Judgment Gist

The patentee provided evidence to prove that BAS-342G computerized embroidery machine has been sold in the Chinese territory since 2007. As manufacturer and dealer specialized for sewing machine and parts thereof, the infringer is capable to and may access the subject software. In addition, the patentee submitted for judicial appraisal (by designated assessment institution) twice, concluding that the allegedly infringing software is substantially similar to the subject software of the patentee, and that the allegedly infringing software was found to contain multiple copyright marks of the patentee, and even contain the model number of the computerized embroidery machine of the patentee loaded with the subject software, for which the infringer could not provide reasonable explanation. Despite the objections of the infringer to the judicial appraisal, as the infringer failed to provide counterevidence overthrowing the judicial appraisal, the allegedly infringing software was determined to constitute infringement.

Case Information

Case Summary

Brother Industries, Ltd. (hereinafter referred to as “Brother”) developed the subject software for the computerized embroidery machine model BAS-342G in the period from 2006 to 2007. In May 2008, Brother modified the subject software and updated the subject software to Version 2.0.

Brother stated that: Ningbo Supreme Investment Management Co. Ltd. (hereinafter referred to as “Supreme Corporation”) installed the allegedly infringing software on the computerized embroidery machine it manufactured, manufactured and sold Supreme CSM-3020G direct-drive programmed computerized embroidery machine on which the allegedly infringing software was installed, thereby infringing the right of modification, the right to copy, and the right of distribution of Brother to the subject software; Guangzhou Liwan Zhongying Stitching Machine Company (hereinafter referred to as “Zhongying Stitching Machine Company”) sold Supreme CSM-3020G direct-drive programmed computerized embroidery machine on which the allegedly infringing software was installed without license, thereby infringing the right of distribution of Brother to the subject software; on the above grounds, Brother appealed to Liwan District People’s Court (hereinafter referred to as “the court of first instance”).

The court of first instance held that: 1. China and Japan are both signed parties of Berne Convention for the Protection of Literary and Artistic Works. Under the Copyright Law of the People’s Republic of China, Brother legal copyrights of Brother that is found in Japan, a signed party of Berne Convention, shall be protected equally under the Chinese laws; Brother is entitled to appeal to a competent court for computer software of its own creation.

2. Based on the evidence including invoices, contracts, and delivery notes provided by Brother, it can be determined that Brother has been selling BAS-342G computerized embroidery machine in China since 2007. As manufacturer and dealer special for sewing machines and parts thereof, Supreme Corporation is capable and possible to access the subject software. In this case, Brother has twice submitted the computer-controlled software (hereinafter referred to as the “allegedly infringing software”) in the control panel FLASHRAM of the CSM-3020G direct-drive programmed computerized embroidery machine it purchased as well as the subject software for judicial appraisal, concluding at each time that the allegedly infringing software is substantially similar to the subject software. Also, the allegedly infringing software was found to contain multiple copyright marks of “Brother Industries, Ltd”, and even contain the model number “BAS342G” of the BAS-342G computerized embroidery machine of Brother, for which Supreme Corporation could not provide reasonable explanation. Despite of the objections of Supreme Corporation to the judicial appraisal, as Supreme Corporation failed to provide counterevidence overthrowing the judicial appraisal, the behavior of Supreme Corporation storing the allegedly infringing software in the CSM-3020G direct-drive programmed computerized embroidery machine manufactured by Supreme Corporation constituted infringement to the right of duplication of Brother to the subject software, and the behavior of Supreme Corporation and Zhongying Stitching Machine Company selling the above model type of computerized embroidery machine storing the allegedly infringing software constitutes infringement to the right of distribution of Brother Industries, Ltd. to the subject software. Referring to the judicial appraisal, program/data segment corresponding to the object code of the allegedly infringing software is slightly different from that of the subject software of Brother; the behavior of Supreme Corporation of making addition and deletion to the subject software constitutes infringement to the right of modification of Brother Industries, Ltd. to the subject software.

