News & Cases from China: January 2020
Tencent Wins Copyright Infringement Action in relation to AI-Generated Work
Recently, a judgment issued by the People’s Court of Nanshan District of Shenzhen took the lead in the debate in relation to copyright protection and AI generated works, when it held that Tencent’s AI generated work was capable of protection. Tencent Technology Company Ltd had sued the ‘Internet Loan House’ for having copied, without authorization, articles written by Tencent’s robot Dreamwriter.
Dreamwriter was a data and algorithm-based intelligent writing assistant system, independently developed by Tencent, that produced articles and reports that enabled Tencent to meet the demand for customized business and financial content. The work in question was a financial report entitled ‘Midday Review: Shanghai Index Rose slightly by 0.11% to 2691.93 Points, led by Telecommunications Operations, Oil Extraction and other Sectors’ that had been produced by Dreamwriter on 20 August 2018. The work was created on the basis of a large quantity of collected data and analysis of both the stock market and shareholder readers’ demands. The report also relied on both historical stock market data and real-time data. It was finished and published within two minutes of the stock market closing. The following notice appeared at the end of the report: "This article was automatically written by Tencent robot Dreamwriter".
After analysing the external expression and generation process of the works involved, the Court held that technically the report had been ‘generated’ by the Dreamwriter software, which constituted an original written work for the purposes of the Copyright Law, and was entitled to copyright protection. The software had been created bymultiple teams organized and directed by Tencent and was, thus, the work of legal persons.
In making the report available on its website, the Defendant had infringed Tencent’s right of information network dissemination, but because the infringing material had been deleted immediately the economic loss was minimal. The Defendant was ordered to delete the infringing works and compensate Tencent for economic loss in the sum of RMB 1,500 (approx. US$ 213) in reasonable enforcement costs.
Tencent Awarded RMB 45 Million (approx. US$ 6,5 million) for Infringement of Copyright Infringement in its CROSSFIRE Game Map
CROSSFIRE is an online FPS (First Person Shooter) game developed by the Korean company named Smilegate. FPS games are video games based on gun, or other weapon-based, combat where the player experiences the action through the eyes of the shooter. Tencent had the exclusive licence in mainland China.
NATIONAL SHOOTOUT is a mobile online game developed by Gwebtop (Beijing) Technology Co., Ltd. (Gwebtop) and Hero Entertainment Co. Ltd. (Hero Entertainment) provides certain services in relation to the game.
Tencent alleged that NATIONAL SHOOTOUT contains various game map and other images identical with or substantially similar to images in CROSSFIRE and that it reproduces other aspects including the operating structure, layout settings, and color matching, and makes use of the same or highly similar names, The gameplay design is also the same. It sued seven companies involved in the development and operation of NATIONAL SHOOTOUT, seeking remedies for copyright infringement, including an apology and compensation for economic loss.
The Shenzhen Intermediate People's Court held that the overall composition, internal structure, and layout of the game scene maps were not only the ‘core expression’ of the game maps, but also of the game itself. Whether the ‘core expression’ of the allegedly infringing game maps and the ‘core expression’ of the rights holder's work are substantially similar, was determined by the Court through the ‘three-step methodology’. The first step was to identify similar content in the two works. The second step was to determine the originality of that conten.. The third step was to determine whether the similar content constituted the ‘core expression’ of the work.
During the comparison process, the Shenzhen Intermediate People's Court paid attention to the positioning of corresponding elements of the works, and identified and compared the works from the perspective of the game players. It considered in detail the problem of the contribution the game maps made to the overall CROSSFIRE game, the contribution made by the six allegedly infringing maps to all the game maps, the recharge income of the NATIONAL SHOOTOUT and the net profit disclosed by financial reports, etc. On this basis, the amount of compensation was fixed at CNY 45,247,900 (approx. US$ 6,451,727). The seven defendants were ordered to immediately cease the infringement; Gwebtop and Hero Entertainment were ordered to pay compensation of CNY 45,249,000 (approx. US$ 6,451,884); Tianjin Hero Entertainment and Shenzhen Qile were ordered to pay jointly compensation of CNY 5,000,000 (approx. US$ 712,931); and Beijing Zhuoyue Xingchen and Tianjin Zhuoyue Xingchen were ordered to pay jointly and severally compensation of CNY 3,000,000 (approx. US$ 427,758).
