaba contained a subjective fault, infringed upon the rights proprietor’s right to network dissemination of information, and shall ultimately be liable for the damages and other legal liabilities.


2. Determining an overall scale and judging on a comprehensive basis “advanced” plagiarism


It is relatively easy to determine the existence of copying when plaintiff’s work is totally exact as or basically similar to the alleged infringing work. It is much more complicated, however, to find copyright if the alleged copying relates only to the idea, style of language, character’s traces and their relations, main plots, individual sentences or various parts that are discrete in the works, and the wording is not always the same between the alleged infringing work and the original. When the rights owner bases their claim of copying on one or more of these facts, an inquiry should be made to the following: how to clarify the dichotomy between ideas and expressions, subject matter and detail, including whether the plot, design, main event, sequence and the characters relation is an idea or an expression; how to distinguish between public domain, facts and individual creation; what is a necessary scene or a unique expression; how to understand originality, whether subject and idea should be excluded absolutely in determining copying; and what principle and method can be used to determine copying.


In Huang Jingwen v. Beijing Books Building Co., Ltd. (BBB) and Feng Yanfei and Jilin People’s Publishing House (JPPH) for copyright infringement, 2 Huang was the author of the book “Social Man –Man of Wilderness” (社会人-荒原人), and BBB sold a book called “Beautiful Field” (美丽的田野) which was written by Feng and published by JPPH. Huang argued that the two books were the same or similar with regards to the story outline, the design, the environment and background, the relationship between characters, the language of the characters and the story plot and accused the “Beautiful Field” of infringing upon Huang’s copyright in the “Social Man –Man of Wilderness”. The first-instance court rejected Huang’s claims.


The Beijing High People’s Court held: “Firstly, the outline means the main points and the arrangement of the main components of the content when the story is narrated. The outline and design covers the activities of the characters and the vein of the story. It embodies the author’s intention on a macro scale and is highly generalized as it is not concerned with the description of how the events develop, or with the description of the details. Although both themed on rural life, the Social Man – the Man of the Wilderness and the Beautiful Field are different from each other in the wording and expressions regarding the actual description of the story. We cannot hold two works as equivalent or similar to each other only on the grounds that they express the same themes and ideas, as different works may employ the same themes and ideas with different expressional forms. Therefore, it cannot be decided that the Beautiful Field has copied the story outline and design of the Social Man –Man of Wilderness. Secondly, the plot of the story is, with regards to narrative works, the activities of the characters that have a cause-and-effect relationship in between and the progressing of the events by the characters. It is an expression of the works. Among the plots copied in Huang’s lists, some are not consistent with the original work and the generalization is in some way subjective some appear in the two works concerned with the case, but when placed in the specific work, cannot be found as the same plots; some are often seen in life and original to none, and should not be exclusively owned by any specific person. Therefore, the two works are not the same in terms of plot. Thirdly, as one of the basic forms of expression, the wording, if creative, should be protected by the copyright law. To compare the Social Man –Man of Wilderness and the Beautiful Field, among the wordings alleged by Huang, some are obviously different in expression and have nothing in common; some use the same expression, but are not from the Social Man – the Man of the Wilderness; and some use the same or similar expression, but are not creative and cannot be owned exclusively by any specific person. Therefore, the arguments of Huang are untenable that Feng has plagiarized Huang’s wordings. Fourthly and finally, characters are one of the structural elements of novel works and the relationship between characters is the main element to show the conflicts of the characters and drive the events. They constitute an “expression” in copyright. To determine the equivalency or similarity between two works, the characters should not be separated and taken out for comparison, but be combined with the plots of the stories and judged after a comprehensive consideration. For the Social Man – the Man of the Wilderness and the Beautiful Field, the expression of the characters is not the same, and the expression of the wordings is neither the same nor similar.” To sum up, the two works in the case, they are distinctive from each other by virtue of the unequivalency or dissimilarity in outline, design, plot, wording and relationship between the characters of the two stories. The second-instance court ruled to affirm the original judgment.


3. Determining whether auctioneers should be responsible for infringement for auctioned infringing works


The term “publish” as provided in the Copyright Law of the People’s Republic of China means the act to provide, through selling or donation, the original or copies of the work to the public. Obviously auctioning is an act of publishing. If the goods for auction are infringing goods, the act of auctioning, objectively speaking, damages the interests of the rights proprietor. However, according to the law, except stipulated otherwise in law, anyone is not responsible for infringement liability unless for an act in which they are at fault. Therefore, the infringement liability of the auctioneer is dependent upon whether they know or should know that the good for auctioning is an infringing good. The civil law determines a fault on whether the actor has used due care. “Due care” is a plural standard. Usually, a person, who is generally obligated to the rights and interests of others, should effect the due care of a man of “credit and good faith;” one, who is specially obligated to the rights and interests of others, should effect special due care as provided for and required by the laws, regulations or operating rules concerned. Thus, whether one can or should care varies with the person and event, and should be considered individually.


