One Classic Case of Computer Software Copyright Infringement Dispute--- A Fatal Thrust

Plaintiff: Shanghai Federal Europe Information Technology Co. Ltd.

Defendant: Beijing CMIIC Asiatalent Automation Engineering Co. Ltd.

Defendant: Chen Jianjiang

Beijing Haidian District People’s Court (2006) Haidian Civil No.20650

From 2002 to March, 2006, Chen Jianjiang had been a manager of Technology Department in Shanghai Federal Europe Information Technology Co. Ltd. (hereinafter referred to as “Federal Europe”). During his term of office, Chen Jianjiang was in charge of and had completed the development of Federal Europe Thermal Control Aided Design Software ((hereinafter referred to as “ELDesign1.0 Software”). Federal Europe registered the copyright on April 29^th, 2004, and acquired the copyright registration certificate with the registration No. of 2004SR03817.

On March 1^st, 2006, Beijing CMIIC Asiatalent Automation Engineering Co. Ltd. (hereinafter referred to as “CMIIC Asiatalent”) completed the development of CMIIC Asiatalent Instrument Design Management Software V1.0 (hereinafter referred to as “INPower2000 Software”). CMIIC Asiatalent registered the copyright in National Copyright Administration on May 17^th, 2006, and the registration No. is 2006SR06140. The price for this software is very expensive, and the market price for each set of software is more than RMB 200,000 Yuan.

In February 2006, Federal Europe and Chen Jianjiang had labor dispute. In April 2006, Federal Europe forcibly withheld Chen Jianjiang’s work laptop with the reason of work handover, which intensified the contradiction.

During the dispute with Federal Europe, Chen Jianjiang had some connection with CMIIC Asiatalent, and was entrusted by CMIIC Asiatalent to provide related advisory service for the trial of INPower2000 Software for Inner Mongolia Electric Power Exploration and Design Institute and some other enterprises.

In June 2006, Federal Europe entrusted a lawyer to start a suit in Beijing Haidian District People’s Court to prosecute CMIIC Asiatalent and Chen Jianjiang, with the reason of Federal Europe’s ELDesign1.0 Software infringed by CMIIC Asiatalent’s INPower2000 Software. CMIIC Asiatalent has entrusted the lawyer of Xu Xinming from China Intellectual Property Lawyers full authority to participate the litigation on behalf of CMIIC Asiatalent.

Federal Europe alleged to Beijing Haidian District People’s Court that from 2002 to April 2006, Chen Jianjiang had been a manager of Technology Department in the company, and had developed ELDesign1.0 Software during his term of office; Federal Europe was the copyright owner, and had registered in National Copyright Administration, registration No. 2004SR03817. In April 2006, Federal Europe realized that Chen Jianjiang together with other people had infringed the copyright of Federal Europe’s software and trade secrets, and thus negotiated with Chen Jianjiang and withheld his work laptop.

After checking Chen Jianjiang’s work laptop, Federal Europe has found that there was a software version named INPower2005 saved in his laptop. Chen Jianjiang’s work laptop showed that from the year of 2005 Chen Jianjiang had made use of his work conditions provided by Federal Europe and mastering technology secrets of Federal Europe and customer resources in his position, revising Federal Europe’s ELDesign1.0 Software to INPower2000V1.0 Software with CMIIC Asiatalent, which registered in National Copyright Administration with registration No. 2006SR06140. After comparing, INPower2000V1.0 Software registered under CMIIC Asiatalent was basically the same as INPower2005 Software saved in Chen Jianjiang’s work laptop. INPower2005 Software which was an upgraded version of ELDesign1.0 Software was Chen Jianjiang’s assignment works during his term of office in Federal Europe. The copyright of INPower2005 Software should be reserved for Federal Europe. During his term of office, Chen Jianjiang, without any authorization, represented CMIIC Asiatalent to provide technical services for the trial of INPower2000 Software for Inner Mongolia Electric Power Exploration and Design Institute, Beijing Bo Qi Technology Co. Ltd. and other enterprises. The above enterprises were all customer resources of Federal Europe, and have already purchased or were going to purchase INPower2000.

Federal Europe believed that CMIIC Asiatalent and Chen Jianjiang’s behavior was joint infringement, which has infringed Federal Europe’s copyright of ELDesign1.0 Software, requesting the court to confirm that INPower2000 Software registered by CMIIC Asiatalent has committed infringement to Federal Europe’s ELDesign1.0 Software; and decreeing that CMIIC Asiatalent and Chen Jianjiang immediately stop selling and permitting others to trial or use the infringed software INPower2000; decreeing that CMIIC Asiatalent and Chen Jianjiang state the fact of infringement to customers in a written description and eliminate ill effects within the scope of infringement influence; decreeing that CMIIC Asiatalent and Chen Jianjiang compensate Federal Europe’s economic loss of RMB300,000 Yuan.

