beijing jingdiao co., ltd. v. shanghai naikai electronic ... computer software copyright...

Copyright 2015 by Stanford University

Beijing Jingdiao Co., Ltd.

v.

Shanghai Naikai Electronic Science and Technology Co., Ltd.,

A Computer Software Copyright Infringement Dispute

Guiding Case No. 48

(Discussed and Passed by the Adjudication Committee of the Supreme People’s Court

Released on April 15, 2015)

CHINA GUIDING CASES PROJECT

English Guiding Case (EGC48)

November 15, 2015 Edition*

* The citation of this translation of the Guiding Case is: 《北京精雕科技有限公司诉上海奈凯电子科技有

限公司侵害计算机软件著作权纠纷案》(Beijing Jingdiao Co., Ltd. v. Shanghai Naikai Electronic Science and

Technology Co., Ltd., A Computer Software Copyright Infringement Dispute), CHINA GUIDING CASES PROJECT,

English Guiding Case (EGC48), Nov. 15, 2015 Edition, available at http://cgc.law.stanford.edu/guiding-

cases/guiding-case-48.

This document was primarily prepared by Oma Lee, Adrian Lo, Thomas Rimmer, Sean Webb, and Xin

Zhang. The document was finalized by Jordan Corrente Beck and Dr. Mei Gechlik. Minor editing, such as splitting

long paragraphs, adding a few words included in square brackets, and boldfacing the headings to correspond with

those boldfaced in the original Chinese version, was done to make the piece more comprehensible to readers. The

following text, otherwise, is a direct translation of the original text and reflects the formatting of the Chinese

document released by the Supreme People’s Court.

The following Guiding Case was discussed and passed by the Adjudication Committee of the Supreme

People’s Court of the People’s Republic of China and was released on April 15, 2015, available at

http://www.chinacourt.org/article/detail/2015/04/id/1602344.shtml. See also 《最高人民法院关于发布第十批指

导性案例的通知》 (The Supreme People’s Court’s Notice Concerning the Release of the Tenth Batch of Guiding

Cases), Apr. 15, 2015, available at http://www.chinacourt.org/law/detail/2015/04/id/148149.shtml.

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Keywords

Civil Computer Software Copyright Infringement Bundle Sale

Technical Protective Measures Abuse of Rights

Main Points of the Adjudication

[Where] for [the purpose] of realizing a bundle sale of [its] software and machine, a

computer software copyright owner sets to a specific file format the data output from the running

of the software so as to restrict other competitors’ machines from reading the data stored in that

specific file format, thereby extending its competitive advantages from the software to the

machine, [this act] is not a technical measure that a copyright owner [may] take to protect its

software copyright as provided by the Copyright Law.1 Where others research and develop

software to read the specific file format set by [the copyright owner], [these acts] do not

constitute infringement of the computer software copyright.

Related Legal Rule(s)

Article 48, Paragraph 1, Item 6 of the Copyright Law of the People’s Republic of China

Article 2; Article 3, Paragraph 1, Item 1; and Article 24, Paragraph 1, Item 3 of the

Regulation on the Protection of Computer Software2

Basic Facts of the Case

Plaintiff Beijing Jingdiao Co., Ltd.3 (北京精雕科技有限公司) (hereinafter referred to as

“Jingdiao Company”) claimed: Plaintiff autonomously developed4 the Jingdiao CNC engraving

1 Translators’ note: the term “著作权法” (“Copyright Law”) as used in this Guiding Case likely refers to

《中华人民共和国著作权法》(Copyright Law of the People’s Republic of China), passed and issued on Sept. 7,

1990, effective as of June 1, 1991, amended two times, most recently on Feb. 26, 2010, effective as of Apr. 1, 2010,

available at http://www.npc.gov.cn/npc/xinwen/2010-02/26/content_1544852.htm. 2 Translators’ note: the original text reads “《计算机软件保护条例》” (“Regulation on the Protection of

Computer Software”). See《计算机软件保护条例》(Regulation on the Protection of Computer Software), issued

by the State Council on Dec. 20, 2001, effective as of Jan. 1, 2002, amended two times, most recently on Jan. 30,

2013, effective as of Mar. 1, 2013, available at http://www.gov.cn/zwgk/2013-02/08/content_2330130.htm. 3 Translators’ note: the name “北京精雕科技有限公司” is translated here as “Beijing Jingdiao Co., Ltd.” in

accordance with the translation used on the company’s website, at http://www.jingdiao.com/company/about-us-

eng.htm.

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system. The system consisted of three parts, [namely], the Jingdiao engraving CAD/CAM

software (JDPaint software), the Jingdiao numerical control system,5 and a mechanical body.