In An Mingyang, Che Yongren and Zhang Yongdian v. Beijing Huachen Auctions Co., Ltd. (Huachen) and Jiang Zhaowen for copyright dispute, 3 An, Che and Zhang were the authors of the work the “Great Strategic Decision” (伟大的战略决策).Jiang signed an auction contract with Huachen and instructed the latter to auction the work. After the auction, the three authors sent a letter written by a lawyer to the company, saying that the Great Strategic Decision auctioned was a phony and requested that the company take relevant measures and pay damages to the authors for the infringement. Upon receipt of the letter, Huachen suggested that the client and buyer terminate the transaction. Subsequently, the transaction was cancelled. The first-instance court held that the claims of the plaintiff lacked factual and legal bases, and rejected the claims.


The Beijing People’s High Court held that according to the Auction Law of the People’s Republic of China, auctioneer and client are not liable for guaranty of defects if they have declared, prior to the auction, that the authenticity or quality of the subject matter to be auctioned cannot be guaranteed. Because the auction of artistic works is special in nature, the law does not require the auctioneer to guarantee that the subject matter being auctioned must be authentic. Article 41 of the Auction Law provides that when a client authorizes auction of articles or goods or property rights, he or she shall provide his or her identity certificate and, as required by the auctioneer, the ownership certificate for the objects of auction, or certificates and any other materials testifying that he may dispose of the objects of auction according to law. Article 42 provides that the auctioneer shall verify the relevant certificates and materials provided by the client. The above provisions only require the auctioneer to examine the ownership of the subject matter under auction. In the case at bar, Huachen effected the examination, and after the auction and upon the questioning of the authors, had the transaction canceled and returned the subject matter in a timely and positive manner. Huacheng actions were not faulty and should not be liable for infringement liability. The second-instance court finally ruled and affirmed the original judgment.


4. The transferee or licensee is not allowed to utilize the right that the copyright proprietor does not expressly transfer or license


A copyright is the right that a creator enjoys in what he or she has created. Without the hard work and investment of the creator, neither work nor the bundle of rights in the work would come into existence. The legislative intent of copyright laws in all countries of the world is to protect the interests of the author. It can be said that “Authors First” is a basic principle deeply rooted in the copyright laws of various countries. The copyright law of China treats it as the first objective to recognize and protect the rights of the copyrights proprietor. Article 26 of the Copyright Law of the People’s Republic of China says explicitly that “the other party shall not, without permission from the copyright owner, exercise any right that the copyright owner has not expressly licensed or assigned in the licensing and assignment contract.”
In the copyright infringement case of Wei Zhaoquan v. Konghong (Beijing) Book Co., Ltd. (Konghong Book) and Beijing Huawang Huitong Technical Service Co., Ltd. (Huawang Huitong), 4 Wei was the author of the novel Dongchang and Xichang(东厂与西厂)(– the Secret Agencies of the Mining Dynasty in Chinese History). According to the Book Publishing Contract between Wei and Konghong Books, the novel was to be delivered, printed, and published by the China Opera Press. Konghong Books had the right to use various types’ media coverage to lawfully promote the novel, for which purpose Wei authorized Konghong Book to publish or broadcast the novel with newspapers, magazines, broadcasting stations or television stations. Konghong Book presented to Huahui Wangtong a Licensing Contract to publish Wei’s work with a forged signature of Wei. Article 7 of the Licensing Contract says that “Party A authorizes that Party B may, for purposes of publishing or promoting the work, utilize the work and have it republished or published in serial form on newspapers, magazines, broadcasting stations, television stations or the Internet, without paying an additional royalty or other premiums.” On the basis of the Licensing Contract, Huahui Wangtong published part of the novel in serial form on the “Readers’ Channel” of China.com which was operated by Huahui Wangtong. The first-instance court held that Konghong Book had infringed upon the right to network dissemination of information and the right to remuneration that Wei enjoyed in his work, and should be legally liable to stop the infringing act, apologize to Wei and pay the damages and the reasonable litigation expenses incurred by Wei.


The Beijing High People’s Court held that by the Book Publishing Contract with Konghong Book, Wei allowed Konghong Book to publish his work legally through various forms of media, but limited the publication to newspapers, magazines, broadcasting stations, and television stations. The limitation expressly excludes the Internet. Wei did not grant to Konghong Book the right to network dissemination of the novel. Without the approval of the author, Konghong Book falsified the author’s signature and subsequently presented to Huahui Wangtong a fraudulant Licensing Contract to publish Wei’s work. The act resulted in the work being disseminated on the Internet. Konghong Book’s act exceeded the range agreed to in the Book Publishing Contract between Wei and Konghong Book and Konghong Book obviously acted in bad faith. Konghong Book had infringed upon Wei’s rights to network dissemination of the information and to remuneration.