CMIIC Asiatalent and Chen Jianjiang argued that Federal Europe’s infringement charge was inconsistent with the facts. INPower2000 Software was developed independently by CMIIC Asiatalent, and CMIIC Asiatalent had the copyright of this software according to law. INPower2000 Software had nothing to do with Chen Jianjiang, neither with Federal Europe. Thus, there was no infringement fact, and CMIIC Asiatalent requested the court to reject Federal Europe’s claim.

I.           The court adjudicated in advance to preserve evidence for the involved software of defendant CMIIC Asiatalent

Before the statement of claim delivered to CMIIC Asiatalent and Chen Jianjiang, Beijing Haidian District People’s Court, due to the demand of Federal Europe, issued two adjudications, decreeing to seal up, detain, and copy INPower2000 Software and related materials, data and information used by Inner Mongolia Electric Power Exploration and Design Institute and Beijing Bo Qi Technology Co. Ltd., obtained from CMIIC Asiatalent, in order to preserve evidence. On August 31^st, 2006, Haidian District People’s Court served the notice of respondence of action, civil complaint, and notice of proof before deadline, and the above evidence preservation verdict to both CMIIC Asiatalent and Chen Jianjiang at the same time. The court ordered CMIIC Asiatalent provide source program and target program of INPower2000 Software within three days in the proof notice. CMIIC Asiatalent provided as scheduled.

CMIIC Asiatalent was in a very passive and serious litigation situation.

II.        The court hosted the first talk before the court, organizing both parties to exchange evidence

On September 25^th, 2006, the court organized both parties to exchange evidence, and the lawyers of both parties were all present. This was also the first face-to-face contact between the lawyers of both parties. The plaintiff Federal Europe confirmed that the infringed software was ELDesign1.0, the copyright of which registered on April 29^th, 2004, and has submitted to the court the infringed INPower2000 software of CMIIC Asiatalent. The court proposed to identify the software, and both parties agreed. According to the principle of “The one who advocates adduces proof”, Federal Europe raised the identification application to the court. The court requested Federal Europe submit all copyright registration materials of the involved software within three days, and CMIIC Asiatalent submit all copyright registration materials of the involved software within three days.

The process of evidence exchange ran successfully. There was no direct confrontation between two parties.

III.     The court hosted the second talk before the court. The plaintiff and the defendants stated opinions on software identification.

On October 27^th, 2006, the plaintiff and the defendants gathered in the court. Under the presiding judge’s hosting, both parties stated opinions on software identification. Federal Europe requested the following three software versions be identified and compared with the INPower2000 software of CMIIC Asiatalent: 1). Federal Europe’s ELDesign1.0 Software, registered on April 29^th, 2004; 2). the 2005 upgraded version of ELDesign1.0; 3). the 2006 upgraded version of ELDesign1.0 from Chen Jianjiang’s work laptop.

The lawyer Xu Xinming, agent of CMIIC Asiatalent, objected that the infringed software listed by Federal Europe in litigation request was ELDesign1.0, and the submitted evidence from Federal Europe before proof deadline appointed by the court was also ELDesign1.0, so the comparing identification of another two versions was inconsistent with litigation request, and was also beyond the proof deadline. Thus, the advocate should not be supported. If Federal Europe advocated that another two versions were infringed, they should file a lawsuit separately.

The judge affirmed that lawyer Xu Xinming’s objection established, disagreeing Federal Europe’s request on comparing identification of three software versions in this lawsuit. Meanwhile, the judge requested CMIIC Asiatalent submit development personnel list of INPower2000, written description of development duration to the court within three days. CMIIC Asiatalent submitted as scheduled.

IV.     The court hosted the third talk before the court. The plaintiff and the defendants continued to state opinions on software identification.

On November 23^th, 2006, the plaintiff and the defendants gathered in the court for the third time. Under the presiding judge’s hosting, both parties continued to state opinions on software identification. Federal Europe insisted that the three software versions be compared and identified. The judge restated that CMIIC Asiatalent’s objection established, disagreeing Federal Europe’s request. Knowing that this way did not work, the lawyer of Federal Europe changed his strategy, requesting to select one of the three versions to be identified.

Lawyer Xu Xinming objected again that Federal Europe’s alleged infringed software was ELDesign1.0. According to Federal Europe’s submitted evidence, which was software copyright registration certificate, ELDesign1.0 was a specific name of the software version registered on April 29^th, 2004 in National Copyright Administration by Federal Europe, and should bind upon Federal Europe. Plaintiff Federal Europe’s intention and behavior of defining different software versions with the same name was unfair to CMIIC Asiatalent, and not allowed in law, and thus should be objected.

