Beijing First Intermediate Court Announces 10 Exemplary Foreign-related IP Cases
 

In early December, the Beijing First Intermediate People's Court ("the Court") held a briefing session on the foreign-related IP cases it heard between the years of 2006 and 2010, and announced on the same occasion 10 exemplary cases selected from those cases.
 
As reported, a total of 2,691 foreign-related IP cases were accepted by the IP Tribunal of the Court from 2006 to October 2010, accounting for 28.4% of all IP cases accepted by the tribunal, with the object in suit amounting to RMB330 million yuan. On annual basis, the number of cases accepted by the Court saw an increase of 470%, from 241 in 2006 to 1,367 as of October in 2010. Cases that were in favor or partially in favor of the foreign claims accounted for 55.2% of all the foreign-related IP cases heard by the Court during the period, and over RMB48 million yuan were awarded to the foreign parties as a result.
 
The following is a case brief of the 10 exemplary foreign-related IP cases as selected and announced by the Court:
 
Case 1  Google, Inc. v. Beijing Guge Technology Co. Ltd. (Unfair competition)
 
In 2007, the famous search engine provider Google, Inc. authorized Google Information Technology (China) Co., Ltd. to initiate a suit against Beijing Guge Technology Co. Ltd. It is ascertained in trial by the Court that Google, Inc. had globally launched their official Chinese name "谷歌" (Guge, literally "Valley Song") on 12 April 2006, indicating that "谷歌" is the corresponding Chinese translation of "Google".
 
The Court in trial held that under a more reputable business name of Google, the unauthorized use of "谷歌" by Beijing Guge not only reflected an intentional act, but also caused confusion and misleading to the relevant public, which contravened the principles of fairness, integrity and generally accepted business ethics, thus constituting unfair competition. On this basis, the Court decided that Beijing Guge should stop using its business name and have it changed so as not to carry  "谷歌" in its wording. Furthermore, Beijing Guge had to pay a total of RMB100,000 yuan to the plaintiff as compensation of economic loss and litigation expenses.
 
Case 2  Kenwood Co. Ltd. v. Fujian Guanwei Telecommunication Technological Co. Ltd. et al. (Infringement dispute)
 
In 2006, the plaintiff Kenwood initiated lawsuits respectively to the Court, alleging that two models of walkie-talkies sold by Fujian Guanwei Telecommunication Technological Co. Ltd., Fuqing Rongwei Telecommunication Co. Ltd. and Beijing Yichangyuan High technological Co. Ltd. infringed the copyright in its walkie-talkie manual as well as the design patent and the exclusive right to use the registered trademark right of its walkie-talkies.
 
The Court in trial ruled that: i) the defendants' product manuals, in addition to bearing the plaintiff's trademark, were identical with the plaintiff's manual in all recognizable textual, symbol and graphic contents and layout; ii) the appearance of the infringing products in suit merely differed slightly in dimensions and rear view from the plaintiff's patented design; iii) compared with the registered trademark of Kenwood, the trademark used on the accused infringing products was similar in overall structure and the same in representation, which easily confused the relevant public about the origin of the products against the more reputed trademark of Kenwood. The defendants were deemed as committing a contributory infringing act with obvious intentions. On this basis, the Court decided that the three defendants shall cease the infringement, and the plaintiff was awarded damages of RMB4 million yuan.
 
Case 3  Microsoft Corporation v. assembled computer dealers (Dispute over software infringement)
 
The plaintiff Microsoft Corporation owns the copyright of Windows XP Professional and Office 2003 Professional. In 2008, the plaintiff made three purchases of a total of 12 assembled computers under notarization from retail stores in Zhongguancun of Beijing, a branch of Beijing Si Chuang Future Technology Development Co., Ltd. Later, they found unauthorized versions of Windows XP Professional and Office 2003 Professional in those computers. The Court in trial held that the defendant had infringed the plaintiff's rights in reproducing and distributing the involved software, and shall bear legal liability in accordance with the Regulations for the Protection of Computer Software of the PRC.
 
The damages to the plaintiff was determined according to Article 49 of the Copyright Law of the PRC, i.e. where the actual loss of the right holder or the illegal gain of the infringer cannot be determined, compensation of no more than RMB500,000 yuan will be awarded by the people's courts depending on the seriousness of the infringing act.
 
Microsoft got an award around RMB460,000 yuan, close to the upper limit of the statutory compensation. Moreover, considering the generality and continuity inherent in the infringing act and the considerable economic loss suffered by Microsoft, the Court confiscated the 12 computers, and held reimbursement of evidence collection fee to the plaintiff.   
 
