Abstract:
(By You Yunting) In today’s post, we would introduce you the first dispute concerning AppStore promotion dispute judged in China. Where only one party possesses relevant evidence but refuses to provide it to the opposing party, and such evidence would generally be considered unfavorable to the interests of the party possessing it, in most cases the court would support the opposing party’s request for the evidence and determine what adverse consequences the withholding party will bear as a result. A contract dispute involving the promotion of Apple’s Appstore will be discussed in today’s post. In this case, we saw a party fail to provide a correct iTunes Connect account, which the court later discovered, leading to a rejection of the party’s claim.
Case introduction
On March 12, 2012, the Shanghai-based LiXiu Advertising Co., Ltd (“LiXiu Advertising”) concluded a contract for the promotion of mobile phone software with the Shanghai-based Pinhabit Net Technology (“Pinhabit”). Pursuant to that agreement, Pinhabit commissioned LiXiu Advertising to promote its“Guanz观众天下”Software for the iOS platform. Both parties agreed that Pinhabit would promote the software in order to obtain two-hundred thousand validated end-users, and would be paid one Yuan Renminbi per validated account within the total agreed upon sum of two-hundred thousand，with the final consideration being paid according to data provided by Apple’s Appstore backdoor database.
Afterward, LiXiu Advertising began promoting Pinhabit’s software. During its promotion campaign, it sent a message on Weibo that the “Guanz观众天下” software had reached the top three among all free apps available on Apple’s Appstore. Following this, the person in charge at Pinhabit contacted LiXiu using QQ, and in the course of their conversation confirmed that LiXiu had reached the agreed upon number of verified end-users as called for in the contract. However, shortly after this conversation, Pinhabit discovered that LiXiu had not in fact fully completed its end of the bargain, and had not reached the required amount of end-users within the promotion period called for in the agreement. In response, LiXiu Advertising filed a lawsuit.
The main dispute in the lawsuit was whose background data would be relied upon in order to prove or disprove LiXiu’s reaching the agreed upon number of users. Specifically, was it Apple’s Appstore database records, or Pinhabit’s server records? Pinhabit claimed that, based on the information it had on its own servers regarding the number of users of its software, LiXiu Advertising did not fulfill its end of the bargain; furthermore, Pinhabit refused to acknowledge the authenticity of the tracking information providing by LiXiu Advertising. Pinhabit provided information related to its developer’s account and iTunes connector account, which showed that no downloads had been made throughout LiXiu’s alleged performance of the contract. After accepting the case, the court in the first instance held that no specific evidence, whether provided by Apple’s Appstore or a third-party entity, had been provided. Furthermore, the court held, in regard to LiXiu Advertising’s failure to provide any evidence of completion of its side of the bargain – with the exception of its own online tracking information – its QQ conversation with Pinhabit’s representatives was equally unpersuasive, because it would be difficult to prove the true identity of the parties to the conversation. Based on this lack of evidence, the court in the first instance rejected LiXiu Advertising’s claims.
Dissatisfied with rejection by the court in the first instance, LiXiu Advertising appealed. The Shanghai No. 2 Intermediate People’s Court heard the case, and overturned the decision made by the court in the first instance; its amended judgment in support of LiXiu Advertising’s claims is as follows:
Directed at the Appstore, the No. 2 Intermediate Court held: the Appstore is owned and managed by Apple. The disputed software on the iOS platform can only be downloaded from Apple’s platform, and the Appstore as defined in the contract refers only to Apple’s. Therefore, the background data at issue in the case should refer only to data provided by the Appstore’s background platform, iTunes Connect.
In regard to the question as to whether LiXiu Advertising had reached the specified number of end-users, the Shanghai No. 2 Intermediate Court held that, taking into consideration that only the developer of the software would be able to obtain accurate statistics in conformity with the iTunes Connect’s license agreement, Pinhabit should then hold the burden of proof. Where Pinhabit provided evidence of “zero” downloads in its records, and where Lixiu Advertising provided evidence to the contrary，including messages posted on Weibo by Pinhabit (where Pinhabit claimed to reach the top three among free apps available on Apple’s Appstore), in order to prove whether Pinhabit provided incorrect evidence, the court decided that Pinhabit should bear the adverse consequences of not providing such evidence in the first place.
Lawyer comments:
1. This was case one handled by one of our lawyers. The biggest question encountered during the case was that the Judge in the first instance was not familiar with Apple’s Appstore rules because she had not used a smart phone; therefore, she failed in her decision to not find Pinhabit’s records from its personal server to be fake. This decision was incorrect because it was proven that a personal server does not have access to the records kept and stored by Apple’s Appstore in regard to software downloads and users. Furthermore, because Apple’s Appstore operators are not located in China, the two parties could only present evidence to the court that would benefit them individually, and provided interpretations of the evidence made available catered to their own points of view. For this reason, the judge in the first instance failed to review the evidence in this light, and arrived at an incorrect conclusion.
But based on our analysis of the case, the judge in the second instance was himself an iPhone user, and was more familiar with the technologies used. That judge held that where both parties agreed upon the Appstore as the platform to be used, it would be reasonable to conclude this would be Apple’s Applestore. The judge held that this was a correct conclusion, based on the similarity of the name identified in the contract, and the general operating environment. Further, the judge held that when identifying similar names, the court should make such determinations in accordance with the operating platform, or any predicted or intended purpose consistent with the general aims of the contract. Because the “Guanz观众天下” software was developed and available exclusively for the iOS platform, the Appstore in the contract implied exclusive use of the Apple Appstore and its background data implied that made available to developers through iTunes Connect. In the author’s opinion, aside from the reasons stated above regarding a basis for determining these elements in the contract, the main reason the information provided by Pinhabit’s personal servers was insufficient and incorrect evidence is because although Apple’s Appstore is a “closed” software environment, Pinhabit’s software could not be downloaded from any third party appstores or software repositories (with the exception of those downloading illegal copies through “jailbroken” iPhones), thus supporting the exclusion of any server records other than those provided by iTunes Connect.
2. The most important question in this case is that when only one party possesses evidence crucial to the adjudication of a case, but fails to provide that information, how does one determine who carries the burden of proof? The court answered, holding that, where there is evidence to prove that only one party possesses relevant evidence, but refuses to provide it, and if the opposing party has relevant evidence to prove that the said evidence is unfavorable to the possessor of the evidence, the possessor shall bear the adverse consequences of its actions.
The defendant Pinhabit agreed upon the use of iTunes Connect as background data, registered a new developer account, and uploaded some software instead of providing real statistics. For this reason, when the court went to determine whether a record of “zero” downloads was in fact true, the actual statistics regarding software use were discovered. At the same time, based on evidence that LiXiu Advertising had helped Pinhabit’s software ranking to climb sharply up the charts during its promotion period pursuant to the agreement, the court was able to directly determine that Pinhabit would bear the adverse consequences of failing to provide relevant evidence.
Lawyer Contacts
You Yunting：86-21-52134918 youyunting@debund.com/yytbest@gmail.com
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