The judge affirmed again that the lawyer Xu Xinming’s objection established, disagreeing Federal Europe’s request.

V.        The court hosted the fourth talk before the court, deciding on the identification.

On December 6^th, 2006, the court called lawyers of both parties together, confirming the identification objectives for the last time. However, the judge was very determined on this issue, believing Federal Europe’s request was unreasonable, and thus not accepted. If Federal Europe applied for identification, only ELDesign1.0 Software could be identified. Federal Europe should handover in advance identification fee within three days, or else bear the legal consequence of inadequate proof.

VI.     Conclusion

Eventually, Federal Europe applied to the court to withdraw the lawsuit, requesting to withdraw the prosecution on CMIIC Asiatalent and Chen Jianjiang. The court permitted the request and issued civil verdict of (2006) Haidian Civil No. 20650 on December 25^th, 2006.

Afterwards, Federal Europe requested the Haidian court to retrieve the software and other evidences submitted to the court during and after the prosecution. The court originally permitted Federal Europe’s request and was going to return the software versions submitted by both plaintiff and defendants, but with the objection of the lawyer Xu Xinming, the agent of CMIIC 

Asiatalent, the court finally did not agree with Federal Europe’s request. All software versions and other evidences submitted by both parties were preserved in the court.

I.           The upgrade of computer software belongs to software revision. The process of upgrading is basically a process of innovation of software works, and is a process of emerging new works.

Computer software is one type of various works forms, protected by Copyright Law and Regulations for the Protection of Computer Software, which is common knowledge in law. However, software, as a special form of works, is characterized differently from books, essays and other works. I believe, the biggest distinction from other works is the continuous upgrading of software with very high frequency and big range. The computer has nowadays been widely applied in production, management, research and other fields. As the logic instrument of computer system, the upgrading speed of computer software has far exceeded that of other technologies.

Because of high frequency of software upgrading, one set of software is far different from the original version after a rather long period, and is new works in the law sense. The attempt of protecting upgraded new version by the previously registered original software is doomed to fail.

II.        Federal Europe obviously did not realize the above characteristics of software works; neither did they realize the legal consequences induced from these characteristics, which eventually caused the fatal trouble during the litigation.

When CMIIC Asiatalent and Chen Jianjiang received the notice of respondence of action, Federal Europe had applied the court to complete the evidence preservation procedures. In addition, Federal Europe submitted over a hundred pages of evidence materials to the court to support their advocates. Federal Europe had made enough preparations.

When the proof deadline set by the court passed and both parties exchanged evidence, Federal Europe confirmed to the court assuredly that the infringed software was ELDesign1.0 registered on April 29^th, 2004. So far, Federal Europe did not realize the above characteristics of software. In fact, Federal Europe’s confirmation unintentionally caused a fatal trouble for themselves and created an excellent counterattack opportunity for CMIIC Asiatalent.

III.     Litigation is an orderly process, and both parties should play by rules of the game. Federal Europe mistakenly selected the most unfavorable scheme and showed the worst game card, which changed the situation smoothly. Federal Europe declined to a passive situation. Federal Europe attempted to change the card in the middle, but was not permitted by the rules; while CMIIC Asiatalent showed the same card throughout the game, just waiting for opportunities.

When the litigation was in the stage of software identification, Federal Europe submitted three software versions to the court: Federal Europe’s ELDesign1.0 Software, registered on April 29^th, 2004, the 2005 upgraded version of ELDesign1.0, the 2006 upgraded version of ELDesign1.0, requesting comparing identification one by one. As the representative lawyer of CMIIC Asiatalent, I believed the opportunity had coming, so proposed the objection.

I believed that the infringed software listed by Federal Europe in litigation request was ELDesign1.0, the recorded software in the submitted Computer Software Copyright Registration Certificate registered on 29^th April 2004 proving their legal rights was also ELDesign1.0, and the confirmed infringed software during evidence exchange was still ELDesign1.0. Therefore, it can be confirmed that the requested to be protected software in this case was ELDesign1.0, and not any other software works. 

ELDesign1.0 could only be the version whose copyright was registered on 29^th April 2004, and not any other version. If Federal Europe believed that there was no substantial revision after comparing the 2005 upgraded version and the 2006 upgraded version with the version of ELDesign1.0 registered on April 29^th, 2004, there was no need for comparing identification using upgraded versions. Also, using registered version to compare just met Federal Europe’s litigation request and advocate. If Federal Europe believed that there were substantial revisions after comparing the 2005 upgraded version and the 2006 upgraded version with the version of ELDesign1.0 registered on April 29^th, 2004, then the 2005 upgraded version and the 2006 upgraded version were new works, and could not be investigated in the litigation of this case. Federal Europe should propose a separate litigation. The infringed software works in the litigation trial of this case was ELDesign1.0 whose copyright was registered on April 29^th, 2004.