The use of that system [required] two computers to complete, one of which was a machining and

programming computer6, and the other a numerically-controlled control computer.

7

The two computers ran two different programs and had to mutually exchange data

through [the exchange of] data files. The specifics were: the JDPaint software was run through

the machining and programming computer to create data files in the Eng format and those data

files were then received and converted into machining instructions by the control software run by

the numerically-controlled control computer. The plaintiff enjoyed the copyright of the above-

mentioned JDPaint software. That software was not for public sale and was only equipped for

use on the numerically-controlled engraving machine that the plaintiff autonomously produced.

In early 2006, the plaintiff discovered that defendant Shanghai Naikai Electronic Science

and Technology Co., Ltd.8 (上海奈凯电子科技有限公司) (hereinafter referred to as “Naikai

Company”) vigorously publicized on its website [that] the NC-1000 engraving and milling

machine numerical control system that [the defendant] had developed fully supported various

editions of Jingdiao’s Eng files. The Ncstudio software of the defendant’s numerical control

system mentioned above could read the data files in the Eng format output by the JDPaint

software. The plaintiff had taken encryption measures to [protect] the Eng format.

4 Translators’ note: the term “自主开发” is translated here as “autonomously develop”, instead of

“independently develop” (“独立开发”), to note the difference of the Chinese terms “自主” (“autonomous”) and “独

立” (“independent”). Leaders in China have been using the term “自主创新” (“autonomous innovation”) to

emphasize the need to have innovations that are driven by the will of China and its people. See, e.g., 《“十二五”

国家自主创新能力建设规划》 (“Twelve Five” Construction Plan on National Autonomous Innovation Ability),

issued by the State Council on and effective as of Jan. 15, 2013, available at http://www.gov.cn/zwgk/2013-

05/29/content_2414100.htm. 5 Translators’ note: the term “数控系统” is translated here as “numerical control system”. For more

information about numerical control systems, see, e.g., The Department of Mechanical Engineering at Michigan

Technological University, Introduction to Numerical Control Machining, available at

http://www.mfg.mtu.edu/cyberman/machtool/auto/nc/intro.html. 6 For discussion of the difference between machining computers and programming computers, see, e.g.,

DAVID GIBBS AND TOM CRANDELL, AN INTRODUCTION TO CNC MACHINING AND PROGRAMMING (Industrial Press,

Inc., 1991); ZHAO Guoyong, ZHAO Yugang,and WANG Shujun, 空间弧面凸轮数控加工程序的计算机辅助编制

(Computer-Aided Programming for NC Machining Procedure to Spatial Arc Cam), Journal of Shandong Institute of

Technology, Issue No. 1 (2002), available at

http://kxrc.cnki.net/kcms/detail/detail.aspx?filename=SDGC200201008&dbcode=CJFQ&dbname=cjfd2002. 7 For more discussion of numerically-controlled control computers, see, e.g., Uwe Heisel Walther Maier,

Experimental Investigation of a Ball Screw for Increasing the Accuracy of Thermal FE Simulations, JOURNAL OF

TRENDS IN THE DEVELOPMENT OF MACHINERY AND ASSOCIATED TECHNOLOGY, Vol. 16, No. 1 (2012) at 167,

available at http://www.tmt.unze.ba/zbornik/TMT2012Journal/37.pdf. 8 Translators’ note: the name “上海奈凯电子科技有限公司” is translated here as “Shanghai Naikai

Electronic Science and Technology Co., Ltd.” in accordance with the name used in an announcement about a patent

application filed by the company on November 30, 2007, at http://google.com/patents/CN101178594A?cl=un.

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The defendant’s [acts of] illegally deciphering the encryption measures of the Eng format

and developing and selling a numerical control system that could read the data files in the Eng

format were acts that intentionally circumvented or sabotaged the technical measures that the

plaintiff had taken to protect [its] software copyright. [Therefore, these acts] constituted

infringement of the plaintiff’s software copyright. The defendant’s acts enabled other

numerically-controlled engraving machines to illegally receive Eng files, causing a reduction in

the sales of the plaintiff’s Jingdiao engraving machine and resulting in economic losses [for the

plaintiff]. [Therefore, the plaintiff] requested that the court order the defendant to immediately

cease the development and sale of the numerical control system that supported various editions

of Eng format [files] output by Jingdiao’s JDPaint software and other infringing acts, publicly

apologize, and pay 485,000 yuan as compensation for [its] losses.

Defendant Naikai Company defended its position, claiming: The Ncstudio software that it

had developed could read the data files in the Eng format output by the JDPaint software.

