China

Hong Fuyuan and Deng Chunxiang V. Guizhou Wufufang Food Co., Ltd. And Guizhou Jincai National Culture Research & Development Co., Ltd. (2015) ZZMCZ No. 17, Guiyang Intermediate People’s Court of Guizhou Province

Cause of action: Dispute over copyright infringement

Collegial panel members: Tang Youlin | Liu Yongju | Yuan Bowen

Keywords: copyright infringement, derivative folk literary or artistic work, originality

Relevant legal provisions: Copyright Law of the People’s Republic of China, article 3 Regulations on the Implementation of the Copyright Law of the People’s Republic of China, article 2

Basic facts: Hong Fuyuan and Deng Chunxiang claimed that the work created by Hong Fuyuan, “Harmonious Coexistence XII”, first appeared in the book Fuyuan’s Batik Arts, published by Guizhou People’s Publishing House, in August 2009. Hong Fuyuan had once transferred the right to exploit the work involved (excluding the right to use it on batik) to Deng Chunxiang, who was responsible for maintaining the copyright-related property rights. Without Hong Fuyuan’s and Deng Chunxiang’s permission, Guizhou Wufufang Food Co., Ltd. (hereinafter “Wufufang Company”) used, for promotional purposes on commodities it sold, a selective part of Hong Fuyuan’s work. Hong Fuyuan and Deng Chunxiang believed that Wufufang Company had infringed upon Hong Fuyuan’s copyright and the copyright-related property right of Deng Chunxiang, and they asked the Intermediate People’s Court of Guiyang City to order Wufufang Company to:

(a) pay Deng Chunxiang RMB200,000 as compensation for the economic loss caused by its infringement upon her copyright-related property right;

(b) cease using the pattern involved, and destroy any packaging and product brochures featuring the infringing image; and

(c) publish a formal apology for its infringement upon Hong Fuyuan’s copyright-related personal right.

Wufufang Company contended, first, that both the work in which the claimants asserted copyright in the action they filed and some patterns on the packaging of products designed for Wufufang Company by Guizhou Jincai National Culture Research & Development Co., Ltd. (hereinafter “Jincai Company”) used the traditional batik patterns of the Gejia people in Huangping County of Guizhou Province, and that this meant that Wufufang Company’s use of the relevant design in its product packaging did not constitute an infringement.

Secondly, Wufufang Company affirmed that a third party, Jincai Company, had designed the packaging of Wufufang Company’s products and that the latter had exercised due care when using such packaging.

Thirdly, the image involved was placed in the lower right-hand corner of the product packaging and the area covered accounted for only about 1/20 of the total area, which meant that the image had little effect in promoting product sales and that the amount of compensation that Hong Fuyuan and Deng Chunxiang claimed (RMB200,000) was excessively high. Therefore, argued Wufufang Company, the claims against it had no basis in fact or law, and the court should dismiss the claims.

Jincai Company, the third party joined to the case, stated that it had engaged in advertising design and planning for Wufufang Company, and had completed the sketch of a pattern it called “Best Wishes for Four Seasons” in December 2006. The pattern was not used until October 2011, when Wufufang Company selected a part of the pattern for use when developing gifts for the tourism market. The bird pattern, Ru-Yi pattern and the copper drum pattern in the design all originated in the “primary form” of the batik of the Gejia people in Huangping County of Guizhou Province; the design of the bird pattern in Hong Fuyuan’s work also originated in the traditional batik of Guizhou Province. Hong Fuyuan’s work was therefore found not to be original and there was no factual basis for a finding of infringement in this case. The court dismissed Hong Fuyuan’s and Deng Chunxiang’s claims.