Case 4  Paramount Pictures, the Walt Disney Company, Warner Bros. Entertainment, Inc., Universal City Studios LLLP, Columbia Pictures Industries, Inc., Twentieth Century Fox Film Corporation v. Beijing Ying Hua Zhi Xing Cultural Exchange Center and its affiliated Li Hua Zhi Sheng AV Shop (Six cases of disputes over copyright infringement)
 
The six plaintiffs of the cases are copyright owners of 21 movies including War of The Worlds. They bought a total of 72 pirated movie DVDs including the involved movies from Li Hua Zhi Sheng AV Shop underBeijing Ying Hua Zhi Xing Cultural Exchange Center, and held that their copyright rights were infringed by the defendant. They therefore requested the Court to order the defendant to cease the infringing act, make apologies, and compensate them with RMB60,000 yuan per movie as well as reasonable costs incurred from rights protection of RMB200,000 yuan per case. The total claims of the six cases exceeded RMB2.4 million yuan.
 
The Court in trial held that as both the U.S. and China are members of Berne Convention for the Protection of Literary and Artistic Works, the works of the plaintiffs, all U.S. companies, should be entitled to the protection under Copyright Law of the PRC.
 
The infringer Li Hua Zhi Sheng AV Shop was ordered to cease the infringing act and compensate the loss suffered by the plaintiffs. Nevertheless, as selling illegally copied compact discs infringed the plaintiffs' property rights rather than their personal rights, the request for apology from the defendant was untenable and not supported by the Court.   
 
Case 5  Blizzard Entertainment, Inc. v. Trademark Review and Adjudication Board, State Administration for Industry and Commerce of China (Decision of rejection on registration of the mark "STARCRAFT:GHOST")
 
The U.S. games provider Blizzard Entertainment is famous for developing numerous internet games like STARCRAFT and WARCRAFT. In 1998, the company released STARCRAFT, a real-time strategy computer game which turned out to be very popular around the world. The game also became one of the four major online competition games globally. In 2008, the Blizzard Entertainment filed an application to State Administration for Industry and Commerce for registration of the English title "STARCRAFT: GHOST" of its new STARCRAFT series as the service mark used for its online competitions etc., which was, however, rejected by the Chinese Trademark Office and the Trademark Review and Adjudication Board, on the ground that the title was associated with superstition.
 
The Court in trial held that "STARCRAFT" in the trademark under application carried an astrological implication while "GHOST" had an apparitional implication. Astrology, apparition and ghost in the Chinese culture were regarded as superstition and the inclusion of wording associated with these themes in a trademark used on entertainment services and online computer games etc. was likely to bring about bad influence. In consideration that the material evidence of the rejection decision in suit was adequate, the procedures legitimate, and the application of law correct, the Court rejected Blizzard Entertainment's claims.   
 
Case 6  Italian chocolatier Ferrero SpA v. Trademark Review and Adjudication Board, State Administration for Industry and Commerce of China (Trademark administrative case)
 
The case relates to the registration and protection of a 3-D trademark.
The Court in trial held that the trademark under application was a 3-D mark comprised of a golden-yellow foil-wrapped sphere with crease packaging effect placed on a chestnut-and-golden-yellow alternated, corrugated base, an indicative design of the claimed product reflecting the originality of the trademark under application and enabling the consumers to clearly discern the origin of the goods by the sight of it. As such, the trademark under application had gained distinctiveness and shall be protected as a registered trademark. In light of this, the plaintiff's claim for geographical extension of protection of the trademark under application in China shall be approved. The Court therefore revoked the decision of rejection by Trademark Review and Adjudication Board. Both parties did not appeal within the prescribed time limit regarding the Court's decision.
 
Case 7  LeapFrog Enterprises, Inc. v. Patent Reexamination Board under State Intellectual Property Office of China (Administrative litigation relating to declaration of invalidation)
 
The U.S. plaintiff LeapFrog Enterprises, Inc. filed a request to the Patent Reexamination Board (PRB) of State Intellectual Property Office of the PRC (SIPO) for invalidation of the utility model patent in "multifunction e-book" of Shenzhen Gaozhitong Industrial Co., Ltd., but was granted partial invalidation upon examination by PRB. LeapFrog held that the patent should not be deemed as valid as claim 1 of the patent lacked novelty, claim 2 did not possess inventiveness over prior art, claims 5 and 10 did not possess inventiveness either over prior art and common knowledge, and other dependent claims accordingly did not have inventiveness. Dissatisfied with PRB's decision, LeapFrog initiated judicial proceedings before the Court.
 