However, Eng data files and the Eng format used in those files were not within the scope of

computer software copyright protection. Therefore, the defendant’s acts did not constitute

infringement. [The defendant] requested that the court reject the plaintiff’s litigation requests.

The court handled the case and ascertained: Plaintiff Jingdiao Company obtained the

Ruan Zhu Deng Zi No. 0011393 and the Ruan Zhu Deng Zi No. 025028 Computer Software

Copyright Registration Certificates in 2001 and 2004, respectively, which were awarded by the

National Copyright Administration9 to register [Jingdiao Company] as the original acquirer

10 of

the Jingdiao engraving software JDPaintV4.0 and JDPaintV5.0 (these two software [programs]

are hereinafter referred to as “JDPaint”). Naikai Company obtained the Ruan Zhu Deng Zi No.

023060 and the Ruan Zhu Deng Zi No. 041930 Computer Software Copyright Registration

Certificates in 2004 and 2005, respectively, which were awarded by the National Copyright

Administration to register [Naikai Company] as the original acquirer of the software [titled] the

Naikai Numerical Control System V5.0 and the Weihong Numerical Control Motion Control

System V.3.0 (these two software [programs] are hereinafter referred to as “Ncstudio”).

Naikai Company asserted on its company website: In December 2005, Naikai Company

launched the NC-1000 engraving and milling machine [numerical] control system. That

numerical control system fully supported various editions of Jingdiao’s Eng files, and the

function was developed [in response to] users’ love of Jingdiao’s JDPaintV5.19, a typesetting

software.

9 Translators’ note: the name “国家版权局” is translated here as “the National Copyright Administration” in

accordance with the translation used on the administration’s website, at http://www.ncac.gov.cn. 10

Translators’ note: the original text reads “原始取得人” (“original acquirer”). The term “原始取得”

(“original acquisition”) refers to an acquisition of property that has never been the property of another. Acquiring

the copyright of a piece of work that is newly created is, for example, a type of original acquisition. For more

information about this interesting topic, see Joseph William Singer, Original Acquisition of Property: From

Conquest & Possession to Democracy & Equal Opportunity, 86 INDIANA L.J. 73 (Summer 2011).

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The Eng files output by Jingdiao Company’s JDPaint software were data files that used

the Eng format. Naikai Company’s Ncstudio software was able to read the Eng files output by

the JDPaint software, and thus the Ncstudio software was compatible with the Eng files output

by the JDPaint software.

Results of the Adjudication

On September 20, 2006, the No. 1 Intermediate People’s Court of Shanghai Municipality

rendered the (2006) Hu Yi Zhong Min Wu (Zhi) Chu Zi No. 134 Civil Judgment: [the court]

rejects plaintiff Jingdiao Company’s litigation requests. After the judgment was pronounced,

Jingdiao Company appealed. On December 13, 2006, the Higher People’s Court of Shanghai

Municipality rendered the (2006) Hu Gao Min San (Zhi) Zhong Zi No. 110 Civil Judgment: [the

court] rejects the appeal and upholds the original judgment.

Reasons for the Adjudication

In the effective judgment, the court opined:11

The focal points of the dispute that should

be resolved in this case were: 1. whether the data files in the Eng format, which were output by

plaintiff Jingdiao Company’s JDPaint software and for which [the plaintiff] had taken encryption

measures, were within the scope of computer software copyright protection; [and] 2. whether

Naikai Company’s act of researching and developing software that could read the files in the Eng

format output by the JDPaint software constituted acts of “intentionally circumvent[ing] or

sabotag[ing] the technical measures that the copyright owner has taken to protect its software

copyright”, as set forth in Article 48, Paragraph 1, Item 6 of the Copyright Law of the People’s

Republic of China (hereinafter referred to as the “Copyright Law”) and Article 24, Paragraph 1,

Item 3 of the Regulation on the Protection of Computer Software.

On the first [focal] point.

Article 2 of the Regulation on the Protection of Computer Software provides:

The term “computer software” (referred to below as “software”) used in

this Regulation refers to computer programs and their related documents.

Article 3 provides:

In this Regulation, the meanings of the following terms are:

11

Translators’ note: the Chinese text does not specify which court opined. Given the context, this should be

the Higher People’s Court of Shanghai Municipality.

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(1) “Computer program” refers to a coded instruction sequence which, for

the purpose of having certain results, can be executed by devices with

information processing capabilities, including computers, or either a

symbolic instruction sequence or a symbolic statement sequence that

can be automatically converted into a coded instruction sequence. The

source program and the object program of the same computer program

are [considered] to be the same work.

(2) “Documents” refers to the text information, diagrams, etc. used to

describe the content, composition, design, functional specifications,

development, test results, and method of use of the program. [These

documents may] include program design instructions, flow charts, and

user manuals.

