This civil copyright dispute, heard by the High‑People’s Court of Jiangsu Province, focuses on infringement of computer software copyright for industrial monitoring systems. All real‑world corporate names are anonymized to preserve commercial confidentiality. The core factual feature of this case is that the actual R&D and operating entity deliberately separated outward‑facing business operations into an independent shell company, so that only the shell entity appeared on contracts, software authorization documents and public sales materials, while the real developer remained hidden behind the scenes to avoid copyright litigation risks
The plaintiff is a domestic industrial software developer holding valid software copyright registration for a set of industrial equipment monitoring software. This software is deployed on factory production‑line terminals, with proprietary code modules for data collection, alarm triggering and equipment status visualization. Around early 2021, the plaintiff found that competing monitoring software with highly similar core program structures was being sold in the domestic industrial‑control market. All sales contracts, product invoices and technical service agreements were signed and issued by Horizon Technology Co., Ltd., a newly‑established shell company located in Wuxi. On paper, Horizon Technology was the sole legal party responsible for software sales, technical support and customer delivery. The shell company had no independent R&D team, no software source‑code management system, and its registered capital was relatively low. If the plaintiff only sued Horizon Technology, successful judgment enforcement would face huge obstacles, as the shell held very limited disposable assets.
During preliminary investigation, the plaintiff’s intellectual‑property lawyers collected public commercial materials. Horizon Technology publicly claimed that it independently completed software development. However, forensic analysis of the infringing software installation package revealed hidden code comments, internal developer notes and compilation traces referencing internal project codenames belonging to Raymond Intelligent System Co., Ltd., located in Suzhou. Raymond Intelligent was never mentioned on any public sales document, website page or business contract signed by Horizon Technology. This created a critical litigation challenge: code metadata alone cannot directly establish joint infringement before Chinese courts; the plaintiff needed to build a complete chain of circumstantial evidence linking the shell company and the concealed real‑developer. Mere technical similarity of software programs was insufficient to prove that Raymond Intelligent controlled the shell and implemented infringing conduct.
The plaintiff adopted multi‑dimensional evidence‑gathering measures. First, lawyers applied to the court for evidence preservation orders targeting enterprise business records, server logs and financial flow data. The court ordered relevant banks, cloud‑service providers and industry‑and‑commerce authorities to produce stored materials. Second, industrial‑and‑commerce filing records showed that although Horizon Technology and Raymond Intelligent had different registered legal representatives, they shared core technical staff, financial personnel and occupied the same co‑working office space. Multiple software engineers formally employed by Raymond Intelligent were recorded as technical service providers for Horizon Technology’s customer projects. Third, judicial accounting of bank transaction records uncovered repeated fund circulation: customers paid software license fees to Horizon Technology’s corporate account, and nearly 90 % of those funds were quickly transferred to Raymond Intelligent under the payment description of “software development service fees”. Horizon Technology only retained a small percentage as nominal operating commission. Fourth, partial internal OA system records obtained via court discovery confirmed that Raymond Intelligent managed software iteration, bug fixing and version‑upgrade work, while Horizon Technology’s sole function was market promotion and external contract signing.
After accumulating sufficient evidence, the plaintiff amended its complaint and added Raymond Intelligent System Co., Ltd. as a joint defendant in the copyright infringement civil action. In court, Raymond Intelligent raised key defensive arguments. It asserted that Horizon Technology was an independent legal‑person entity with separate civil liability capacity. Raymond Intelligent claimed it only provided ordinary commissioned software development services according to orders placed by Horizon Technology. It further contended that Raymond Intelligent had no knowledge that the delivered software would copy third‑party copyrighted code, and that all sales‑side infringing activities belonged exclusively to Horizon Technology. Therefore, Raymond Intelligent should not bear joint tort liability for copyright infringement.
The court of first instance conducted comprehensive review of software forensic appraisal reports, corporate personnel materials, capital transfer records and internal business documents. The judge analyzed the factual criteria for corporate‑personality confusion in intellectual‑property cases. The core judicial standard is whether the shell company exists merely as a superficial tool for the actual controller to carry out infringing activities and isolate legal liability. The first‑instance court held that Horizon Technology had no independent R&D capacity; it existed mainly to mask Raymond Intelligent’s identity from customers and potential copyright claimants. Raymond Intelligent completed all core development work and controlled the whole profit distribution channel. The infringing software reproduced substantial‑essential parts of the plaintiff’s copyrighted program code. The court ruled that both defendants jointly committed software copyright infringement. The judgment ordered both parties to cease copying and distributing the infringing monitoring software, and to jointly pay RMB 1.72 million for economic losses plus reasonable litigation costs.
Raymond Intelligent disagreed with the first‑instance judgment and filed an appeal to the Jiangsu High People’s Court. The appellant emphasized corporate legal‑person independence and argued there was no direct written agreement proving joint‑infringement intent. The high‑court panel reviewed the entire evidence chain again and delivered the final appellate ruling. Under Chinese civil procedure rules, multiple mutually‑corroborated indirect circumstantial evidence can establish joint tort liability, even without direct written conspiracy documents. Code metadata, staff overlap, fund‑transfer trails and internal business records together proved that Horizon Technology was deliberately deployed as a front‑end shell to conceal Raymond Intelligent’s real‑world infringing identity. The appellate court rejected the appeal and upheld the original judgment.
This case delivers practical lessons for software copyright holders. First, when facing a low‑asset shell‑company defendant, right holders should not stop at surface‑level contract and invoice evidence; forensic software analysis, judicial evidence preservation and financial‑flow investigation are vital means to trace hidden actual infringers. Second, pay attention to hidden metadata, internal notes and compilation information stored inside program code, which frequently supply critical circumstantial clues. Third, evaluate defendants’ asset status before litigation; suing only the public‑facing shell may result in a winning judgment without effective property for enforcement.
Official valid hyperlinks:
1. Supreme People’s Court Intellectual Property Tribunal official website https://ipc.court.gov.cn
2. China Copyright Protection Center official portal https://www.ccopyright.com.cn
3. WIPO‑Lex China copyright‑related judicial interpretations database https://www.wipo.int/wipolex/zh/
4. Chinese Civil Procedure Law official online text https://www.npc.gov.cn/npc/c30834/202403/840224.html