The court found that Hong Fuyuan had been engaged in the artistic design and creation of batik for many years, and that he had been awarded such honors as being named one of “China’s Top Ten Folk Artists” and an “Advanced Individual of Intangible Cultural Heritage Protection” by the Ministry of Culture. The work “Harmonious Coexistence XII”, which he created in August 2009, had been published in the book Fuyuan’s Batik Arts by Guizhou People’s Publishing House. This work used the characteristics of natural patterns and geometrical patterns of the traditional batik arts as its reference and indigo as its main color, and it illustrated a harmonious environment in which flowers and birds coexisted. However, the outlines of birds were supplemented in this work. The lines of the birds’ eyes and mouths were enriched, which made the patterns of the birds more vivid. Hong Fuyuan’s original ideas were integrated into the necks and feathers of birds, which made the patterns of the birds livelier. Hong Fuyuan’s creative ideas were also integrated into the copper drum patterns in the middle, which were different from the patterns found in traditional batik arts. On August 1, 2010, Hong Fuyuan and Deng Chunxiang entered into a contract under which Hong Fuyuan transferred the right to use the work involved (excluding its use on batik) to Deng Chunxiang and Deng Chunxiang was responsible for maintaining the copyright-related property rights in the work involved within the scope of the rights transferred.

Wufufang Company authorized a third party, Jincai Company, to provide it with planning and design services for the branding of its products, including product packaging and supporting designs, product brochures and marketing materials. According to the design services that Jincai Company provided, Wufufang Company used the batik flower and bird patterns, as well as a frame of Ru-Yi patterns, on the upper left-hand and lower right-hand corners of the packaging of its products Guizhou Peppery Chicken, Guizhou Millet Dreg and Guizhou Dried Pork. Hong Fuyuan believed that Wufufang Company’s use of his work, “Harmonious Coexistence XII”, infringed upon his right of authorship, which split the connection between the author and the work, and infringed upon the property rights in the work enjoyed by Deng Chunxiang. It was found, upon comparison, that the design of the batik flowers and birds used on the packaging and product brochures of Wufufang Company’s three products were identical with “Harmonious Coexistence XII”, the work created by Hong Fuyuan, in terms of the pattern structure of the birds and flowers, as well as the choice and arrangement of the lines. Indeed, they were different only in terms of the color of the background to the pattern and the color of lines.

Held: On September 18, 2015, the Intermediate People’s Court of Guiyang City, Guizhou Province, delivered its judgment, holding as follows.

(a) Wufufang Company should, within 10 days of the judgment coming into force, pay Deng Chunxiang RMB100,000 as compensation for her economic loss.

(b) After the judgment comes into force, Wufufang Company should immediately cease to use the work “Harmonious Coexistence XII”.

 (c) Within five days of the judgment coming into force, Wufufang Company should destroy the packaging and product brochures of the products involved, including Guizhou Peppery Chicken, Guizhou Millet Dreg and Guizhou Dried Pork.

(d) Hong Fuyuan’s and Deng Chunxiang’s other claims should be dismissed.

After the judgment at first instance was pronounced, none of the parties appealed and the judgment came into force.

Reasoning: In its effective judgment, the court held that the main issues in this case were:

(a) whether the work “Harmonious Coexistence XII” was protected under the Copyright Law;

(b) whether the patterns on the product packaging involved infringed upon Hong Fuyan’s copyright;

(c) how to identify the parties responsible;

(d) how to determine the apportionment of liability for infringement; and

(e) how to calculate the amount of compensation due.

In relation to the first issue, the tails of the two birds in the work “Harmonious Coexistence XII”, created by Hong Fuyuan, overlapped each other and, in the middle, copper drum patterns were used as a connecting motif demonstrating the beauty of symmetry, reflecting the characteristics of natural patterns and geometrical patterns found in the traditional batik arts. Based on the evidence submitted of this case, it could be determined that the work involved used the forms of expression found in the traditional batik arts and that the creative inspiration directly originated in the batik patterns of the Gejia people in Huangping County. However, the outlines of the birds were supplemented in the work involved. The lines of the birds’ eyes and mouths were enriched, and the author integrated his original creation into the necks and feathers of birds, making the patterns of birds livelier and more vivid. Hong Fuyuan’s own ideas were also integrated into the copper drum patterns in the center of the work, which were different from patterns found in traditional batik arts. Article 2 of the Regulations on the Implementation of the Copyright Law of the People’s Republic of China provides that: “The term ‘work’ as referred to in the Copyright Law means intellectual creations with originality in the literary, artistic or scientific domain, insofar as they can be reproduced in a tangible form.” The work involved, “Harmonious Coexistence XII”, was created by the claimant Hong Fuyuan and is a derivative work of traditional batik art. While it demonstrates the heritage and innovation found in traditional batik art, it also exhibits the characteristics of works protected under the Copyright Law, and therefore is protected under the law to the extent that it exhibits Hong Fuyuan’s originality.

