China Victim of Chinese IP Thieves Too: China Report Claims

On April 26, 2020, The National Law Review published an article titled, “China’s Supreme People’s Procuratorate Issues Top Example Cases of Criminal Intellectual Property Rights Infringement in 2019, written by Aaron Wininger.

Mr. Wininger did a good job of summarizing the results of each case, noting that of the 18 cases cited in the report, only 2 were trade secrets theft cases. The other 16 cases were either trademark or copyright infringement related.

Link to the 2019 China report: Typical cases of procuratorial organs’ protection of intellectual property in 2019

The report provides a tremendous amount of information on the legal and procedural issues related to each of the 18 cases which I found interesting.

I was particularly struck by the facts and range of the copyright theft cases, as well as the two related to trade secrets theft. The modus operandi (M.O.) of the IP thieves is laid out for the reader in great detail and would be eerily familiar to IP theft investigators around the world.

I have pulled excerpts from this comprehensive report that I thought IP PI Blog readers may find intriguing.

Note: Each excerpt pulled from the published report is in italics.

Case 12: Shanghai Chen Mou et al. Copyright Infringement Case

1. Case facts

From July 2017 to March 2019, the defendant Chen was hired by overseas personnel to recruit 7 defendants, Lin and Lai, who have a large geographical span and scattered residences in China, and set up a “chicken group studio” QQ Chat groups, update and maintain pirated film and television resource websites, and use false IDs to register fund accounts to collect fees.

Chen is responsible for publishing tasks and paying remuneration to other members of the group;

Lin is responsible for recruiting personnel, training and urging members to complete tasks, statistical workload, etc .;

Lai Mou and other 6 people are responsible for film and television from everyone’s film and television, iqiyi and other websites Download the source to the remote server, and then upload it to the cloud transcoding server, and realize the functions of slicing, transcoding, adding advertisements and watermarks, and generating links on the cloud transcoding server.

Finally, copy and paste the link generated by the transcoding to the relevant pirated film and television Resource website.

After investigation, during this period, Chen and others distributed more than 2,400 other film and television works through the information network without the permission of the copyright owner, and received a total of more than 12.5 million yuan in operating expenses remitted by “Wild Grass”, and each defendant profited from it. 10,000 to 18,000 yuan.

There are more than 20,000 pirated film and television works in this case, which cover many types of movies, TV series, variety shows, anime, etc. The copyright owners are distributed in Europe, America, Japan and South Korea, mainland China and Taiwan. As of the incident, the website of the defendant involved in the update and maintenance of the site has been fixed to include “Wandering Earth”, “Integrity”, “Crazy Alien” and other eight 2019 Chinese New Year files.

Case 13: Anhui Xumou and Wangmou copyright infringement case

1. Case facts

Since May 2014, the defendant Xu has rented a server and used “Guanguan Collection and Copy Software” and “Crawler Software”.

Without the authorization of the copyright owner, he collected and copied the text works of others and uploaded it to his personally operated website for readers to read for free.

Increase reader clicks, and illegally profit by collecting advertising fees from the advertising network.

In order to expand the scale, Xu established the Hefei Kujimi Network Technology Company in 2015. He has hired more than ten editors and technicians, set up six pirated infringing websites such as Xiaoxiaoshuhu, Hujuge, and 263ZW, and copied and distributed the texts of others.

A total of more than 5 million works, more than 320,000 members have been absorbed, and the total number of views on the website has reached 1.8 billion.

Only from July 2017 to January 2018, it collected more than 7 million yuan in advertising fees from advertising alliances such as Yiyi and Luomi.

The defendant, Wang, was the first employee hired by Xu, who knew that Xu was engaged in copyright infringement and still engaged in copying, editing, salary distribution, and personnel management for infringing works for a long time.

Case 14: An infringement of copyright by Zhao Moumou and others in Anhui

1. Case facts

Since 2015, the defendant Zhao Moumou has ordered the defendant Wang to scan and typeset genuine books without the permission of the copyright owner.

People Wang Yunmou, Wang Wumou and Wang Jia are responsible for the daily delivery of pirated books, and then sell the pirated books to all parts of the country through logistics channels.

From September 1, 2016 to March 4, 2017, the defendants Zhao Moumou, Wang Yunmou, Wang Wumou and Wang Jia sold a total of 1.78 million copies of pirated books.

On March 16, 2017, public security organs seized nearly 200,000 pirated books in two warehouses rented by Zhao Moumou in Tongzhou District, Beijing. The defendant Zhao Mou paid the defendant Wang Mou a total of more than RMB 400,000 for scanning and typesetting, and the defendant Xu Mou paid a printing and binding fee of more than RMB 1.8 million.