IV. New developments in unfair competition trials


1. Determining that the use of an existing company name or commodity name justifies the difference from the existing famous good on reasonable grounds


Section 2, Article 5 of the Unfair Competition Law of the People’s Republic of China provides that any unauthorized use of a particular name of a well-known good or a name similar, which causes confusion with the well-known good and makes potential buyers mistake the other good as well-known goods, constitutes unfair competition. According to the provision, the elements of unfair competition include the act of unauthorized use and the consequence of confusion and mistaken belief among consumers. The so-called “unauthorized use” means generally the use by an actor without reasonable grounds or bases, nor legal grant. If the actor has reasonable grounds or bases to use the particular name of the well-known good or a similar name, and does not cause confusion with the well-known good or mistaken belief among the consumers, such use cannot be determined as unfair competition.


In Zhang Chang, Zhang Hongyue and Beijing Nirenzhang Art Development Co., Ltd. v. Zhang Tiecheng, Beijing Nirenzhang Bogu Ceramic Art Factory and Beijing Nirenzhang Art Works Co., Ltd. for infringement upon the right of name and unfair competition, 5 the first-instance court held that the defendant’s use of “Nirenzhang” as a product name and a company name for publicizing purposes causes the public to mistaken the brand name “Nirenzhang” and constituted unfair competition. The Beijing High People’s Court held that as an offspring of “Beijing Nirenzhang” – the Man of Clay Figures in Beijing, the defendant is reasonably based to use “Beijing Nirenzhang” The imitation clay ceramic products of ancient styles of Beijing Nirenzhang are different from the well-known colored clay sculpture works of Tianjin Nirenzhang with regards to the product categories, characteristics, processing techniques, distribution channels and consumer groups. The public is able to differentiate the imitation clay ceramic products of ancient styles by the defendant from the well-known colored clay sculpture works of the plaintiff. Thus, no confusion or mistake would result in the market. Therefore, the defendant’s use of “Beijing Nirenzhang” as part of the company name and the product name does not constitute unfair competition.


2. Petitions for declaratory judgment of non-infringement of trade secrets should not be entertained.


Recently, more and more cases are filed seeking declaratory judgment of non-infringement of intellectual property rights. The Rules on Causes of Civil Actions of the Supreme People’s Court, effective as of April 1, 2008, enumerated the causes of civil actions for declaratory judgment of non-infringement in disputes involving patents, trademarks and copyrights, without mentioning trade secrets. Thus, it is still unsettled whether a petition for declaratory judgment of non-infringement of trade secret should be entertained in courts.
In Shi Ruilong v. Tian Yujin and Beijing Yujin Chemical Co., Ltd. (Yujin Company) for affirmation of non-infringement upon business secrets, 6 Shi requested the court to affirm that Shi’s act had not infringed upon the business secrets of the Tian and Yujin Company. The trial court held that Shi has stated a cause of action and sustained the petition. The Beijing High People’s Court held that Shi complained to the court that the Tian and Yujin Company had several times, reported to the industrial and commercial administration and the public security authority that their business secrets had been infringed on by Shi, as a result of which Shi was questioned and summoned by the authorities several times. Shi’s normal production, operation and personal life were seriously affected. Shi requested that the court affirm that Shi had not infringed on the business secrets of the Tian and Yujin Company. However, the industrial and commercial administration and the public security authority had acted in accordance with the law while they performed their duties by questioning and summoning Shi. The action that Shi raised by using the above as the causes to request an affirmation of Shi’s non-infringement upon the business secrets of the Tian and Yujin Company is not an action stipulated in Civil Procedural Law of the People’s Republic of China. The court lacked the legal basis to accept the case. The second-instance court ruled to disaffirm the first-instance judgment and reject the complaint of Shi in accordance with Article 186 of the Civil Procedural Law and the Opinions on Several Issues in the Application of the Civil Procedural Law of the People’s Republic of China by the Supreme People’s Court.

Endnotes:
1. See the Civil Judgment (2007) Gao Min Zong Zi No. 1190 of the Beijing High People’s Court, and the Civil Judgment (2007) Er Zhong Min Chu Zi No. 2626 of the Beijing Second Intermediate Court.
2. See the Civil Judgment (2007) Gao Min Zong Zi No. 1698 of the Beijing High People’s Court, and the Civil Judgment (2006) Yi Zhong Min Chu Zi No. 14484 of the Beijing First Intermediate Court.
3. See the Civil Judgment (2007) Gao Min Zong Zi No. 589 of the Beijing High People’s Court, and the Civil Judgment (2006) Yi Zhong Min Chu Zi No. 11139 of the Beijing First Intermediate Court.
4. See the Civil Judgment (2007) Gao Min Zong Zi No. 1357 of the Beijing High People’s Court, and the Civil Judgment (2007) Er Zhong Min Chu Zi No. 4844 of the Beijing Second Intermediate Court.
5. See the Civil Judgment (2007) Gao Min Zong Zi No. 540 of the Beijing High People’s Court, and the Civil Judgment (2006) Er Zhong Min Chu Zi No. 1017 of the Beijing Second Intermediate Court.
6. See the Civil Judgment (2006) Gao Min Zong Zi No. 1386 of the Beijing High People’s Court, and the Civil Judgment (2006) Yi Zhong Min Chu Zi No. 7085 of the Beijing First Intermediate Court.

By Liu Xiaojun


(Translated by Ren Qingtao)

 

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