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01 Case Information

Trial Court

Chongqing No. 1 Intermediate People's Court

Case No.

(2019) Yu 01 Civil First Instance No. 677

party

Chongqing Tencent Information Technology Co., Ltd. (Plaintiff No. 1)

Shenzhen Tencent Computer Systems Company Limited (Second Plaintiff)

Guangzhou Youshun Network Technology Co., Ltd. (Defendant)

Date of Judgment

April 9, 2021

Cause of Action

Unfair Competition Dispute

02 Case Summary

The mobile game "Let's Hunt Monsters" is jointly developed and operated by Tencent Chongqing Co., Ltd. and Tencent Shenzhen Co., Ltd. (Plaintiff No. 1 and Plaintiff No. 2). As the first AR exploration mobile game launched by Tencent, it enjoys certain popularity. The "Chacha Assistant Platform" operated by Youshun Company (the Defendant) includes the Chacha Assistant Website, the Chacha IPA Elf mobile APP (for IOS system) and other related contents. Its principal business activity is to provide game scripts for various mobile games (including "Let's Hunt Monsters", the game involved in the present case) and allow users to download and install the aforesaid scripts upon payment.

With scripts provided by Youshun Company, mobile game users can quickly complete in-game achievements without excessive time input. The means adopted for such purpose include, but are not limited to, "virtual positioning", "auto monster-catching", "auto drum-tapping" and other acts that are not set out in the involved game but explicitly prohibited thereby. In addition, Youshun Company has carried out extensive publicity and promotion for the App it operates, and provides paid download services to reap profits. Such practices even obstruct mobile game users from normally logging into the involved game to make recharges via official channels.

Accordingly, Chongqing Tencent Company and Shenzhen Tencent Company filed a lawsuit with the court, holding that Youshun Company constituted unfair competition, and demanded an immediate cessation of the infringement, compensation of 10 million yuan, and publication of an apology statement to eliminate adverse effects. Finally, the court found that Youshun Company's profit-making act of selling scripts undermined the business model of the game involved in the case, disrupted the competitive order of the game market, and harmed the legitimate rights and interests of game operators and game player consumers, which indeed constituted unfair competition. The court fully upheld the claim for 10 million yuan in compensation.

the plaintiff's claims

1. Request that the court order the defendant to immediately cease the acts of providing users with script programs targeting the mobile game "Let's Hunt Monsters" and carrying out relevant promotion and publicity through the XX Assistant platform.

2. Pray that the defendant be ordered to cease providing operation services for game script programs of the mobile game *Let's Hunt Monsters* via the XX Assistant Platform;

3. Pray that the court order the Defendant to compensate Plaintiff No. 1 and Plaintiff No. 2 for economic losses and reasonable expenses in the total amount of RMB 10,000,000;

4. Order the defendant to publish an apology statement and eliminate the adverse effects at the prominent position of the top notification bar on the homepages of Sina, Sohu, NetEase and the XX Assistant website operated by the defendant.

5. Request the court to order that the litigation fees and preservation costs of this case be borne by the defendant.

The defendant argues

1. There is no competitive relationship between the defendant and the plaintiff.

2. The conduct of the defendant does not constitute unfair competition.

3. Part of the facts of the present case are related to criminal trials. Therefore, the trial principle of "criminal proceedings take precedence over civil proceedings" shall apply, and a ruling shall be rendered to suspend the trial of the present case.

Court judgment

1. The Defendant, Guangzhou Youshun Network Technology Co., Ltd., shall immediately cease the unfair competition acts that harm the interests of the Plaintiffs, Chongqing Tencent Information Technology Co., Ltd. and Shenzhen Tencent Computer Systems Co., Ltd. as of the date when this judgment becomes legally effective. That is, the Defendant shall immediately stop the promotion and dissemination of script programs related to the game *Let's Hunt Monsters*; completely delete all announcements, articles and information related to Chacha Assistant communication groups involving the publicity and promotion of cheat scripts for the game *Let's Hunt Monsters* on the WeChat Official Account of "Chacha IPA Elf", the official website of Chacha Assistant (XXXX) and its official Weibo account; completely delete and take down all cheat scripts for the game *Let's Hunt Monsters* on the Chacha Assistant App (Android version) and the iOS version of Chacha IPA Elf.

2. Defendant Guangzhou Youshun Network Technology Co., Ltd. shall, within 10 days from the date this judgment enters into force, publish a statement for five consecutive days in prominent positions on the homepage of Tencent.com, the official website of the game *Let's Hunt Monsters*, the official website of XX Assistant, as well as the official Weibo account of XX Assistant and the WeChat Official Account of XX IPA Elf, to eliminate the adverse effects caused to the two plaintiffs by the infringing acts.

3. The Defendant Guangzhou Youshun Network Technology Co., Ltd. shall, within 10 days from the date this judgment takes legal effect, compensate the Plaintiffs Chongqing Tencent Information Technology Co., Ltd. and Shenzhen Tencent Computer Systems Co., Ltd. a total of RMB 10 million for economic losses and reasonable expenses incurred for stopping the infringement.

4. Dismiss the other claims of the plaintiffs Chongqing Tencent Information Technology Co., Ltd. and Shenzhen Tencent Computer Systems Co., Ltd.

03 Case Observation

Q1: On what legal basis is Youshun Company determined to have committed an act of unfair competition in the present case?

A1: It is stipulated in Paragraph 2 of Article 2 and Sub-item 4 of Paragraph 2 of Article 12 of the *Anti-Unfair Competition Law of the People's Republic of China*, which reads, "Business operators shall not, by use of technical means, through influencing users' choices or by other methods, carry out the following acts that impede or disrupt the normal operation of network products or services legally provided by other business operators: (4) Other acts that impede or disrupt the normal operation of network products or services legally provided by other business operators."

