How to Divide the Burden of Proof in Software Infringement Cases in China?

(By Luo Yanjie) Abstract: In software infringement lawsuits, the plaintiff shall demonstrate itself as the rights holder of the software involved and the “substantial similarity” of the defendant’s software with its own. On the opposite side of the coin, once a defendant counters by claiming that no infringements have been made, it shall present relevant evidence; otherwise, it shall bear any disadvantages resulting from the failure to present proof of a lack of infringement. As for the case described in this essay, although it involves open source software, no definitive solution has yet been made to solve this particular legal program, to our disappointment.

Huilian Information Technology (the “Huilian”) is the copyright holder of EASYSITE, a computer back-stage management software, which has acquired a computer copyright certificate in China’s Copyright Office. As alleged by Huilian, Globalstech used its EASYSITE software without a license, and upon discovery Huilian filed a lawsuit in court alleging copyright infringement.

Case Summary:

In the lawsuit, with the application of the plaintiff and the organization of the court, both parties involved in the case debated whether whether the defendant had used easySite, and confirmed that the software involved in the case was substantially the same. However, as for the defendant, it argued that the plaintiff’s software was developed under an OSS agreement, and therefore it was impossible for any infringement to have been made.

After the court heard the case and the parties’ arguments, the judge held that since Huilian had submitted proof demonstrating that it is the legitimate right holder of easySite, in spite of Globalstech argument that Huilian had developed the software under OSS agreements, Globalstech would assume liability to demonstrate that its software was not infringing. The court reasoned that in light of Huilian opening all the source code to Globalstech, Gloibalstech should be fully capable in identifying any relevant software specifications, and present evidence concerning the core code module as well as other content arising out of the OSS, commercial software or the public domain; alternatively, it could file an application identifying 20 modules, namely, the core module of the easySite management system. And yet, as seen in the original instance, nine modules out of twenty were submitted for verification. For this reason, Globalstech was deemed to assume the disadvantage of demonstrating that Huilian’s arguments were without merit, and the court subsequently determined that it shall assume liability for infringement of Huilian’s software.

Lawyer Comments:

1.      In this case, what proof should the plaintiff present in order to demonstrate the defendant had infringed upon its IP?

As the plaintiff in a software infringement case, it shall assume liability for demonstrating the infringement in regard to two aspects of the lawsuit: 1) it is the right holder of the software involved in the case; 2) the software used by the defendant is substantially similar to that of the plaintiff’s. Generally, the first point is easier to demonstrate, and by now, we have seen most software companies registering their software with the copyright office. Despite a copyright certificate not being absolute evidence in proving ownership of rights, when no adverse evidence can be presented, the copyright holder as indicated on the copyright certificate would be accepted as the owner by the court.

With respect to whether substantial similarity has been found between the plaintiff and defendant’s software, the court would judge according to the source code of both parties’ software. In practice, situations where the defendant refuses to reveal its source code is relatively common; however, this alone is not sufficient to determine the defendant’s guilt in an infringement suit. According to Article 75 of Several Rules on Civil Lawsuit Evidence by the Supreme People’s Court (the “Evidence Rules”):

“When it can be demonstrated that one party in the lawsuit is witholding evidence but is reluctant to submit it without excuse, and when the opposing party claims a disadvantage due to that reluctance, the establishment of claims can be decided.”

For this reason, if the plaintiff’s preliminary evidence is adequate to prove the accused facts, even the defendant refuses to provide the open software source code, the court could also confirm it has met Article 75 of Several Rules, and then judge the defendant’s infringement.

In the case, the plaintiff demonstrated itself as the right holder of the software, and otherwise confirmed the substantial similarity between the software of both parties. Despite this, the defendant argued that all the software involved in the case was open source software, and yet no evidence had been submitted to corroborate this statement. Therefore, the court determined the defendant would assume the disadvantage of failing to provide evidence to support its statements, a decision supported by the law..

2.      How does one settle a dispute concerning open source software?

In fact, there is a legal difficulty that was not verified in the case due to the defendant not submitting any explanation regarding the source of the plaintiff’s software from open source materials. That means once a plaintiff has adapted software based on open source standards, if it subsequently does not conform its practices to the open source agreement, does the defendant then gain a confirmation in judgment?

To this point, in the author’s opinion, no matter whether the plaintiff has actively utilized opened source code or not, it remains the copyright holder of the derivative software part, and a breach of the OSS could would be the liability of the developer, and not a contractual obligation that has been granted to the other party. Therefore, once it has no actively opened derivate part, others cannot use this software code through decoding or reverse engineering; otherwise, it could be found guilty of infringement.

Although in the law, the defendant could still infringe, in this case such a decision would not benefit the sharing of software, because the OSS developer could not charge those have not revealed the source code. Thus we are waiting for a more comprehensive set of rules for a more specific solution.

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