I. Case Recap

In November 1998, Shenzhen Jiexian Advertising Design Co., Ltd. (original plaintiff, hereinafter referred to as Jiexian Company) assigned Tian Xianguang to go to Zhouzhuang Town, Jiangsu Province to take photos for use in printing calendar themes. At the end of 1999, Jiexian Company delivered the film of the above seven works to Shenzhen Nanfeng Color Printing Co., Ltd. (original defendant, hereinafter referred to as Nanfeng Color Company), entrusting Nanfeng Color Company to print a batch of "Dream Water Town" calendars. After the calendars were printed, Jiexian Company's film remained at Nanfeng Color Company. In 2000, China Great Wall Computer Shenzhen Co., Ltd. (original defendant, hereinafter referred to as Great Wall Computer Shenzhen Company) entrusted Nanfeng Color Company to design and print 2001 calendars. Nanfeng Color Company provided calendar samples to Great Wall Computer Shenzhen Company, and personnel from both companies selected Jiexian Company's seven "Dream Water Town" works from the samples. After obtaining oral consent from Jiexian Company, Nanfeng Color Company printed 5,000 calendars and delivered them to Great Wall Computer Shenzhen Company, which distributed them free of charge to employees and customers.

On July 9, 2001, Jiexian Company filed a lawsuit with the Shenzhen Intermediate People's Court on the grounds of copyright infringement, requesting the court to order the two defendants to cease the infringement, destroy the infringing calendars, publicly apologize in Shenzhen media, and compensate for economic losses of RMB 175,000, and to order the two defendants to bear joint and several liability and all litigation costs.

After a court hearing, the Shenzhen Intermediate People's Court rendered the following judgment [Civil Judgment No. (2001) Shen Zhong Fa Zhi Chan Chu Zi No. 113]:

"First, the defendants, Great Wall Computer Shenzhen Co., Ltd. and Shenzhen Nanfeng Color Printing Co., Ltd., shall immediately cease infringing on the copyright of the plaintiff, Shenzhen Jiexian Advertising Design Co., Ltd., in the seven 'Dream Water Town' works.

Second, within ten days after the judgment takes effect, the two defendants shall each compensate the plaintiff for economic losses of RMB 20,000, totaling RMB 40,000, and the two defendants shall bear joint and several liability.

Third, the plaintiff's other claims are dismissed. The case acceptance fee of RMB 5,010 shall be borne by the two defendants, each paying RMB 2,505."

All three parties appealed the judgment. After a hearing, the Guangdong Provincial Higher People's Court ruled as follows [(2001) Yue Gao Fa Zhi Zhong Zi No. 142]:

"Appeal dismissed, original judgment upheld."

II. Case Focus

The three appellants' claims are as follows:

(1) Jiexian Company appealed: Requesting that the first judgment item be upheld, the second judgment item be amended to order the two appellees to jointly compensate the appellant for economic losses of RMB 175,000, and the third item be amended to order the two appellees to publicly apologize to the appellant in the Shenzhen Special Zone Daily. The reasons are as follows:

1. The original trial court has established that the two appellees infringed upon the appellant's copyright. According to the Copyright Law and its implementing regulations, the two appellees should publicly apologize to the appellant in the Shenzhen Special Zone Daily.

2. The amount of compensation determined by the original trial court for the two appellees is clearly too low, for the following reasons:

(1) The appellant incurred significant costs and expenses in completing the creation of the photographic works in this case.

(2) Compensation for copyright infringement should be determined from a punitive perspective, and the lack of serious consequences should not preclude our claim. The compensation amount in this case is too low to effectively deter future copyright infringements.

(3) The author of the photographic works in this case, Tian Xianguang, is a renowned Chinese photographer, and the value of his works should be higher than that of ordinary works.

(II) Great Wall Computer Shenzhen Company appealed, stating:

1. We do not have subjective fault. Jiexian Company cannot prove our infringement merely by showing that we are the actual user of the infringing work; subjective intent is a crucial factor. We commissioned Nan Fengcai to print the calendar and were unaware whether the works were infringing. Subjective intent cannot be inferred from objective facts after the fact.

2. Jiexian Company emphasized that Tian Xianguang is a photographer, but the membership certificate of the China Photographers Association and the award certificates presented by Jiexian Company during the trial were insufficient to establish that Tian Xianguang is a "renowned" photographer.