The defendants Zhou Mou and Liu Mou bought pirated books at a low price and sold them to the defendant Xie Mou at a higher price.

The defendant Xie Mou hired Tao Yang to manage the book packaging staff and contact the home supplier, hired Tao Xu to manage the customer service staff and management funds of the online store, and hired Wang Anmou, Xue Mou, Hao Zhimou, Tao Yan Someone engaged in the packaging and ordering of pirated books, and sold nearly 590,000 copies of the purchased pirated books through specialty stores such as Beta, Shengxue, and Yunji opened on Taobao.

In addition, the public security organs searched for more than 55,000 pirated books and more than 16,000 pirated CDs from Xie Mou’s warehouses in Hefei.

Case 15: Case of copyright infringement by a Qiu in Sichuan

1. Case facts

On April 1, 2017, Shenzhen Shengsheng Network Technology Co., Ltd. obtained the copyright of “Renren” chess game software and authorized the distribution and operation rights of the game software to Shenzhen Shanda Meiyou Information Technology Co., Ltd. (hereinafter referred to as ” Shanda Meiyou Company “).

In early February 2017, the defendant Qiu became a general manager of Shanda Meiyou Company. Through the convenience of his position, he learned the account number and password of the SVN server of Shanda Meiyou Company, and obtained the source code of “Renren” board game.

From May to June 2017, Qiu established the Nine Star Technology Company and Tiantianle Technology Company (Qiu Mou was the actual controller of the two companies) through others. Without the permission of the copyright owner, he will “Everyone” chess and card game was changed (that is, on the basis of completely changing the external expression of the original game, retaining the original game core resources and directly realizing an operation mode of the game), processing and other forms of modification, renamed as “big winner” chess and card game. 

In August 2017, after Qiu officially resigned from Shanda Meiyou Company, he used Nine Star Technology Company to be responsible for the technical support of the “big winner” board game, and used Tiantianle Technology Company to launch the “big winner” board game.

Judicial appraisal shows that the source code of the “big winner” board game is 99% similar to the source code of “everyone” board game, and there is substantial similarity. The on-site investigation by the public security organs revealed that during the online operation of the “big winner” board game, the player’s recharge amount was more than 82 million yuan.

In the process of handling the case, the procuratorate took the initiative to cause Qiu to sign a compensation agreement with Shanda Meiyou. Qiu paid Shanda Meiyou a compensation of 2.2 million yuan and guaranteed that he would not engage in direct or indirect competition with the right holder within 3 years The research and development and operation of online games have obtained Shanda Meiyou’s understanding.

Case 16: Beijing Tian Moumou infringement of trade secrets

1. Case facts

From February to March 2017, the defendant Tian Moumou used the vulnerability of the company’s data management system to download from the database of Jingdiao Technology Server before leaving Beijing Jingdiao Technology Group Co., Ltd. (hereinafter referred to as “Beijing Jingdiao Company”).

A total of 162 files, over 70,000 copies of files from a personal office computer to a public computer via network sharing and transmission, and then the downloaded files were stolen with U disk, mobile hard disk and other equipment, involving non-Tian Mou design More than 33,000 files.

After the defendant Tian Mou went to Shenzhen Genesis Machinery Co., Ltd. (hereinafter referred to as Shenzhen Genesis Co., Ltd.), he used the drawings and technical schemes of the JDLVG600 equipment that he had stolen as the deputy general manager of the glass machine project. Produced and sold model B-600A-B equipment, causing economic losses of more than 2.15 million yuan to Beijing Jingdiao Company.

Case 17: Zhejiang Jin Moumou infringement of trade secrets

1. Case facts

Wenzhou Bright Luminescence Technology Co., Ltd. (hereinafter referred to as “Mingfa Company”) mainly produces and sells optical plastic microscopes, telescopes, solar condenser lenses, and chargers.

After years of research, it has mastered the production technology of Fresnel ultra-thin magnifying glass. The defendant Jin Moumou worked as a salesperson, sales manager and deputy general manager during Mingfa’s work, and signed a confidentiality agreement with Mingfa.

In early 2011, the defendant Jin Moumou resigned from Mingfa Company and established Wenzhou Fresnel Optics Co., Ltd. to purchase the same type of equipment and materials from Mingfa ’s suppliers, using the same method to produce the same as Mingfa Company. The Fresnel ultra-thin magnifying glass entered the market and caused Mingfa ’s economic loss of more than 1.2 million yuan.

Link to China’s Supreme People’s Procuratorate

FINAL THOUGHT

This report was an insight for me into the challenges China (and its citizens) face battling IP theft.

However, as Mr. Wininger noted in his National Law Review article: “…only 2 of the 18 cases are for trade secret theft and defendants received minimal or no jail time, perhaps indicating room for improvement on trade secret protection in China.“

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