The Court in trial held that: i) claim 1 was novel over the prior art since the prior art did not clearly disclose the technical feature that the book frame in claim 1 of the patent could accommodate a color storybook with an electronic sensor board installed in the base of the book frame; ii) claim 2 was inventive over prior art as the technical contents of claim 2 related to installing function icons on the color storybook for facilitating various teaching functions, whereas corresponding contents in prior art related to content information or information icons of the book, rather than function icons; iii) on the aforesaid basis, claims 3 and 4 which both cited claim 2 were inventive as well; iv) claims 5 and 10 were also inventive over prior art in combination with common knowledge. As the decision on the invalidation request in suit was based on sufficient material evidence, correct applicable law and legitimate procedures, the examination decision of the PRB was upheld in accordance with Article 54 (1) of the Administrative Procedure Law of the PRC.  
 
Case 8  Graduate Management Admissions Council v. Beijing Century Passion Consulting Co. (Dispute over copyright infringement)
 
The plaintiff Graduate Management Admissions Council (GMAC) develops and administers the GMAT exam, a standardized test specifically designed for graduate business and management programs used widely by universities worldwide (including universities in China), and has gained high reputation in global scope.
 
The defendant Beijing Century Passion Consulting was set up in 2002 and engaged in offering preparation courses for GMAT in major Chinese cities. It was alleged of using substantially the GMAT exam questions whose copyright owned by the plaintiff on its GMAT classes, as well as reproducing and disclosing the GMAT exam questions on its website. The plaintiff requested the Court to issue an order to cease the infringing act and to indemnify it for economic losses of RMB3 million yuan. 
 
The Court, in accordance with the Civil Procedure Law of the PRC, sealed up the original evidence pertaining to the defendant's relevant financial accounts, and entrusted a professional auditing firm to conduct an audit and determine the specific amount of gains by the defendant from relevant operations. The case was finally settled and closed through the Court's conciliation.
 
Case 9  Korean Broadcasting System v. China Telecom Corporation Limited and famous enterprises including Sina and Sohu (Dispute over information network distribution right infringement)
 
The case is one of the first batch of cases accepted by the Court relating to foreign right holders' claims against the PRC enterprises for infringement over the right to network dissemination of information.
 
Several movies of the audio-visual works involved were illegally disseminated via the Internet in China without obtaining the approval for distribution by the PRC broadcasting and television authorities. The availability of protection for this type of works not only presents a challenge to China's administrative enforcement and judicial protection in action, but also very likely to become exemplary cases showing how China honors its promise of equal protection to right owners.
 
The Court, on the one hand, involved domestic trade associations including Copyright Union of Internet Society of China and Arbitration Center under Internet Society Copyright Union of China in the conciliation process, and, on the other hand, held public hearing of the cases according to standard litigation procedures. With clearer expectation of the final result of the litigation through the cross-examination and debate in the trials, the parties intended to seek reconciliation, and an out-of-court settlement was reached with the help of the trade associations.
 
Case 10  Wemade Entertainment Co., Ltd., ActozSoftCo., Ltd. v. Shanda Interactive Entertainment Limited, Shengqu Information Technology (Shanghai) Co., Ltd. (Dispute over "Legend" copyright infringement)
 
This is China's first case involving large-scale online game copyright infringement and anti-unfair competition. The case has received much attention since its filing in October 2003 as it touches upon relatively unexplored judicial issue. In terms of social impact, as "The World of Legend", the object in suit, had more than 70 million registered network users, the interests of a huge number of players would be at stake if the game ceased operation according to the request of the plaintiffs. 
 
As mentioned, the case is the first of its kind in China, and in fact few precedents of similar cases are available outside China. Since it concerns many frontier issues in legislative and judicial realms, legacy at home and abroad theoretically and practice-wise are far from adequate. For instance, whether a network game is a "works" in the conventional sense under copyright law is an issue worthy of further exploring. Given the special characteristics of a network game, in the present stage when few rules and regulations are available, assuming a network game constitutes a "works" under copyright law, it will be a major challenge for the judges to determine in particular works-related issues of a game, such as the names, characters, props, skills, NPCs (non-player characters), price, parameters, scenes, story, operational methods, functional setting and interface setting, in a manner that can better appreciate the basic principle and legislative intention of copyright law.
 
The Court in trial ascertained the facts of the case through proper procedures, and at the same time invited legal experts and network game developers for panel discussion to delve into legal issues involved in the case. The parties concerned in this case eventually reached reconciliation and confirmed no copyright infringement on both sides through the Court's coordination.