Xiaomi Awarded Punitive Damages and Compensated 500 Million Yuan
In 2011, Zhongshan Povos Appliances Co., Ltd ( ‘Zhongshan Povos’) applied to register the trademark ‘Xiaomi Life’ (Application No. 10224020). Xiaomi is a well-known Chinese electronics company, fourth after Apple, Samsung and Huawei, and the Xiaomi mark is well-known. Prior to 2011, Xiaomi had registered a series of "小米"trademarks and ‘Xiaomi’ constituted a well-known mark.
A number of Xiaomi's later trademark applications were rejected for registration on the basis that they were too similar to Zhongshan Povos’s trademark. .
As well as applying to register ‘Xiaomi Life’, Zhongshan Povos had filed nearly a hundred applications for the registration of well-known trademarks, among which were registration applications filed in different categories with signs such as “生活小米”, “MILIFE”, “智米米家”, “智米生活” ,and trademark registration applications such as "盖乐世", "百事可乐PAPSIPAPNE "and” 威猛先生WEIMENG”.
Xiaomi brought a trademark infringement action against Zhongshan Povos and Zhongshan Duling Fengshao Life Electric Co., Ltd. and other defendants in the People's Court of Nanjing City, Jiangsu Province. The Court held that, at the time Zhongshan Povos filed its application, ‘Xiaomi’ constituted a well-known trademark. The two Defendants had used, without permission, a label similar to the Plaintiff’s trademark in relation to induction cookers and other products, thereby infringing Xiaomi’s trademark.
The Defendants also used the slogan "Xiaomi Life is born for quality", "We only do art in living appliances" and orange and white color schemes, similar to the color scheme used by Xiaomi, which constituted misleading and false publicity and constituted unfair competition. As the Defendants’ infringement had been undertaken with obvious malice and had very serious consequences, the punitive damages system was applicable to this case. The Court fully supported the Plaintiff's claim for economic loss in the amount of CNY 500,000,000 (approx. US$ 71,307,348) and reasonable expenses of CNY 414,198 (approx. US$ 59,058)
The Defendants appealed to the Higher People's Court of Jiangsu province, which held that the case met the requirements for the award of punitive damages. The profit made as a result of the infringement was the appropriate basis of compensation, and punitive damages was three times the compensation base. The Court fully supported the Plaintiff's claim for compensation of CNY 500,000,000 (approx. US$ 71,307,348) and reasonable expenses of CNY 414,198 (approx. US$ 59,070).
Xiaomi’s trademark use resulted in Reverse Confusion – damages award of 12 Million Yuan (approx. US$1,700,000)
Hangzhou Lian'an Security Engineering Co., Ltd. is the proprietor of the trademark “MIKA米家” (No. 10054096), registered in relation to various products, including network communications equipment, cameras, and video recorders in Class 9. It brought a trademark infringement action against Xiaomi Communications Co., Ltd. and Xiaomi Technology Co., Ltd. (collectively referred to as Xiaomi) for use of the "米家" trademark on their Mi Home Security Camera, smart camera PTZ version, driving recorder and other products.
The Intermediate People's Court of Hangzhou City, Zhejiang Province found that Xiaomi had launched their ‘米家’ products in 2016, while Lian'an Company's trademark had been registered in 2012. Lian'an Company’s registration did not, therefore, constitute trademark squatting in bad faith. If the trademark used by an economically stronger company is registered after the weaker company’s registration, use of the mark by the stronger company would be likely to lead the relevant public to believe that the original trademark owner’s products had originated from the economically stronger company. i.e. . there would be ‘reverse confusion’. In this case, Xiaomi Company, the economically more powerful company, had vigorously promoted and used the "米家" logo and it would, therefore, be easy for the relevant public to associate that logo with Xiaomi Company, and believe that the products of Lian'an Company originated from Xiaomi.. The Court found that Xiaomi Company had infringed Lian’an’s trademark. When determining the amount of compensation, it first determined that Xiaomi's profit margin was not less than 30%, and then determined its profit from the infringing acts. It determined that Xiaomi Company should pay compensation of CNY 12,000.000 (approx. US$ 1,711,376).