My opinion was adopted by the judge.

Federal Europe was in a dilemma. If Federal Europe insisted the identification application, they were only able to take ELDesign1.0 registered on April 29^th, 2004 as the comparing software. Thus, even if CMIIC Asiatalent’s software, the 2006 upgraded version, was truly the revised version of ELDesign1.0 by Chen Jianjiang allegedly by Federal Europe, the identification result would surely be non-infringement. This was because there were great differences between the 2006 upgraded version of ELDesign1.0 and ELDesign1.0 registered on April 29^th, 2004. Both Federal Europe and the judge realized this point. If Federal Europe gave up on identification application, they had to bear the consequence of losing the lawsuit because of inadequate proof.

IV.     IV. Federal Europe’s allegation of facts on finding related software versions from Chen Jianjiang’s laptop was obviously improper, thus voluntarily gave up the opportunity of proposing a separate prosecution.

Originally, Federal Europe has had the opportunity to propose a separate prosecution, but in their previous allegation of facts, Federal Europe did not leave an out for themselves. Federal Europe alleged that they found the 2006 upgraded version of ELDesign1.0 from Chen Jianjiang’s laptop in April 2006. This indicates that this software was not developed independently by Federal Europe. Although they advocated that this software was Chen Jianjiang’s assignment works, this advocate should be supported by evidence. With the premise of no supported evidence, this statement of Federal Europe actually cut off their copyrights to the software on their own. In addition, Federal Europe found that their software registration time submitted to the court was later than CMIIC Asiatalent’s publishing and registration time of INPower2000. According the logic of time sequence, previously published INPower2000 could not be from the later formed 2006 upgraded version of ELDesign1.0. Therefore, there was absolutely no possibility of infringement.

Federal Europe’s statements above confirmed the facts. According to the principle of estoppels, Federal Europe should be bound by the above statements even if they proposed a separate prosecution. Even if Federal Europe proposed a separate prosecution, the result would possibly be that Federal Europe has infringed CMIIC Asiatalent’s software, and not CMIIC Asiatalent infringing Federal Europe’s.

V.        After my objection, the Haidian court rejected Federal Europe’s request on returning the evidence of software after the court permitting them to withdraw the litigation, which completely broke Federal Europe’s hope of proposing a separate prosecution. This case was finally closed.

Federal Europe requested to the court to withdraw the litigation, and the court adjudicated and permitted. Before long, I received the notice from the Haidian court which stated that Federal Europe requested to retrieve the evidence of each version of software CD submitted to the court, and the court decided to return the software CDs to both parties. I realized immediately that this is one step of Federal Europe to propose a separate prosecution. I proposed the objection that if the court returned each version of software CD submitted to the court in the original litigation, all the legal actions in this case would turn to meaningless. For example, if Federal Europe took the 2006 upgraded version of ELDesign1.0 with the name of ELDesign1.0 to prosecute again, both CMIIC Asiatalent and the court could not identify this software, and then Federal Europe could avoid all the obstacles of established facts and the obstacles of laws. The result must have been unfavorable to CMIIC Asiatalent. There would be no fairness in judicial proceedings. Litigation is not a game, and every litigation subject should be responsible for all their statements and behaviors. Withdrawing prosecution just means that the plaintiff will not continue the lawsuit, which causes the litigation to end up with in special way. The court’s permission of the plaintiff withdrawing the prosecution does not indicate that all the legal actions disappear and return to the beginning. The statements and behaviors in the original prosecution by both parties should have bindings upon themselves. From what was stated above, Federal Europe’s request on returning the evidence of software should not be permitted. Otherwise, the court should bear corresponding responsibilities.

The court finally adopted my objection, disagreeing Federal Europe’s request on returning the evidence of software. Federal Europe’s hope of proposing a separate prosecution was in no longer in existence. This case was completely concluded.

VI.     Conclusion

In a general view of this case, the litigation did not come to the stage of confrontation in court and the stage of debate in court, and both parties stopped in the stage of software identification, but the result was already settled. Litigation is like a war, situations changing frequently, both parties taking turns to wax and warn. Federal Europe could have won, but they just carelessly showed a fatal flaw, which was captured by our party, and thus was killed by a deadly sword. This can be called a fatal thrust.

January 29th, 2007