TYGlobe

01 Case Information

Trial Court

Guangzhou Internet Court

Case No.

Case No. 7434, Minchu (Civil First Instance), Yue 0192, 2021

plaintiff

Hangzhou NetEase Leihuo Technology Co., Ltd.

defendant

Guangzhou Jianyue Information Technology Co., Ltd.

Date of Judgment

May 15, 2023

Cause of Action

Disputes over Copyright Infringement and Unfair Competition

02 Case Summary

NetEase Leihuo Co., Ltd. is duly authorized to hold the copyright and rights to conduct rights protection actions in respect of the game *Rise of Dynasties*. Since its launch in 2015, the game has amassed a large number of players and enjoys extremely high reputation in the gaming industry. However, *Three Kingdoms: Strategy Edition*, developed by Ejoy Co., Ltd. and launched in 2019, is highly similar to the aforesaid game in terms of hundreds of game elements including resources, buildings, maps, military generals, as well as game mechanisms and interactive design, which leads to highly similar experience delivered to players through game visuals. Therefore, NetEase Leihuo Co., Ltd. deems that the acts of Ejoy Co., Ltd. constitute copyright infringement via overall plagiarism and unfair competition, and has filed a lawsuit with the Guangzhou Internet Court.

Ultimately, the case lasted for approximately two years. The court of first instance applied the provisions of Subparagraph (9) of Article 3 of the Copyright Law of the People's Republic of China, and determined that the game *Shuaitu* falls into the category of "other intellectual creations that meet the characteristics of a work". It was ascertained that the game *Sanzhan* developed by Jianyue Co., Ltd. used 79 items of game rules and mechanisms constituting original expression of the *Shuaitu* game, which constituted infringement of the right of adaptation. Jianyue Co., Ltd. shall delete/modify the original expression involved in the case, and compensate NetEase Leihuo Co., Ltd. RMB 50 million for economic losses and reasonable expenses incurred for rights protection.

Claims

1. Order Jianyue Company to compensate NetEase Leihuo Company for economic losses and reasonable expenses totaling RMB 50 million;

2. Order that Jianyue Company immediately cease the copyright infringement acts against the game *Shuai Tu Zhi Bin* (hereinafter referred to as "Shuaitu"), including immediately ceasing the adaptation of *Shuaitu* and the act of disseminating *Shuaitu* through information networks, deleting the copyright-infringing content contained in the game *Records of the Three Kingdoms: Strategy Edition* (hereinafter referred to as "Sanzhan"), and ceasing the operation of *Sanzhan*; Order that Jianyue Company immediately cease the unfair competition act of holistically plagiarizing the game design content of *Shuaitu* owned by NetEase Leihuo Company, including deleting all infringing content involved in the aforesaid game, and ceasing the operation of *Sanzhan*;

3. Order that Jianyue Company shall bear all the litigation costs of this case.

Supplementary Explanation on the Litigation Claims:

1. It is contended that the overall continuous dynamic images generated during the operation of the *Shuaitu* game constitute an audiovisual work. If it is held that the aforesaid images do not constitute an audiovisual work, they shall still constitute other intellectual achievements that conform to the characteristics of a work.

2. It is claimed that the whole set of text descriptions involved in the gameplay of *Shuaitu*, which consists of 143 groups of entries in total, constitutes a literary work (In the event that the claim for overall protection of the game is upheld, no claim for infringement of literary works will be further asserted).

3. It is alleged that the plagiarism of 121 gameplay features constitutes unfair competition as stipulated in Article 2 of the Anti-Unfair Competition Law of the People's Republic of China.

Court judgment

1. The defendant, Guangzhou Jianyue Information Technology Co., Ltd., shall, within 30 days from the date this Judgment comes into force, delete or revise the contents constituting the original expression of *Lü Tu Zhi Bin* utilized in the 79 game rules on record of *Three Kingdoms: Strategy Edition*, and revise the game mechanics formed by the interconnection and interaction of the aforesaid rules.

2. The Defendant, Guangzhou Jianyue Information Technology Co., Ltd., shall, within 10 days from the date when this judgment becomes legally effective, compensate the Plaintiff, Hangzhou NetEase Leihuo Technology Co., Ltd., RMB 50 million for economic losses and reasonable expenses incurred in safeguarding its legitimate rights and interests.