Q2: Why is the act of providing cheating plug-in scripts held to be culpable in the context of unfair competition?

A2: (1) For operators, it disrupts the normal operation environment and order of games, and undermines the business model of the game involved in the case. (2) For players, it damages game balance, impairs the legitimate rights and interests of other players as consumers, and also reduces their gaming experience. (3) For the gaming market, the destructiveness of similar script programs will dampen the enthusiasm of genuine game developers and operators, reduce game profits, lower the output efficiency of the entire gaming market and discourage the innovation initiative of others. In addition, such acts violate the principle of good faith and the commercial ethics in the gaming market field.

Q3: The defendant in the present case claimed that the principle of "criminal proceedings take precedence over civil proceedings" should be applied and requested the suspension of the trial. Why was such request not upheld by the court?

A3: The basis for determining the procedural handling of criminal-civil overlapping matters lies in whether the facts investigated in the criminal case and the civil case are "the same fact" or "the same legal relationship", and whether the civil case takes the trial result of the relevant criminal case as its precondition. If the aforesaid matters fall under the same fact/legal relationship and the civil case is premised on the trial result of the criminal case, the principle of "criminal proceedings prior to civil proceedings" shall apply; otherwise, criminal and civil proceedings may be conducted in parallel. The criminal charge against Youshun Company is the Crime of Providing Programs or Tools for Intruding into or Illegally Controlling Computer Information Systems. The main facts investigated in the criminal case focus on the technical issues concerning the illegality of the provided programs and tools, i.e. whether the programs and tools per se have the illegal attributes of intrusion, illegal control and the like (including criminal circumstances and the amount of crime), which are not the same as the tort facts of unfair competition involved in this case. The former criminal provision aims to protect the integrity and security of victims' computer systems from infringement, while the latter civil legal norm protects interests such as transaction opportunities and competitive advantages, so the two do not belong to the same legal relationship either. Therefore, there is no necessity to suspend the trial of this case.

Q4: As the infringing party, how to make a proper response upon receipt of a lawyer's letter?

A4: (1) Immediately cease the infringement, and retain evidence of relevant acts for proof purposes (e.g. retain direct evidence of the take-down of cheating plug-ins and script programs); (2) Acts including secondary promotion and promotional publicity via articles (e.g. replying to players under your operated Weibo account to invite them to join dedicated plug-in groups, or retaining articles publicizing cheating plug-ins and script programs on the official website) shall also be promptly removed. Otherwise, the opposing party may adduce evidence to establish that the infringement is still ongoing, which constitutes secondary infringement.

Q5: Is it certain that business operators not in the same industry do not constitute a competitive relationship?

Q5: Negative. In this case, the court held that under new economic models, especially in the online environment, the determination of whether a competitive relationship exists between business operators shall not be limited to operators in the same industry. As long as the two parties have a competitive relationship in terms of specific business conducts and ultimate interests, a competitive relationship between the two shall be deemed to exist. The act of Zhongyoushun Company in this case of parasitizing on the involved game through game scripts has led to competition for transaction opportunities between the company and Chongqing Tencent Co., Ltd. and Shenzhen Tencent Co., Ltd., and there exists a gain-loss relationship where the growth of one party's interests comes at the expense of the other's.

Q6: In the present case, why was the defendant's claim for exemption from liability based on the application of the "safe harbor principle" not upheld by the court?

A6: The "Safe Harbor Principle", also known as the "notice-and-takedown" rule, applies only to network service providers that provide information storage space, search or linking services. However, the defendant in the present case is not a pure network service provider, as its act in essence is to provide a type of software (the XX Assistant series of mobile applications, on which illegal auxiliary scripts must rely to operate) for use. Therefore, the aforesaid principle and rule shall not apply.

Q7: What are the grounds and calculation basis on which the People's Court fully upholds the claim for RMB 10 million in damages?

A7: Game players purchase "Force Points" from Youshun Company, which can be used to exchange for illegal auxiliary scripts. Therefore, the profits can be determined by estimating the sales amount of "Force Points" of Youshun Company. The conversion rate between "Force Points" and RMB is 10:1. 1% of the script popularity value (discretionarily determined) is estimated as the number of sales, so sales profit = Force Points / 10 × 1% of the script popularity value. Finally, the infringement profit amount of all illegal auxiliary scripts shall be calculated in accordance with this formula and summed up (as the number of scripts is excessive, a rough calculation and statistics shall suffice to prove that the infringement profits far exceed the amount claimed by the plaintiff). It is concluded that the profit amount has exceeded RMB 10 million. Accordingly, the court fully upholds the plaintiff's claim.

04 Summary

Game cheating plug-ins and game scripts are both categories of game cheating programs. Game players often generally refer to all game cheating programs as "plug-ins", which leads to the interchangeable use and confusion of the concepts of plug-ins and scripts in practice. Ordinarily, no deliberate distinction is drawn between the two, yet there are essential differences between them in nature. Game scripts generally do not involve modification of the inherent data of the game itself. Functionally equivalent to helping players "cut corners", they enable players to automatically process batch operations and routine task instructions. Plug-ins, by contrast, usually involve modification of the inherent data and content of the game itself, as well as circumvention and destruction of technological protection measures. They can put players in an "invincible" status, realizing incredible functions such as unlimited health points and unlimited ammunition. As for the present case, both the plaintiff's claims and the production of infringement evidence are targeted at the act of "selling game scripts". The plaintiff alleged that such act constitutes unfair competition, and its claims were finally upheld by the court.