On April 23, the Provincial Court held a press conference to report on the status of intellectual property judicial protection in Jiangsu courts for 2023 and released the top ten typical cases. Among them, two cases from Suzhou were selected.
Rights Boundaries between Open Source Code Rights Holders and Software Secondary Developers
— Net Economic Technology (Suzhou) Co., Ltd. vs. Yi Certain Communication Technology Co., Ltd. and others for infringement of computer software copyright dispute
[Case Index]
First Instance: Suzhou Intermediate Court (2018) Su 05 Min Chu 845
Second Instance: Supreme Court (2021) Supreme Court Intellectual Property Civil Final 51
[Judgment Summary]
The GPL license object is the program protected by copyright under the GPL license and derivative products or modified versions based on that program, but it cannot be simply assumed that all software related to that program must be open source. The copyright ownership of software developed based on an open-source framework should distinguish different situations. Modifications, optimizations, and developments based on the functions of the open-source product should determine copyright ownership according to the open-source agreement. However, if a developer calls an open-source product or conducts secondary development based on the open-source product, and the developer’s creative labor is sufficient to constitute an independent work, the developer enjoys independent copyright.
Whether the secondary developer violates the open-source software agreement is independent of whether they enjoy software copyright and whether they can exercise infringement remedies against others; otherwise, it would unreasonably deprive or restrict the software developer’s legal copyright based on their original contributions.
[Basic Case Facts]
OpenWRT is a system operating control software in the communication field, and its source code is available for free use by software developers, applicable under the GNU General Public License (Version 2) (i.e., “GPLv2”). Net Economic Technology (Suzhou) Co., Ltd. (hereinafter referred to as Net Economic) developed the involved “OfficeTen1800” software based on OpenWRT, including the underlying system formed by adding, deleting, modifying, and adjusting the corresponding source code of the OpenWRT system software, as well as the upper functional system formed by the newly added source code corresponding to the specific functions of the involved software. Yi Certain Communication Technology Co., Ltd. (hereinafter referred to as Yi Certain) recruited former employees of Net Economic to participate in the development of software at Qi Certain Network Technology Co., Ltd. (hereinafter referred to as Qi Certain), and developed similar software substantially similar to the involved software by copying and modifying the source code of the involved software, which contained special markings of Net Economic’s source code. Yi Certain and Qi Certain were closely related in personnel, funding, and project management, and there was commonality in goals, actions, and interests during the software development and copying process. Net Economic sued Yi Certain, Qi Certain, and some former employees of Net Economic in court for infringing its computer software copyright, demanding that the defendants stop the infringement and compensate for losses of 3 million yuan, etc. The defendants argued that according to the open-source license agreement, Net Economic should publicly disclose the source code of the involved software and license it for free use by all third parties, and thus had no right to claim infringement against others.
[Judgment Content]
The court held that the “OfficeTen1800” intelligent gateway software, which Net Economic developed with significant investment based on open-source software, has originality and should be protected by copyright. Qi Certain’s evidence only proved that the involved gateway software contained open-source code, but it could not prove that the software was merely a use of the open-source code (addition, modification, or deletion), and the source code of the involved software was not publicly available, so there was no prerequisite for Qi Certain to use third-party open-source programs and build derivative software products under the GPLv2 agreement. Whether Net Economic violated the open-source software agreement is independent of whether it enjoys software copyright; otherwise, it would unreasonably deprive or restrict the software developer’s legal copyright based on their original contributions. Even if Net Economic’s violation of the GPLv2 agreement resulted in the involved software having copyright defects, or if Net Economic did not publicly disclose the source code of the involved software for others to obtain and use for free, it does not affect its legal responsibility to claim software copyright infringement against the defendants. Therefore, Yi Certain and Qi Certain’s copying, modifying, and distributing the involved software infringed on Net Economic’s software copyright. In calculating the infringement losses, the originality of the secondary development portion by Net Economic should be emphasized in proportion to the overall software work, reasonably separating the already open-sourced portions of the OpenWRT system software. Considering the high similarity between the accused software and the involved software, and their direct competition in the relevant market, along with the fact that the accused software developers had previously worked for Net Economic, it was necessary to eliminate the negative commercial impact of the accused software on the involved software and restore the relevant market’s recognition of the involved software and its operating entity, Net Economic. Therefore, the court ruled that both companies stop the infringement, eliminate the impact, and jointly compensate Net Economic 500,000 yuan. However, it should be noted that the final determination of the accused behavior constituting infringement and supporting part of Net Economic’s claims does not indicate that Net Economic can be exempt from its obligations in potential breach and/or infringement lawsuits in the future.
[Case Value]
This case clarifies the copyright ownership of software developed based on open-source software, the control scope of the GPL agreement, the identification of infringement when others use secondary development works, and the determination of damage compensation, which has guiding and industry normative significance. It has been rated as one of the top 100 typical cases by the Supreme Court on the fifth anniversary of the establishment of the Intellectual Property Court. The adjudication rules for cases involving open-source software are still under exploration and development. Accurately grasping the binding force of open-source license agreements and reasonably defining the rights boundaries between open-source code rights holders and software secondary developers is of great significance for encouraging innovation and promoting the healthy and standardized development of the software industry. The judgment clarifies that developers enjoy copyright for new works that are only based on open-source products or developed based on open-source products with originality. Whether secondary developers violate the open-source software agreement is independent of whether they enjoy software copyright and whether they can exercise infringement remedies against others. In determining damage compensation, the proportion of the secondary development portion in the overall software work should be considered, reasonably separating the already open-sourced portions in the prior open-source software, etc. The principle that the secondary development software is relatively independent and not necessarily fully bound by mandatory open-source rules respects and protects the original labor contributed by secondary developers, providing a “reassurance” for software developers.