3. Dismiss the other claims of the plaintiff, Hangzhou NetEase Leihuo Technology Co., Ltd.

03 Case Observation

Q1: In copyright cases, where the type of the "work" is uncertain, may claims for multiple types of works be brought simultaneously?

A1: Such claims may be asserted concurrently. In the present case, NetEase Leihuo Co., Ltd. asserts that the overall continuous dynamic images of the game *Shuaitu* constitute an audiovisual work, and also asserts, in the form of supplementary explanation submitted in respect of this litigation claim, that the said images constitute "other intellectual achievements that conform to the characteristics of a work". The court eventually delivered detailed reasoning on both circumstances and rendered a determination on the category of the work.

Q2: What are the general characteristics of audiovisual works?

Q2: Pursuant to Article 17 of the Copyright Law of China, audiovisual works include "cinematographic and television works" and "other audiovisual works". In accordance with Article 4 of the Regulations for the Implementation of the Copyright Law of China, the definition of cinematographic works covers the following elements: (1) shot on a certain medium; (2) composed of a series of images with or without accompanying sound; (3) projected or disseminated by appropriate devices, which correspond to creation method, form of expression and communication means respectively. Therefore, the general characteristics of audiovisual works may be interpreted with reference to the definition of "cinematographic works". However, the creation method and communication means of cinematographic works have certain individualized features. As such, only the form of expression, namely "composed of a series of images with or without accompanying sound", is sufficient to reflect the general characteristics of audiovisual works.

Q3: What are the essential differences between the images presented by cinematographic works and those presented by electronic games?

Q3: The criterion for determining the completion of creation of cinematographic works is that all frames of the film have been fixed, and the work can be paused, played back or fast-forwarded at any point in time. Whereas for video games, the criterion for completion of creation is not the fixation of game images, but the formation of the game package that integrates game rules, game materials and game programs. The images of a video game are continuously generated in the recurring cycle where players issue instructions, make adjustments based on information feedback, and then issue new instructions. Such images include both continuous images (scene images) and discontinuous images (interactive interfaces), and the discontinuous images are often fleeting and irreversible.

Q4: Who contributes to the originality of the overall audiovisual presentation of video games?

A4: Generally, game images are generated from the probability space formed by the combination of game rules and game materials, therefore their originality is still a product of the design by game creators. However, for some electronic games with high openness and a high degree of freedom, some players may demonstrate individual creative will and contribute labor within the meaning of the Copyright Law of the People's Republic of China. In such cases, the relevant game images are the result of the joint contributions of game creators and game players.

Q5: Do the rules of electronic games constitute expression within the meaning of the Copyright Law?

A5: It is permissible under certain conditions. From the perspective of game creators, electronic game rules can be categorized into basic game rules (falling within the scope of ideas) and specific game rules. The basic game rules define the fundamental gameplay of a game, and determine the design orientation of the entire electronic game as well as the design thinking for specific game rules. By contrast, specific game rules are elaborate and detailed designs developed centering on the basic game rules, which enjoy broad space for creative expression. This is reflected not only in the design of individual game rules, but also at the level of various game mechanics formed by the interconnection and interaction between game rules. Furthermore, the game rules and game mechanics of electronic games can also be presented in certain forms and statically fixed in the game package.

Q6: Why may game rules (including game mechanics) possess independent value and status of existence?

A6: For game creators, the "game rule system" they have designed can be transplanted to games with different materials or even different media, and is sufficient to enable players to have basically the same or similar experience. In this sense, game rules hold the status of being perceived and appreciated in games independent of game materials. In addition, it shall be noted that game rules can only be perceived and appreciated by the public when combined with materials including art, text and music of a specific game.

Q7: How to conduct an infringement comparison of electronic game rules?

A7: First, from the perspective of comparison methodology, game graphics are dynamic and constantly changing, and not all of such graphics are necessarily contributed by game creators. Therefore, it is inappropriate to carry out comparison frame by frame, which is neither realistic nor objective. By contrast, the rules, materials and programs contained in the game package are complete and stable, which can not only fully reflect the originality of the game, but also support clear categorized comparison and sufficiently distinguish two games from each other, so they are eligible for infringement comparison. Second, from the perspective of comparison content, basic game rules fall into the category of ideas and are not protected by the Copyright Law. Specific game rules can only jointly perform their functions in the game system when combined with other rules. Therefore, when comparing specific game rules, we shall not only conduct static comparison of individual game mechanisms, but also carry out dynamic comparison of the interaction mechanisms between different rules.

