Among the Ten IPR Cases issued by the Supreme People’s Court in 2012, one of the more interesting ones involves a case of portrait infringement involving international basketball star Yao Ming’s likeness. Despite the court’s understanding that infringement had been found for the unlicensed use of Yao’s portrait and name, granting compensation as high as RMB 1 million Yuan, such an amount is far less than Yao’s typical payment for participating in ads and other marketing materials. For this reason, the court’s decision to grant such an amount is simply inadequate to prevent further acts of infringement involving a well-known person’s name and likeness.

Case Summary from a publication released from the Hubei High People’s Court:

(By You Yunting) Without any granting of rights or a license from Yao, the Wuhan-based Yunhe Sharks Sporting Goods Company (“Company Y”) made use of Yao’s portrait and likeness, as well as his name in marketing materials for it’s new product “Y.M. ERA.” To Yao’s understanding, Company Y’s acts infringed upon his personal rights, which constituted unfair competition. Yao initially filed a lawsuit in court demanding Company Y stop its infringing activities. Moreover, Yao claimed compensation in the amount of RMB ten million Yuan, as well as a public apology on the China Industry and Commerce News .

After the initial hearing in the Hubei Wuhan Intermediate People’s Court, the judge took note of the fact that through Yao’s efforts, he had become one of the most successful basketball players in recent times, and cultivated a good social image. That influence, the judge said, so well-known among relevant consumers, shall be protected by law. Company Y used Yao’s portrait and name several times in its product publications and marketing materials, the sole purpose of which was to encourage the idea that there was a connection between the product involved and Yao. That suggestion infringed upon Yao’s name rights and portrait rights, and also constituted unfair competition as understood in Chinese laws. Based upon these facts, the court ordered Company Y to cease infringement immediately, and make an apology to mitigate the damage done to Yao’s name and image. However, the court also stated that due to the relative lack of evidence presented by Yao to support his claims that Company Y’s infringement had caused him to suffer RMB ten million Yuan in damages, and taking into account the facts surrounding the infringement and the costs Yao incurred in protecting his rights, the judge granted compensation to Yao in the amount of RMB 300,000 Yuan. Yao appealed to a higher court, dissatisfied with the court’s decision in the first instance.

The Hubei High People’s Court heard the case in the second instance, and held that an individual’s name shall be protected by the Anti Unfair Competition Law; in addition, the court held that such a right is not like those similar to a common personal right, in which the only difference may be distinguishing a market participant. Without a license or approval from the rights holder, any companies or individuals could use another’s name, portrait, signature or any other commercial symbol. Company Y deliberately infringed, and yet the court in the first instance did not give adequate consideration to the nature, consequence, and period of time that Company Y had engaged in infringing activity. In addition, the court held, the court in the first instance did not consider the continuous infringement on behalf of Company Y despite Yao making an announcement as such on sina.com in March 2010.

Therefore, in considering the above factual elements, as well as the losses suffered by the rights holder and unclear gains made by the infringing party, the Hubei High People’s Court ordered Company Y to make compensation in the amount of RMB one million Yuan, including fair legal expenses incurred by Yao in the amount of RMB one million Yuan, basing its decision according to Article 20 of Anti Unfair Competition Law and Article 17 of the Interpretation on Several Issues concerning Trials on Unfair Competition Disputes issued by the Supreme People’s Court.

Lawyer Comments:

I. Why did the infringer dare to continuously use Yao’s portrait and name, even when the prospect of facing charges was certain?

Such a question is a good one, and easily explained. Portrait infringement is not like IPR infringement, and can never constitute a crime. If in this case, the infringed rights were trademark rights or copyright, when faced with such accusations, there is a greater possibility that the infringer may be punished through criminal penalties and sanctions as a result of continued use. However, because portrait rights are a kind of personal right, according to the regulations in the Criminal Law, any unlicensed use of others’ portrait, even under severe conditions, will not constitute a crime as such. With regard to portrait infringement, only when such infringement has distorted reality, like to smear someone’s image resulting in bad consequences (i.e. suicide of the infringed party), would such activity be deemed of a criminal nature. With no possibility of that happening in this particular case, the infringing party, Company Y, felt it was free to keep infringing.

II. Why was the compensation in the amount of RMB one million Yuan so low?

In our experience, when hearing disputes concerning portrait and name rights, compensation in the amount of of RMB 1 million is actually quite high. In this case, however, considering Yao’s reputation as one of the most reputed athletes in China, any product endorsement would certainly allow him to earn more than RMB one million Yuan. For this reason, the compensation decided in the case is far too low. In fact, any rational businessman would tend to think that it is more effective and economically sound to use Yao’s portrait without a license, for any official invitation to be a product spokesman would likely cost significantly more. The key to the problem is the standard adopted among China’s courts granting low amounts of compensation in infringement cases; not even considering punitive compensation  which may not be adequate to even make up the losses suffered by the rights holder.

III. Is there any improvement in the court’s use and interpretation of the law?

The case discussed today is one involving infringement against portrait and name rights. Traditionally, that kind of case would not result in a high amount of compensation, and yet in this case, we saw the court refer to the Anti Unfair Competition Law and its judicial interpretations. According to the relevant regulations in the Interpretation, parts of the unfair competition case could be determined to follow the standard found in the compensation of trademark disputes. This is one reason why a higher amount of compensation was granted in comparison with other similar cases involving the same infringement of rights. Despite such a relative “breakthrough,” the court’s decision on compensation remains inadequate to compensate actual losses, and is a serious problem faced in China’s IPR industry and legal development.

Finally, although the compensation in this case remains far too low, it has been listed among the 10 main cases heard by the Supreme People’s Court, which makes sense to some extent, and has shown that the court intends to increase the compensation standard. However, doing so in actual practice is still difficult. Since China’s courts are influenced by the government to a great extend, rulings granting a high amount of compensation would result in pressure on the courts from local authorities, who do not want local industries to be shut down as a result of compensation in infringement cases, primarily because local authorities would earn less tax revenue and ever-present employment issues would become a greater problem. No matter the result, we must admit that compensation, even at RMB one million, is still relative progress.

Lawyer Contacts

You Yunting：86-21-52134918  youyunting@debund.com/yytbest@gmail.com

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