Article 4 provides:

The software protected by this Regulation must be independently

developed12

by the developer, and [must] have already been fixed onto13

some tangible object.

Based on the abovementioned provisions, the scope of computer software copyright protection

[covers] the software program and [related] documents.

In this case, the Eng files were data files created by running the JDPaint software through

the machining and programming computer. The output format that they used, i.e., the Eng

format, was the result produced by the computer executing the object program of the JDPaint

computer software. The [Eng] format data file itself was not a coded instruction sequence,

symbolized instruction sequence, or symbolized statement sequence, nor could [the Eng format

data file] be run or executed by a computer. The act of decrypting the files in the Eng format in

itself would not directly cause illegal copying of the JDPaint software. Furthermore, the data

recorded in the files were not inherent in plaintiff Jingdiao Company’s JDPaint software, but

were created by software users who input engraving machining information [into the JDPaint

software]. These data did not belong to Jingdiao Company, the copyright owner of JDPaint

software. Therefore, the data and the file format contained in the data files that were in the Eng

format were not program components of the JDPaint software, and were not within the scope of

computer software copyright protection. 12

Translators’ note: the original text reads “独立开发” (“independently develop”). 13

Translators’ note: the phrase “固定在” is translated here as “fixed onto”. Any software that is permanently

“etched onto” (“固化在”) is called firmware (“固件”). For a definition of “firmware”, see, e.g., Computer

Designers are Firm about Software, NEW SCIENTIST, at 816 (June 7, 1979) and Definition: What does Firmware

mean?, TECHOPEDIA, available at https://www.techopedia.com/definition/2137/firmware.

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On the second [focal] point.

According to Article 48, Paragraph 1, Item 6 of the Copyright Law and Article 24,

Paragraph 1, Item 3 of the Regulation on the Protection of Computer Software, acts that

intentionally circumvent or sabotage the technical measures that the copyright owner has taken

to protect its software copyright are acts that infringe on software copyright.

The abovementioned provisions reflect restrictions on malicious circumvention of [a

copyright owner’s] technical measures and are protections of computer software copyright.

However, the abovementioned provisions, which restrict “malicious circumvention of [a

copyright owner’s] technical measures”, must not be abused. The abovementioned provisions

primarily restrict acts of maliciously circumventing technical [measures] targeted at protected

software copyright. [Where] a copyright owner sets the output data to a specific file format and

takes encryption measures towards the file format so as to restrict machines of other brands from

reading the data stored in that file format, thereby ensuring that the machine bundled with [the

copyright owner’s] own computer software possesses a competitive advantage in the market, [the

owner’s act] is not a type of act taken by a copyright owner to protect its software copyright

through technical measures as provided by the abovementioned provisions. Other person’s acts

of researching and developing software that can read the specific file format set by the copyright

owner do not constitute infringement of the [computer] software copyright.

Based on the facts of this case, the files in the Eng format output by JDPaint were files

[created] at the completion of the data exchange between the two computer programs in Jingdiao

Company’s “Jingdiao CNC engraving system”. With regard to design objectives, Jingdiao

Company’s use of the Eng format, [instead of] a common format, to complete data exchange was

not [for the purpose of] carrying out encryption protection of the JDPaint software, but in the

hope that only the “Jingdiao CNC engraving system” would be able to receive this format, and

that this software could only be used by the engraving machine tool that was bundled [for sale]

with the “Jingdiao CNC engraving system”.

Jingdiao Company’s use of the Eng format for files output by JDPaint aimed at limiting

the use of the JDPaint software to the “Jingdiao CNC engraving system”. Its fundamental

objective and true intent were to establish and consolidate a bundled relationship between the

JDPaint software and [the company’s] engraving machine tool. This kind of act is not a

protective technical measure taken to protect software copyright. If the protection of software

copyright were extended to products bundled [for sale] with the software, [this] would inevitably

exceed the scope of computer software copyright protection [provided by] China’s14

Copyright

Law. The technical measures taken by Jingdiao Company in this case were not technical

measures taken to protect the JDPaint software copyright, but were rather technical measures

taken to obtain interests beyond the interests of copyright. Therefore, the technical measures

14

Translators’ note: the term “我国” (“my country”) is translated here as “China”.

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taken by Jingdiao Company were not types of technical measures taken by a copyright owner to

protect its software copyright as provided by the Copyright Law or the Regulation on the

Protection of Computer Software. Naikai Company’s act of developing software that was able to

read files in the Eng format output by the JDPaint software was not an act of intentionally

circumventing and sabotaging the technical measures that the copyright owner took to protect its

software copyright.