Q8: Under what circumstances can it be determined to constitute "other intellectual achievements that conform to the characteristics of a work"?

A8: The classification of works under the Copyright Law of China is mainly determined based on the "form of expression" and "mode of dissemination and utilization" of works. Where a "work" created through new creation means has a unique form of expression and a mode of transmissible utilization, and cannot be categorized into any of the eight statutory categories of works, given that the current Copyright Law adopts an open-ended legislative approach, such work may be recognized accordingly.

Q9: Why can the game *Shuaitu* be recognized as "other intellectual achievements that conform to the characteristics of a work"?

A9: The originality of the *Shuaitu* video game is embodied in the specific design, selection and arrangement of its game rules, game materials and game programs, and is presented through game screens. The game screens mentioned herein can be divided into two parts: the first part is screens that can be automatically played and run; the second part is screens generated when players operate the computer to call resources from the game resource library. The first part of the screens are manifested as a series of screens with or without accompanying sound, which can be protected as audiovisual works. The generation of the second part of the screens requires the participation/contribution of players, which is essentially different from the former. Therefore, it is not appropriate to determine the overall screens of the *Shuaitu* game as audiovisual works or any of the other seven statutory types of works. In addition, considering that game rules (including game mechanics) play a vital role in both the aforementioned first and second parts of the game screens, and can constitute expression within the meaning of the Copyright Law of China, the *Shuaitu* game may be determined as "other intellectual achievements conforming to the characteristics of works".

Q10: Why did the plaintiff in the present case claim protection for 121 game rules, while only 79 thereof were finally recognized by the court?

A10: First, 10 items of the game operation rules do not qualify as objects protected by the Copyright Law of the People's Republic of China, and 5 items of game rules are repetitively included in the comparison, thus a total of 15 items are excluded from consideration. Second, none of the following items constitute substantial similarity: 9 items (Nos. 56-64) of currency resource rules, 7 items (Nos. 74-80) of main interface UI layout, 5 items (Nos. 48-52) of battle report system, 2 items (Nos. 19, 20) of resource system rules, 2 items (Nos. 30, 33) of military general system, and 2 items (Nos. 93, 94) of strategy selection system, with a total of 27 items excluded from consideration.

Q11: In the present case, why is the part of the plaintiff's claim concerning "deletion of infringing content" not upheld by the court?

A11: There is sufficient room for modification of game mechanics. Once the modification is completed, the "experience" of players will be significantly different, namely, the purpose of ceasing infringement can be realized. Therefore, the terms of the court's judgment only specify that it is sufficient to "delete or modify" the 79 items of the game's content that constitute original expression, and "modify" the game mechanics with corresponding connections and interactions.

Therefore, it is sufficient for the people's court to merely render a judgment that "the contents constituting original expression in the 79 game rules shall be deleted or modified".

Q12: How is the RMB 50 million compensation for damages in the present case calculated?

A12: The court gives priority to applying the priority order of "actual loss / illegal gains of the defendant" to calculate the compensation amount of RMB 50 million. The main reference factors are as follows: (1) The originality and popularity of the game *Shuaitu*; (2) The infringer's subjective intent, duration of infringement and illegal gains therefrom, specifically including that the downloads of the game on iOS and Android mobile terminals exceeded 100 million as shown by third-party data platforms, and its estimated total revenue on the global App Store and Google Play exceeded USD 1 billion; (3) The contribution rate of the infringing content to the game *Sanzhan*; (4) Reasonable expenses for rights protection. In addition, the court has also taken into account the circumstance that the relevant authentic data is objectively held by the defendant but has not been disclosed to the court.

04 Summary

· Electronic

Rules for electronic games (including game mechanics) may constitute expression within the meaning of the Copyright Law. The aforementioned expression is reflected in its ability to consistently enable players to obtain substantially identical or similar "experience", while its objective carrier may be manifested as a variety of specific game rules and the linkage mechanism between such rules. The subject determining whether relevant content constitutes "expression" shall be game players with certain experience, for electronic games, as an emerging category (compared with other statutory types of works), do have a certain threshold for interaction and experience.