Case Summary176: Supreme People’s Court (2021) Supreme Court Civil Final 51
Key Information of the Case:
1.Suzhou He Guang Company was established onJuly 12, 2006, with a registered capital of 60.3377 million yuan. Its business scope includes research, design, development, and production of programmable user switches, access network system equipment, user access service managers, gateway devices,wireless communication equipment, terminal devices, sales of self-produced products, research, design, and development of enterprise unified communication platformssystems, and providing technical consulting, after-sales service, and related business for communication system integration and solutions.
2.The OpenWRT system software is a system operation control software in the communication field. This software is open-source and is licensed under the GPLv2 license. There are many contributors to the OpenWRT system software code, and developers can freely obtain the source code of the OpenWRT system software on the Internet. The full name of the GPLv2 license is GNU General Public License, version 2, which is translated into Chinese as “GNU General Public License (Version 2)”. The publisher of the GPLv2 license is the Free Software Foundation.
3.Since2009, Suzhou He Guang Company has invested approximately25.89 million yuan in research and development, completing a gateway product system software named “OfficeTen” and obtaining the copyright registration certificate from the National Copyright Administration for “OfficeTen1800 System Software (V1.8)” in 2013. The software primarily targets large domestic communication operators such as China Mobile and China Telecom,and has a very broad market prospect.
4.Party A was previously employed by Suzhou He Guang Company.On June 24, 2010, Suzhou He Guang Company signed a “Labor Contract” with Party A, hiring Party A as a hardware engineer. Both parties also signed a “Confidentiality Agreement.” The “Labor Contract” stipulates that any inventions or works created/developed during employment belong to Suzhou He Guang Company; the “Confidentiality Agreement” stipulates that confidentiality obligations continue after leaving the company. Party A left the company on July 29, 2011.
5.Party B was previously employed by Suzhou He Guang Company.On June 1, 2011, Suzhou He Guang Company signed a labor contract with Party B, hiring Party B as an embedded engineer. Both parties also signed a “Confidentiality Agreement.” The “Labor Contract” stipulates that any inventions or works created/developed during employment belong to Suzhou He Guang Company; the “Confidentiality Agreement” stipulates that confidentiality obligations continue after leaving the company. Party B left the company on May 29, 2015.
6.After leaving, Party A posted their resume on a talent recruitment website, and Zhejiang Qiaomu Company recruited them for hardware development. The two parties agreed to establish a company in Suzhou for research and development. Subsequently, Zhejiang Qiaomu Company sent Party C to handle the company registration, establishing Suzhou Qiaomu Company.Suzhou Qiaomu Company was established onMay 28, 2015, as a limited liability company, with Party C as the shareholder and legal representative. Its business scope includes technical development, technical services, and technical consulting in the fields of computer network technology and communication engineering,with its address in a certain industrial park in Suzhou, Jiangsu Province.
7.Party B participated in the research and development team for the OfficeTen series gateway product system software at Suzhou He Guang Company, working on the low-level drivers, which involved all the low-level driver source code for the OfficeTen series. Additionally, about 70-80% of the upper software source code for the OfficeTen1800 gateway was downloaded by Party B from the Suzhou He Guang Company server to their personal laptop.In May 2015, introduced by former colleague Party A, Party B resigned from Suzhou He Guang Company and began working at Suzhou Qiaomu Company established by Zhejiang Qiaomu Company, responsible for gateway product development. Initially, they intended to write the source code with their team, mainly downloading and modifying the source code from the OpenWRT system software website. However, when encountering difficulties, the team asked if anyone had the source code for the OfficeTen gateway from Suzhou He Guang Company, and Party B provided the OfficeTen1800 source code for reference. During the development, when facing challenges, the team resorted to copying the source code from Suzhou He Guang Company to expedite the completion of the project. The gateway was put into production in June 2016, with the product model EB-MIG-1800Z, using software system source code that was copied from Suzhou He Guang Company, winning a bid for 18,000 units of gateways from Guangzhou Telecom.
8.In August 2015,Zhejiang Qiaomu Company’s supervisor held a meeting, requiring modifications to the EB-MIG source code, mainly to remove any code involving the term “OfficeTen.”
9.Zhejiang Qiaomu Company indirectly established Suzhou Qiaomu Company as a “firewall”; Party A and Party B were nominally employed by Suzhou Qiaomu Company but were actually developing software for gateways directly for Zhejiang Qiaomu Company. Suzhou Qiaomu Company was directly managed and controlled by Zhejiang Qiaomu Company, and the recruitment advertisements posted by Suzhou Qiaomu Company on recruitment websites confirmed that it was the “R&D Department II” of Zhejiang Qiaomu Company.
10.In December 2015, Suzhou He Guang Company discovered during the public bidding process for gateway equipment with Guangdong Telecom that Zhejiang Qiaomu Company was also participating in the bidding. During the bidding process, Suzhou He Guang Company heard that Zhejiang Qiaomu Company had claimed to testing personnel from a certain research institute in Guangdong that its products were identical to those of Suzhou He Guang Company and that the technology came from former employees of Suzhou He Guang Company, prompting Suzhou He Guang Company to initiate an investigation.
11.On January 5, 2016, Suzhou He Guang Company purchased an enterprise gateway produced by Zhejiang Qiaomu Company’s distributor. Upon comparison, it was found that the software running results of the device contained specific markers from Suzhou He Guang Company’s software source code, and there were other identical indicators in the software running results.
12.Suzhou He Guang Company reported to the Suzhou Public Security Bureau in July 2016 that Party A, Party B, and Zhejiang Qiaomu Company were suspected of copyright infringement.