As to the second issue, according to article 4(9) of the Regulations on the Implementation of the Copyright Law: “‘Works of fine art’ means two- or three-dimensional works of the plastic arts created in lines, colors or other media which impart esthetic effects, such as paintings, works of calligraphy and sculptures.” “Paintings” are two dimensional artistic works of the plastic arts created using lines and colors, among other things, which impart aesthetic effects. It was found, upon comparison during the case, that the pattern of flowers and birds used on the packaging of and the product brochures for products such as Guizhou Peppery Chicken were consistent with the work at issue, “Harmonious Coexistence XII”, in terms of the pattern structure of the birds and flowers, as well as the choice and arrangement of lines, and that they differed only in terms of the background color of the pattern and the color of the lines. Based on the results of this comparison, the court held that these differences were only a way of concealing the infringement, not intellectual work with originality. The third party Jincai Company alleged that it created in 2006 the works that Wufufang Company then used on packaging and product brochures, but Jincai Company failed to provide any evidence to prove that fact. Meanwhile, Hong Fuyuan could prove that he published the work involved in the book Fuyuan’s Batik Arts in 2009 and it was indicated in the book that the painting was created in 2003. It could therefore be determined that Hong Fuyuan’s works involved in this case were the first to be created and published. Before Wufufang Company produced and sold the products involved, Hong Fuyuan had published the work “Harmonious Coexistence XII”, so Wufufang Company was likely to have been exposed to the work. Accordingly, it could also be determined that the third party Jincai Company was intentionally plagiarizing Hong Fuyuan’s works. Partial use by Wufufang Company of the claimant’s works on packaging and product brochures when producing and selling the products involved infringed upon the right of reproduction enjoyed by Hong Fuyuan to the works of painting involved in the case.

With reference to the third issue in the case, the court asked Hong Fuyuan during pre-trial preparation whether he wanted to join Jincai Company as a defendant in the case and whether he wanted to change the claims. Hong Fuyuan refused, in writing, to join Jincai Company as a defendant, stating a belief that the legal relationship between Wufufang Company and Jincai Company was such that it would be improper for him to join the latter as a party to the case. In fact, Wufufang Company and Jincai Company had signed a contract under which Jincai Company would design the packaging, advertising copy and promotional materials for all of Wufufang Company’s products. The contract also stipulated that, should the design contents submitted by Jincai Company be found to be infringing copyright, Jincai Company should bear the consequences in full. In this case, however, Wufufang Company failed to provide evidence proving that it had exercised due care as a client. Wufufang Company was also the final user and actual beneficiary of the infringing works. Article 48(2)(i) of the Copyright Law provides that:

Any one who commits any of the following acts of infringement shall, depending on the circumstances, bear civil liabilities such as ceasing the infringement, eliminating the bad effects of the act, making an apology or paying compensation for damages:

(i) reproducing, distributing, performing, presenting, broadcasting, compiling a work or making it available to the public through information network, without permission of the copyright owner, except where otherwise provided for in this Law …

Under both this provision and articles 19 and 20(2) of the Interpretation of the Supreme People’s Court Concerning the Application of Laws in the Trial of Civil Disputes over Copyright (hereinafter the “Interpretation Concerning Civil Disputes over Copyright”), Wufufang Company was to bear the civil liability for infringement in this case according to law. The legal relationship between Wufufang Company and Jincai Company was not covered by this case, and the parties may make a separate settlement. As to the fourth issue, according to the provisions of articles 47 and 48 of the Copyright Law, if a copyright or copyright-related right is infringed, depending on facts of the case, the infringer shall bear civil liabilities such as ceasing the infringement, mitigating the bad effects of the act, issuing an apology or paying compensation for damages. In this case, the court found the following.

(a) Hong Fuyuan’s and Deng Chunxiang’s copyright-related personal rights and property rights were infringed, objectively causing them economic loss, and hence their first claim for compensation of loss should be upheld by law.

