Deciding the Infringement Liabilities on Electronic Device Manufacturer

2011/1/24By Wang Zhuo, Judge of the IP division, Beijing No.1 Intermediate People’s Court,[Copyright]

I.                   Case Information
Plaintiff: Beijing Ren’ai Education Research Institute (“Ren’ai”)
Defendant: Shenzhen Talkwin Technology Company (“Talkwin”)
    Beijing Xinxinggu Digital Technology Co., Ltd. (“Xinxinggu”)
 
The Case: the textbook involved, English for grade 7 (volume 1, 2) and for grade 8 (volume 1, 2) and four sets of corresponding tapes, are standard trial textbooks for compulsory education. Ren’ai applied for its compilation to the textbook assessment office of the Ministry of Education, organized staff to complete it and, after the textbook being preliminarily approved by the national assessment committee for textbooks of primary and middle schools put it to use in standard trial areas of compulsory education. All covers of the four books and tapes involved bear the words “compiled by Beijing Ren’ai Education Research Institute.” The colored version of English for grade 7 is priced at 11.55 Yuan (volume1) and 12.7 Yuan (volume 2) and the black-and-white version carries a price of 7.05 and 7.7 Yuan respectively. The colored version of English for grade 8 is priced at 12.6 Yuan (volume 1) and 12.7 Yuan (volume 2), and its black-and-white version is 7.6 Yuan and 7.7 Yuan respectively; the corresponding tape is 21 Yuan per set.
 
According to the Notarial Certificate No.8189 (2005) by Haidian Notary Office, Ren’ai’s agent Zhang Xianyong, acting as an average consumer, purchased a TW “beiduofen” VS3520 English learning machine at shop 3A004 on the third floor of Zhongguancun Kemao Digital Product Market, at No. 18 of Zhongguancun Street, Haidian District, and received a “special-purpose receipt of Beijing commercial enterprise” numbered 15725369.
 
According to Notarial Certificate No. 8190 (2005) by Haidian Notary Office and Notarial Certificate No. 1825 (2006) by Chang’an Notary Office, at the Dongzheng Technology website (www.abc-sky.com), downloads are limited to Talkwin digital learning machine formats VS1.0,V S2.0 and V S3.0. After clicking VS3.0, a key word search can lead to Ren’ai English textbook, which can be downloaded, stored and played by the Talkwin learning machine VS3.0. The textbooks can only be played on the learning machine mentioned, but not on computer terminals.
 
According to Notarial Certificate No. 1823 (2006) by Chang’an Notary Office, Ren’ai’s agent Ma Jing, in the disguise of an average consumer, purchased a “beiduofen” VS3350+ English digital learning machine at “chain shop NO.08” on the first floor of Hailong Digital Product Market, at No.1 Zhongguancun Street, Haidian District, and received a “special-purpose receipt of Beijing commercial enterprise” numbered 26091640 and a “sale certificate of Hailong” numbered 0090556, the drawer being Xinxinggu. The learning machine mentioned is produced by Talkwin. At the user’s guide of VS3 series learning machines, “material download websites” included www.talkwin.com, www.abcsky.com and www.hope8848.com, of which www.abc-sky.com was accused of copyright infringement.
 
Plaintiff Ren’ai claimed that according to the English Course Standards by the Ministry of Education, it compiled a new set of pilot textbooks for use in experimental areas of compulsory education. After the textbooks entered the market, Talkwin, without permission, reproduced the entire contents of the mentioned textbooks on three websites for a free download by users who bought its product “TW Beiduofen English digital learning machine,” which violated the legitimate rights and interests of the plaintiff. Xinxinggu, as a dealer of Talkwin, contributed to Talkwin in the copyright infringement and therefore should be jointly liable. After commencement of litigation, the plaintiff discovered that the defendant expanded the scale of infringement by copying the complete contents of junior high school English grade 7 (volume 2), grade 8 (volume 2) and corresponding tapes, and copying the contents of junior high school English grade 7 (volume1, 2), grade 8 (volume1, 2) to its VS3.0 series software to gain huge profits by selling its “TW Beiduofen VS3 series English digital learning machine.” Therefore, plaintiff sought a court order for: 1. Injunction; 2. Apology to China Education Daily; 3. Damages in the amount of 2,018,697 Yuan; and 4. Recuperation of cost and reasonable expenses totaling 16,640 Yuan.
 