13.During the investigation by the Suzhou Public Security Bureau’s Industrial Park Branch, on August 8, 2016, it commissioned the Shanghai Oriental Computer Judicial Appraisal Institute to assess the software similarity between the OfficeTen1800-c produced by Suzhou He Guang Company and the EB-MIG-2100G produced by Zhejiang Qiaomu Company. The samples sent for inspection included one device of each. The appraisal concluded that there were 105 identical script files and 14 similar ones, with a similarity rate of 87.5%.
14.On August 8, 2016, the court commissioned the Shanghai Oriental Computer Judicial Appraisal Institute to assess the software source code similarity between the OfficeTen1800-c produced by Suzhou He Guang Company and the EB-MIG-2100G developed by Suzhou Qiaomu Company and produced by Zhejiang Qiaomu Company. The appraisal concluded that there were 36,826 software source code files for the OfficeTen1800-c produced by Suzhou He Guang Company, of which 35,503 were identical to those of the EB-MIG-2100G, resulting in a similarity rate of 96%.
15.According to Article 8 of the Computer Software Protection Regulations of the People’s Republic of China, software copyright owners have the rights to modify, reproduce, and distribute. No one may copy, modify, or distribute the software in question without the permission of Suzhou He Guang Company, otherwise it constitutes an infringement of the software copyright.
16.According to Article 9 of the Anti-Unfair Competition Law of the People’s Republic of China, operators shall not engage in the following acts that infringe on trade secrets:
1. Obtaining the trade secrets of the rights holder through theft, bribery, fraud, coercion, electronic intrusion, or other improper means;
2. Disclosing, using, or allowing others to use the trade secrets they possess in violation of confidentiality obligations or the rights holder’s requirements for maintaining trade secrets;
etc.
17.In 2018, Suzhou He Guang Company filed a lawsuit against:
1.Ordering Zhejiang Qiaomu Company, Suzhou Qiaomu Company, Party A, and Party B to cease the infringement of the software copyright in question;
2.Zhejiang Qiaomu Company, Suzhou Qiaomu Company, Party A, and Party B to jointly compensate Suzhou He Guang Company for economic losses and reasonable expenses for safeguarding rights totaling3 million yuan.
18.Suzhou Qiaomu Companyargued that Suzhou He Guang Company had no right to sue, for the following reasons: the software in question was developed based on the OpenWRT system software as an open-source framework, and the secondary development based on the OpenWRT system software constitutes a derivative product of the OpenWRT system software, which must comply with the requirements of the GPLv2.0 license, and the rights belong to the rights holders of the OpenWRT system software open-source code. According to the GPLv2 agreement, Suzhou He Guang Company is obligated to publicly disclose the source code of the software in question, therefore, even if Zhejiang Qiaomu Company and Suzhou Qiaomu Company used the source code of the software in question, such use does not constitute infringement.
19.Suzhou He Guang Company contended that the software in question is derived software formed by secondary development based on the OpenWRT system software, which can be divided into two parts: one part is the underlying system of the software formed by adding, deleting, modifying, and adjusting the source code corresponding to the OpenWRT system software, and the other part is the upper functional software formed by new source code corresponding to the specific functions of the software in question. An isolation layer is established between the underlying system software and the upper functional software using techniques such as sockets and command lines, and the communication content between the two does not involve internal data structure information, thus making the upper functional software constitute an “independent and separate” program under the GPLv2 agreement, and therefore not subject to the constraints of the GPLv2.
20.In October 2023, after the first and second trials, the court ruled:
1.Regarding whether the software in question is subject to the GPLv2 agreement, this issue involves whether the underlying system software is subject to the GPLv2 agreement, whether the upper functional software constitutes an “independent and separate program” under the GPLv2 agreement, the isolation technical means, communication methods, communication content, and how these factors are defined, as well as the usual understanding and industry practices regarding the transmissibility of the GPLv2 agreement in the software field. In the case where the rights holder of the OpenWRT system software is not a party to this case, it is also difficult to ascertain the aforementioned series of facts related to the GPLv2 agreement.
2.No evidence proves that Suzhou He Guang Company has waived its copyright over the software in question under Chinese copyright law through the GPLv2 agreement.
3.The court conducted three appraisals regarding the software similarity between the OfficeTen1800-c produced by Suzhou He Guang Company and the EB-MIG-2100G produced by Zhejiang Qiaomu Company, as well as the software source code similarity between the OfficeTen1800-c produced by Suzhou He Guang Company and the EB-MIG-2100G developed by Suzhou Qiaomu Company and produced by Zhejiang Qiaomu Company. The conclusions showed similarity rates of 87.5%, 96%, and 90.2%, respectively; it was also found that the special signaling in the call flow of the EB-MIG-2100G produced by Zhejiang Qiaomu Company contained the unique term “OfficeTen” from Suzhou He Guang Company. This is sufficient to determine that the accused software partially copied the software in question.
4.Suzhou Qiaomu Company and Zhejiang Qiaomu Company, without the permission of Suzhou He Guang Company, partially copied the software in question, constituting infringement.
5.Zhejiang Qiaomu Company and Suzhou Qiaomu Company must immediately cease their infringement of Suzhou He Guang Company’s copyright for the “OfficeTen1800 System Software”.
6.Zhejiang Qiaomu Company and Suzhou Qiaomu Company must jointly compensate Suzhou He Guang Company for economic losses and reasonable expenses for safeguarding rights totaling500,000 yuan.
Author’s Note: This case is solely a civil compensation case,and Zhejiang Qiaomu Company, Suzhou Qiaomu Company, Party A, and Party B are also suspected of committing criminal offenses of trade secret infringement.
Written by: Lawyer Gong Peng from Beijing Fada Law Firm Address: Room 912, Building A, Fenglan International, 32 North Peking University Street, Haidian District, Beijing Phone: 010-82228493 Website: www.fadalawyer.com.cn Phone: 15011322077
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