Comprehensive Crackdown on Abuse of Intellectual Property
True Rights HoldersConstitute Unfair Competition
— Shikang Protective Products Co., Ltd. vs. Yuan Certain Information Technology Co., Ltd., Xing Certain Supply Chain Management (Shanghai) Co., Ltd., and Xu Certain Unfair Competition Dispute
[Case Index]
First Instance: Suzhou Intermediate Court (2020) Su 05 Min Chu 679
Second Instance: Jiangsu High Court (2021) Su Min Final 2452
[Judgment Summary]
The accused infringer maliciously registered the well-known trademark and works used by the rights holder in advance as a trademark during cooperation with the rights holder, and comprehensively attacked the trademark owner through litigation for infringement of intellectual property rights, complaints to administrative agencies, industry associations, e-commerce platforms, improper registration of WeChat public accounts, commercial defamation, and malicious registration and hoarding of trademarks, showing obvious subjective malice and serious circumstances, constituting unfair competition behavior of abusing intellectual property rights.
[Basic Case Facts]
Shikang Protective Products Co., Ltd. (hereinafter referred to as Shikang) is a company specializing in the production of respiratory protective products, which has long used the “MASkin” brand and owns registered trademarks such as “maskin” and “BENEHAL/必利好”, which have high recognition. Yuan Certain Information Technology Co., Ltd. (hereinafter referred to as Yuan Certain) registered the “MASkin” trademark during its cooperation with Shikang. After the cooperation broke down, Yuan Certain initiated three lawsuits against Shikang for copyright infringement, trademark infringement, and more, and made more than three complaints to the Market Supervision Administration, industry associations, and e-commerce platforms, among other “rights protection” actions. Yuan Certain also registered the “MASkin” and “BENEHAL” WeChat public account names, and its legal representative and controlling shareholder Xu Certain published misleading statements against Shikang on the public account, and repeatedly used the registered trademark to negotiate with Shikang in a threatening manner. In addition, before and after the invalidation of the registered “MASkin” trademark on mask-related products, Yuan Certain and its affiliated company Xing Certain Supply Chain Management (Shanghai) Co., Ltd. (hereinafter referred to as Xing Certain) continued to register more than 16 trademarks such as “MASkin”, “Su Shikang”, “Zhou Shikang”, “BENEHAL”, and “必利好”. These actions caused difficulties for Shikang’s protective mask products and incurred significant time, manpower, and material costs for rights protection. Therefore, Shikang sued Yuan Certain, Xing Certain, and Xu Certain in court, demanding the cessation of unfair competition behavior and joint compensation for losses and reasonable expenses of 3 million yuan.
[Judgment Content]
The court held that the defendants, knowing that Shikang had long used the “MASkin” mark, still maliciously registered it as a trademark. Their actions of initiating intellectual property infringement lawsuits, complaints to administrative agencies, industry associations, and e-commerce platforms lacked factual and legal basis, and were aimed at harming Shikang’s interests or seeking improper benefits for themselves, objectively violating competition rules, disrupting competition order, and harming Shikang’s legitimate interests, constituting malicious rights protection by abusing intellectual property rights. Yuan Certain’s registration of the “MASkin” and “BENEHAL” WeChat public account names lacked a legitimate rights basis and was maliciously aimed at seeking improper benefits and creating obstacles for Shikang’s business. Yuan Certain and Xing Certain’s registration and use of trademarks identical or similar to Shikang’s well-known trademarks and trade names, and their threatening negotiations with Shikang, sought improper benefits, causing difficulties for Shikang’s related products, disrupting trademark registration management order and competition order. The defendants published false statements on the WeChat public account without judicial or administrative agency recognition in the rights protection dispute, damaging Shikang’s commercial reputation and product reputation, constituting commercial defamation. All of the above actions constituted unfair competition, and the three defendants jointly infringed and should bear legal responsibility for stopping the infringement and eliminating the impact. The court fully supported Shikang’s claim for 3 million yuan in damages after considering the nature of the unfair competition behavior, the damage consequences, and the subjective malice of the actors.
[Case Value]
This case is a rare domestic case that integrates malicious initiation of intellectual property litigation, malicious complaints to administrative agencies, industry associations, e-commerce platforms, improper registration of WeChat public accounts, commercial defamation, malicious registration, and hoarding of trademarks, constituting abuse of intellectual property and unfair competition. The court’s ruling effectively regulates the infringer’s behavior of comprehensively blocking the true rights holder under the guise of commercial cooperation, firmly upholding the legal spirit of “the law cannot yield to the unlawful”, and effectively maintaining the honest and trustworthy trading order, promoting core values. At the same time, the ruling implements the strictest intellectual property protection, fully supports the rights holder’s claim for 3 million yuan in damages, and imposes a heavy price on malicious rights holders and malicious rights protectors; it also innovates the responsibility approach, ordering the actors to change the WeChat public account, stop malicious litigation, malicious complaints, and malicious registrations, effectively preventing and regulating potential unfair competition behaviors in the future, which is conducive to maintaining trademark registration management order and fair competition market order, guiding market entities to protect their rights legitimately and compete healthily.
Previous Recommendations
The “Bird Su” that “pestered” “U Su” was judged; is this just a matter of a “丶”? A city of Gusu, half a volume of Jiangnan poetry—Suzhou legislation protects ancient cities and towns, promoting cultural inheritance and development
Highlights of the newly revised “Confidentiality Law” interpretation
Secretly discharging sludge into the river? Severe punishment!Source: Suzhou Intermediate People’s CourtSuzhou Legal Education (etongshuofa)Comprehensive organization and publication
