In cross‑border copyright disputes, bad‑faith operators frequently set up multiple independent‑looking shell entities to separate public‑facing business records from the real operating company. This case originates from a civil copyright litigation heard by Suzhou Industrial Park People’s Court in 2024, focusing on textile pattern copyright infringement in domestic and cross‑border e‑commerce scenarios. The real infringing enterprise is anonymised as Bloom Pattern Design Co., Ltd. The plaintiff is an independent original design studio named Lumi Creative Workshop, which completed copyright registration for 12 sets of original Chinese‑style floral textile patterns for home textiles and apparel products in China Copyright Protection Center.
Starting from early 2022, Lumi Creative Workshop found multiple e‑commerce stores selling bedding, cushion covers and printed garments that directly reproduced its registered pattern works. The store operators displayed three different limited‑liability company names on platform qualification filings: Sunlight Trading Co., Ltd., Nova E‑commerce Co., Ltd., and Horizon Supply Chain Co., Ltd. At first glance, these three companies appeared to be completely unrelated market participants. None of the public platform materials, product pages, invoices or logistics documents mentioned Bloom Pattern Design Co., Ltd at all. The plaintiff initially sued these three nominal defendants, only to discover that each shell company had extremely low registered capital, almost no fixed assets, and their bank accounts held very limited enforceable funds. If the court only held these nominal shell companies liable, even winning the judgment would result in almost no effective compensation.
The plaintiff’s legal team realised that merely suing publicly‑displayed platform subject companies cannot resolve copyright losses when actual infringers hide behind nominee‑controlled shell companies. The core litigation challenge shifted to collecting indirect evidence to connect the three shell defendants with the hidden real operator Bloom Pattern Design Co., Ltd.
The legal team launched multi‑dimensional evidence collection work. First, they obtained e‑commerce backend log data through court evidence preservation. Product revision records, background image upload metadata and internal operation account login IP addresses repeatedly pointed to office network addresses registered under Bloom Pattern Design. Second, industrial and commercial filing information showed that the three shell companies used different nominee legal representatives, but their contact mobile phones, email addresses and office registration addresses were highly overlapping with Bloom Pattern Design’s business contact information. Third, forensic accounting reports submitted to the court uncovered fund flow traces: large‑scale sales income generated by infringing online stores flowed into shell company accounts, then was transferred out in batches under the item names of “design consulting service fee” and “raw material purchase payment”, and finally entered the corporate account of Bloom Pattern Design. Asset commingling constitutes one of the most critical factual foundations for Chinese courts to pierce the corporate veil in copyright civil cases.
In addition, the plaintiff obtained partial internal chat records through witness testimony. The management of Bloom Pattern Design clearly instructed operational personnel: “Use different shell entities to open online shops. If one store receives copyright complaints and lawsuits, we can abandon that shell and continue business via other entities, avoiding freezing core assets of our main company.” This written record directly proved that establishing multiple shell companies was a pre‑meditated measure for evading copyright infringement liability, rather than normal commercial layout.
During the trial, the three nominal shell companies argued that they were only platform‑operating agents and knew nothing about pattern copyright issues. Bloom Pattern Design submitted procedural objections, claiming it had no contractual relationship with online stores and should not bear tort liability. The court conducted comprehensive review combining electronic evidence, industrial‑commercial archives, judicial accounting appraisal and witness statements.
The court held several key points. First, the three shell companies had no independent design capacity, product‑sourcing capacity or independent profit‑making logic. Their sole business purpose was to operate online stores for Bloom Pattern Design and isolate legal risks. Second, massive fund commingling existed between shell entities and Bloom Pattern Design. Nominal legal representatives of shell companies were nominee agents receiving only small service fees, without actual decision‑making power over operation, procurement or capital disposition. Third, reproducing and selling copyrighted patterns without authorization constituted intentional copyright infringement, and using corporate legal‑person status as a tool to evade tort liability should not receive legal protection.
Applying the corporate‑veil‑piercing rule under China’s Company Law and tort liability clauses of the Civil Code, the court ruled that Bloom Pattern Design Co., Ltd, together with three shell companies, should bear joint and several civil liability for copyright infringement. The full compensation amount totalled RMB 1.92 million, covering economic losses of the right holder and reasonable legal expenses including notarisation, forensic appraisal and attorney fees. The court also issued permanent injunctions requiring all defendants to stop reproducing, selling and disseminating the 12 copyrighted textile pattern works.
This case delivers practical enlightenment for copyright owners facing similar hidden‑subject infringement. Right holders should not merely rely on merchant subject information displayed on e‑commerce platforms. When facing low‑asset shell defendants, it is necessary to proactively apply to courts for evidence preservation of backend logs, capital flow and IP trace data. Metadata, fund transfer paths, industrial‑commercial contact information and internal business documents can jointly build a complete evidence chain to identify concealed actual infringers. Many right holders tend to ignore forensic accounting appraisal, yet financial trace evidence often becomes decisive proof in veil‑piercing copyright litigations.
For cross‑border copyright businesses, this case also serves as compliance warning. Enterprises should establish complete intellectual property review procedures for pattern import and export. If counterparty frequently uses multiple unrelated corporate entities for transactions, it is necessary to verify actual control relationships in advance, reducing the risk of dealing with bad‑faith operators who hide their identity to avoid copyright responsibility.
1. China Judgments Online (Full official judgment database for Chinese civil IP cases): https://wenshu.court.gov.cn/
2. WIPO‑LEX English full‑text of China Copyright Law: https://www.wipo.int/wipolex/en/legislation/details/21065
3. China Copyright Protection Center official copyright registration inquiry portal: https://www.ccopyright.com.cn/
4. National Copyright Administration of China, typical copyright case release page: https://www.ncac.gov.cn/