3. Zhongying Stitching Machine Company submitted evidence to prove that the product it sold were obtained from a lawful origin. Zhongying Stitching Machine Company shall immediately desist from the behavior of selling the computerized embroidery machine carrying the allegedly infringing software. The claim of Brother Industries, Ltd. for Zhongying Stitching Machine Company bearing joint liabilities lacks a legal basis, and thus is not supported. As a corporation of R&D, manufacture, assembly and sales of sewing machine and parts thereof with a considerable scale, Supreme Corporation installed the allegedly infringing software on the CSM-3020G direct-drive programmed computerized embroidery machine and sold the machine without being licensed by Brother, which infringes the right of modification, the right to copy, and the right of distribution of Brother to the subject software. Supreme Corporation shall immediately desist from the infringement and compensate for the losses. That is, Supreme Corporation shall immediately desist from modification, duplication, and distribution of the control software infringing the copyright of the subject software of Brother Industries, Ltd, desist from the behavior of installing the allegedly infringing software on any model of the product manufactured by Supreme Corporation and desist from the sales of the same, and delete the allegedly infringing software.

4. As Brother fails to prove its specific losses incurred from the infringement and cannot provide conclusive evidence of the profits of Supreme Corporation earned from the infringement, the amount of damages of Supreme Corporation is determined to be 800,000 yuan based on comprehensive consideration of the type of the subject computer software, the price of the computerized embroidery machine using the software, the nature, circumstance, and consequences of the infringement of Supreme Corporation, as well as the reasonable expenses of Brother for stopping the infringement (including the fees for judicial appraisal service, attorney fees, translation fees, warehousing fees, the expenses of purchase, etc.).

Both Brother and Supreme Corporation were unsatisfied with the judgment, and appealed to Guangzhou Intermediate People’s Court (hereinafter referred to as “the court of second instance”). The court of second instance substantially agreed with the court of first instance on whether or not infringement to software copyright is constituted and on the determination of infringement liabilities. As to whether Supreme Corporation infringed the right of modification to the subject software, the court of second instance opined that: the program/data segment corresponding to the object code of the allegedly infringing software is slightly different from that of the subject software; but neither of the judicial appraisal specifies whether or not the difference in the data segment of the object code of the allegedly infringing software is modification to the subject software; Brother did not give further explanation on this matter, either; thus, Brother’s accusation that the allegedly infringing software infringes the right of modification to the subject software lack of evidence; and the court of second instance supports the claim of Supreme Corporation that it did not infringe the right of modification to the subject software. In addition, regarding the liabilities of compensation, the court of second instance considered the nature, circumstance, and consequences of the infringement of Supreme Corporation as well as the reasonable expenses of Brother for stopping the infringement, and determined the amount of damages to be paid by Supreme Corporation to Brother to be 600,000 yuan under the law. The court of second instance also determined that Brother need not return the two machines installing the allegedly infringing software obtained by notary purchase.

Attorney’s Opinion

This case is a case of infringement on software copyright. Wei Chi Xue Law Firm represented Brother through the entire procedure and won in each phase of the case.

Generally, determination of infringement to computer software is based on substantial similarity and access analysis.

Regarding access, judicial practice does not require the patentee to prove that the alleged infringer have actually accessed the allegedly infringed software, as long as it is proven that the alleged infringer have access to the allegedly infringed software. In this case, the patentee submitted evidence for the sales of the computerized embroidery machine storing the subject software in China in as early as 2007, thereby proving that the alleged infringer have access to the subject software, which was supported by the court.

Regarding substantial similarity, we provided evidence of judicial appraisal. During the trial, the alleged infringer raised a bunch of questions about the procedure legitimacy and the qualification of the judicial appraiser. However, we have checked the qualification of the institution and the appraiser at the early stage of selecting and entrusting a judicial appraisal institution and adequately communicated with the institution on the objectiveness and the validity of the evaluation method. The court did not recognize the questioning of the alleged infringer with regard to the judicial appraisal.

In practice, it is common in disputes over computer software copyright infringement to entrust a judicial appraisal institution to provide judicial appraisal on the similarity. The involved parties should prudently check the qualification of the institution and the expert witness. Although the judicial appraisal for intellectual property rights is no longer required to be certified by the Ministry of Justice, it is still recommended to entrust an institution documented at rmfysszc.gov.cn or recognized by a local court or in previous judicial cases. Also, it is necessary to ensure the correctness and the objectiveness of the evaluation method.

This case provides an important reference in terms of the determination of infringement to software copyright and the standards of acceptable judicial appraisal.

Link to Second-instance Judgment

https://wenshu.court.gov.cn/website/wenshu/181107ANFZ0BXSK4/index.html?docId=OOqpMK6es41ZX4Xcfz57b+dDFMgMCnXDqIUvXdemREHXM8hBD9CSTp/dgBYosE2ggAZpx0VY6hnu1z63edeG+vTXTyWfi7q21XjDwDE+XhYzpXkfcLfrrOiK8hVE+buJ