(b) Whether Wufufang Company was at fault or not, it was ordered to immediately cease its actions infringing the copyright of others so as to protect the right holder’s legitimate rights and interests, to avoid further loss to the claimants and to enforce the law. The court sustained Hong Fuyuan’s and Deng Chunxiang’s request that Wufufang Company be ordered to cease using the patterns involved, and to destroy the packaging and product brochures involved.

(c) Because there was no subjective intention and gross negligence on the part of Wufufang Company, which was liable for infringement according to law only because of its failure to exercise due care, and because Hong Fuyuan failed to submit evidence proving that the infringing act had resulted in damage to his reputation, the court rejected his third request – that is, that Wufufang Company be ordered to publish a formal apology in Guizhou City News.

In relation to the fifth issue in this case, neither Hong Fuyuan nor Deng Chunxiang claimed for or submitted evidence of their reasonable expenses incurred in the action to deter the infringing act. During the course of the case, they did not submit evidence proving the amount of actual losses that they had suffered or of Wufufang Company’s illegal gains. In fact, it was difficult to determine either. According to article 25(1) and (2) of the Interpretation Concerning Civil Disputes over Copyright:

In case the actual losses of the copyright owners or the illegitimate revenues of the infringing party cannot be determined, the People’s Court shall determine the amount of compensations as per the request of the parties concerned or according to the provisions of Article 48(2) of the Copyright Law (i.e. the current Article 49(2)) at their discretion within their powers. When determining the amount of compensations, the People’s Court shall comprehensively consider the work type, reasonable usage fee, nature of infringing acts, results, and other relevant circumstances.

Taking into consideration the objective facts of this case, there were five main factors to be considered that had an impact on the amount of compensation due in this instance of copyright infringement, as follows.

(a) The work involved – that is, Hong Fuyuan’s “Harmonious Coexistence XII” – is a derivative work based on traditional batik art originating in Guizhou Province. The creation of the copyrighted work built on the heritage and innovation demonstrated in traditional batik art, and both the outline of bird patterns and the beauty of symmetry showed in the work involved originated from traditional artistic works. The innovation evident in the author’s work was limited and the room for innovation was also limited.

(b) Batik art in Guizhou Province featured certain regional characteristics and geographically significant features. In a sense, the artistic works in batik based on flowers, birds, insects and fish, among other things, belonged to elements and symbols of Guizhou Province. As a company local to Guizhou Province, Wufufang Company used the artistic works in batik of Guizhou Province in a manner conforming to the basic national and regional characteristics inherent in folk literary art works as intangible cultural heritage.

(c) According to the contract transferring the right to exploit the work between Hong Fuyuan and Deng Chunxiang, Hong Fuyuan had transferred the right to exploit his work “Harmonious Coexistence XII” (excluding its use on batik) to Deng Chunxiang – that is, a large part of the copyright-related property rights of the work involved was transferred to Deng Chunxiang, who was not an heir to the traditional folk art. Deng Chunxiang was responsible for maintaining the copyright-related property rights of the work involved. Considering that the personal right and property right of the work at issue belonged to subjects who were, respectively, within and outside of the range of those entitled to inherit the traditional folk art, the consequences and impact of the corporate infringement of that heritage were insignificant.

(d) Hong Fuyuan had devoted himself to the exploration and pursuit of national batik art for several decades, and he integrated traditional batik art and Chinese ancient culture into his creations, elevating batik art to a certain degree and driving regional cultural development. Although a large part of the copyrightrelated property rights in the work involved was transferred to Deng Chunxiang, who was not an heir to the traditional folk art, Hong Fuyuan’s creative value and his reputation in the field of batik art should be respected.

(e) The scale of production and the sales channels of the Wufufang Company products involved – Guizhou Peppery Chicken, Guizhou Millet Dreg and Guizhou Dried Pork – should be taken into account. Under a purchase contract between Wufufang Company and Guangzhou Zhuofan Color Printing Co., Ltd., submitted by Wufufang Company, although all of the evidence might not fully and objectively reflect the scale of production and operations concerning the products involved, Wufufang Company’s claims should be reasonably admitted under law in the absence of the claimants submitting any contrary evidence.

Upon comprehensive consideration of all of these factors, and based on the current economic development level of and living standards within Guizhou Province, a discretional decision was made that Wufufang Company should compensate Deng Chunxiang in the sum of RMB100,000 for her economic loss.