Defendant Talkwin counter argued: that Talkwin developed a set of learning material editing software “VCEM voice and Chinese-English mixed code format software V3.0 (or VS voice and text code format),” which is able to digitalize and install traditional text and voice materials on learning machines; that as early as the end of 2002, Talkwin published the VS3 format on websites mentioned so that each user can make learning materials according to his needs; that the software itself is for learning instead of copyright infringement; that among the five “infringement” websites accused, only one involves materials of Talkwin; material provided by Talkwin showed that the website had a claimed right holder of “Dongzheng Technology” instead of Talkwin; that the plaintiff presented no evidence to prove “Dongzheng Technology” is or actually controlled by Talkwin, and presented no evidence to prove it had conducted a right search and was unable to exercise rights over Dongzheng Technology; that it cannot be asserted that the website was opened by Talkwin only because www.abc-sky.com was printed on Talkwin’s user guide; that after selling the learning machines, Talkwin was unable to restrain or control the conduct of each user, and therefore should not accept responsibility; that after receiving the file, Talkwin immediately deleted the website name from its user guide and adopted reasonable measures to prevent possible infringement, so it should not accept responsibility for previous acts; that it is groundless to assess losses according to the number of learning machines sold, and Talkwin’s materials only includes a very small part even at www.abc-sky.com. Therefore, in the legal process, the plaintiff should not make claims against Talkwin before obtaining evidence showing right infringement of the “Dongzheng Technology” website and making claims against it; in terms of entity, plaintiff’s evidence is insufficient and the so-called loss is non-existent. It is possible that the plaintiff is suing to hurt emerging industries. Talkwin therefore asked the court to reject the plaintiff’s claims according to law. Defendant Xinxinggu argued that it only acted as a seller and should not accept liability in tort.   
 
II.                Court Judgment
The People’s Court of Haidian District, according to article 41, article 46 (vii) and article 48 (ii) of the Copyright Law of the People’s Republic of China, ruled that: 1. Talkwin stops providing download service of involved materials at “Dongzheng Technology” website (www.abc-sky.com); and Xinxinggu stops selling the learning machines involved; 2. Talkwin publishes a public statement of apology to Ren’ai in China Education Daily; 3. Talkwin pays Ren’ai a compensation of economic loss and reasonable lawsuit expense totaling 250,000 Yuan. Talkwin then appealed to the Beijing No.1 Intermediate People’s Court, which finally rejected its claims and maintained the first-instance ruling
 
III.             Case Analysis
Beijing courts accepted in recent years a large number of lawsuits with copyright holders suing manufacturers and sellers of electric learning machines. Such cases bear the following features:
1.      Most works involved are textbooks, and the plaintiffs are usually right holders of textbook materials. Ren’ai is the plaintiff of many such cases;
2.      Manufacturers of learning machines usually download involved works at their own websites, and then change them into certain formats; only buyers of the learning machines can download the works to their machines for reading;
3.      The works involved not only consists of text but also tape, and the learning machines offer both text and voice materials to consumers. Therefore, such cases touch on right infringement upon both text and tape producers.
4.      The main reason of right infringement is that manufacturers of learning machines fail to obtain permission from textbook right holders when using the materials.
5.      Regarding the amount of compensation, courts usually consult text payment standards by the National Copyright Administration, and if the right holder can present, any executed agreement on the permission of use. Courts usually consider a compensation amount under 500,000 Yuan according to the conduct of the defendants.
 
In this case, the four English textbooks and related tapes involved bear the name of Ren’ai, and, without evidence to the contrary, it can be affirmed that Ren’ai is the right holder of the textbooks and tapes. Without Ren’ai’s permission, others shall not use the works on commercial purpose. Considering the fact that the accused website only provides download in VS1.0, VS2.0 and VS3.0 formats for learning machines produced by Talkwin, and that the accused website is among the three download sites recommended by the machine’s user guide, it could be affirmed that Talkwin is the real operator of the website accused. Considering the fact that Talkwin presented no evidence to prove its having obtained permission from Ren’ai for the use of the four textbooks and tapes involved, its conduct constituted copyright infringement upon Ren’ai and therefore should accept civil liability. As for the compensation amount, the court decided on 250,000 Yuan according to the defendants’ conduct. The author believes that a consultation with related compensation standards might be more appropriate. For example, the court can consult writer’s remuneration standards of the National Copyright Administration, or ask the plaintiff to provide a royalty standard in other similar works for its reference.
(Translated by Li Heng)
  
 
 
 
 
 

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