Shenzhen Tencent Computer System Co., Ltd. (“Tencent”) filed a lawsuit against Guangzhou 4399 Information Technology Co., Ltd. (“Guangzhou 4399”) and 4399 Network Co., Ltd. (“4399 Network”) for trademark infringement and unfair competition, in which a professional team led by Mr. Xie Xianghui, partner of Grandall Shenzhen, represented Tencent. Recently, the second-instance judgement of this case has been issued by Guangzhou IP Court. The court rejected the appeal and upheld the original judgment. So far, after three years of rights protection, Tencent has been awarded a compensation of RMB 5 million and completely won the case. This case set a new record high of awarded compensation not only for online-game trademark infringement, but also for trademark infringement in keyword search.

Tencent has been granted an exclusive right to operate the online game - “Dungeon and Fighters” in Mainland, China by Neople Inc. (“Neople”) since 2008. The scope of authorization also includes the right to use the trademarks - “DNF” and “Dungeon and Fighters DNF” registered by Neople in China as well as the right to stop and crack down on infringements. Guangzhou 4399 is the registered owner of the copyright in “Fighting Hunter” V1.0 (full name: “Fighting Hunter”, game software for mobile phone / tablet), and 4399 Network is the shareholder controlling 100% shares of Guangzhou 4399.

Tencent found that the following referral links showed up as top search results when putting key words such as “DNF mobile game” or “Dungeon and Fighters mobile game” into Baidu search engine: “DNF side-scrolling mobile fighting game, play DNF mobile game”, “Dungeon and Fighters mobile game, Dungeon and Fighter”. A click on any of such links would direct you to the downloading interface of “Fighting Hunter”. Tencent believed that the acts of Guangzhou 4399 and 4399 Network have constituted trademark infringement and unfair competition, so it instructed Grandall to file a lawsuit for trademark infringement and unfair competition.

Guangzhou Tianhe People’s Court is the court of first instance of this case. After trial, the court held that Guangzhou 4399 and 4399 Network committed trademark infringement and unfair competition by putting “DNF” and “Dungeon and Fighters” in Baidu Search as keywords for paid listing and thus should be jointly and severally liable for compensation. With respect to the amount of compensation, the court of first instance took those evidences submitted by the plaintiff and defendant into comprehensive consideration and held that the losses suffered by Tencent were obviously higher than the statutory maximum compensation amount, so it ruled that Guangzhou 4399 and 4399 Network should jointly pay RMB 5 million to Tencent as compensation for its economic losses (including reasonable expenses).

The defendant refused to accept the said judgment and filed an appeal to Guangzhou Intellectual Property Court. The court of second instance gave comprehensive consideration to the popularity of the trademark involved, the defendant’s subjective malice in the infringement, the preliminary evidence submitted by Tencent for proving its losses as a result of the infringement, the customary use of online game, and other factors, and held that the losses suffered by Tencent as a result of the alleged infringement obviously exceeded the statutory compensation limit, and the compensation amount determined in the judgment of first instance was justified and proper.

In the case, Grandall made a preliminary calculation of the potential huge loss which Tencent might suffer by using the number of registered users admitted by 4399, ARPU of Tencent’s online games and other data, and used such supplementary evidences as the popularity of the “Dungeon and Fighters” to fully prove the fact that the loss suffered by Tencent was obviously higher than the statutory compensation limit. In determining the amount of compensation, the court gave full consideration to Grandall lawyers’ opinions and finally awarded a compensation beyond the statutory compensation limit. Typical significance of this case lies in the following two aspects: firstly, it provides ideas and methods for lawyers to prove that the damages or profits resulted from the infringement exceed the statutory compensation limit; secondly, the courts of first instance and second instance have fully discussed the factors to be considered in determining the amount of compensation for online-gaming trademark infringement, which can be used as reference for other courts to try similar cases.

Xie Xianghui, partner of Grandall Shenzhen, and lawyers Shi Yue, Lu Ping and Hao Pengyu, provided professional services for Tencent. Relevant lawyers have extensive practical experience in areas such as intellectual property, civil and commercial litigation and arbitration, financial dispute resolution, real-estate development and transfer, and construction projects.