3. Our side lacked subjective malice, objectively caused no serious consequences, and inflicted no losses on Jiexian Company, so there is no need to support its claim for an apology. The calendars we printed totaled only 5,000 copies and were distributed as gifts to employees, not for profit. The first-instance judgment ordering us to compensate 20,000 yuan is inconsistent with the facts, and we request a fair judgment from the appellate court.

(3) Nanfengcai Company appealed, stating:

Our use of the seven works in question was with Jiexian Company's consent. We had a good cooperative relationship with Jiexian Company, and the film for "Dreamy Water Town" had been stored with us for over a year. Before our company and Great Wall Computer Shenzhen Company decided to use these seven films, we promptly contacted General Manager Ye of Jiexian Company and asked whether they agreed to our use. After receiving an affirmative response, we signed the printing contract with Great Wall Computer Shenzhen Company. Since the communication was oral, no written documentation was produced. Moreover, after the calendars were printed, Jiexian Company sent Manager He Gaoguo to pick up five calendars and sent us a letter on March 30, 2001, without raising any objections. The first-instance judgment ordering us to compensate 20,000 yuan is inconsistent with the facts, and we request a fair judgment from the appellate court.

III. Case Analysis

According to Article 23 of the Copyright Law of the People's Republic of China and Article 32 of the Implementing Regulations of the Copyright Law of the People's Republic of China, using another person's work requires obtaining written permission from the copyright holder (except for works published in newspapers and magazines). Although Nanfengcai Company obtained oral consent from Jiexian Company before using its works to print calendars, due to insufficient legal knowledge and weak legal awareness, it failed to obtain written permission in a timely manner. The first-instance judgment concluding that Nanfengcai Company and Great Wall Computer Shenzhen Company infringed Jiexian Company's copyright is now irreversible. All three parties in this case have appealed. Jiexian Company continues to uphold its first-instance claims and has made thorough preparations. Therefore, the defense attorney for the two original defendants, Lead Attorney Wang Tengfeng, faces a severe offensive and defensive situation. The defense strategy in this case focuses on mitigating the two defendants' liability for infringement and the amount of compensation, with emphasis on the following key points for argument and debate, ultimately gaining support and adoption from the appellate court:

(1) Jiexian Company was aware in advance that Nanfengcai Company would use its works to print calendars. During the first-instance trial, Jiexian Company denied prior knowledge, and the first-instance judgment supported this: "This court holds that—the defendants failed to provide evidence proving the plaintiff's prior knowledge, and the plaintiff denied the claim of prior knowledge;—the plaintiff insisted it did not consent to the defendants' use of its seven photographic works, and the defendants' defense is untenable." During the second-instance trial, Lead Attorney Wang Tengfeng analyzed in detail the content and key wording of the letter sent by the plaintiff to the defendants. After intense debate, the plaintiff ultimately had to admit to prior knowledge, stating in its final defense: "Nanfengcai Company has consistently emphasized that our side 'knew' and 'tolerated' the infringement, and we do not deny this." The second-instance judgment corrected the erroneous finding of the first-instance judgment: "This court holds that—the letter expresses knowledge and tolerance of the infringement." The plaintiff's "knowledge and tolerance of the infringement" by the defendants, while not equivalent to "written permission" and unable to change the fact of infringement, can nonetheless be understood as tacit consent to the defendants' use of the plaintiff's works. This was the direct cause of the defendants' infringement and also constitutes the plaintiff's fault. The second-instance finding is favorable for mitigating the defendants' infringement liability.

(2) The two defendants did not have subjective malice, did not cause serious consequences objectively, and did not cause losses to Jiexian Company. The second-instance judgment supported this view, stating: "Regarding the issue of whether an apology should be made. Jiexian Company argued that Great Wall Computer Shenzhen Company and Nanfengcai Company should publicly apologize, but provided no evidence of what damage the infringement caused to its business reputation. Therefore, this court does not support this appeal request," and "Regarding the amount of compensation, Jiexian Company failed to provide evidence of actual losses caused by the infringement or profits gained from it. The original trial court's discretionary judgment was not improper, and this court upholds it."

The two defendants, under very unfavorable circumstances, managed to achieve the result of upholding the original judgment, which was already quite difficult.

(Compiled and commented by Guo Tianxi)

Zhiming Office

March 22, 2001