Elementary Comments On the Legal Protection of Software File Format

Author: Zhong Yi, Ni Jia [Shanghai Runhe Law Firm]

1.   Brief Introduction to the Case

Court of First Instance: Intermediate People's Court of One City
Court of Second Instance: High People's Court of One City
Plaintiff of the First Instance (the Appellee of the Second Instance): Company A (the Copyright Owner of JDP Software)
Defendant of the First Instance (the Appellor of the Second Instance): Company B

1.1 Brief Introduction to the First Instance:

Plaintiff alleged that: The Plaintiff, Company A, independently developed JD System which is composed by three principal parts, i.e. JDP Software, JD Numerical Control System and Machine itself. The System runs relying on two computers. One is processing and programming computer and the other is numerical control one. Two computers run two different programs and they need to exchange data through format files. In detail the process is: JDP Software generates encrypted ENG format data file through the running of processing program computer and then the data file is received and transformed into processing order by the controlling software which is run on the numerical control computer. Company A enjoys software copyright of the said JDP Software which is not for public offering and is only equipped on the numerical control equipment for usage independently produced by Company A.

Company B, for the sake of making its own NCS Software of the NC numerical control system read the ENG format data file outputted by JDP Software of Company A, illegally decoded the measures of encryption of ENG format, which constitutes the software copyright infringement to the Plaintiff, Company A.The conducts of Company B enable other numerical equipments to illegally receive ENG data file, which leads to the drop of sales volume of numerical equipments of Company A and relevant economic losses. Company A requests the Court to decree that Company B shall immediately stop its infringement acts, apologize to Company A publicly and compensate relevant economic losses.

Defendant argued: The NCS Software developed by Company B is totally different from the JDP Software of Company A in the respects of interface, function settings, applicable environment, etc. It is true that NCS Software can read the ENG format data file outputted by JDP Software, provided, however, the acts of Company B do not constitute infringement for the reason that ENG data file and the ENG format it uses do not belong to the protection scope of computer software copyright. Company B requests the Court to reject Company A’s claims.

Upon hearing the Case, the Court of first instance verified that Company A is the copyright owner of JDP Software. ENG file outputted by JDP Software is data file in the format of ENG. NCS Software of Company B can read the ENG file outputted by JDP Software, i.e. the data file outputted by NCS Software is compatible with the ENG file outputted by JDP Software.
The focus point of disputes on this case:  (i) Whether the ENG format data file outputted by JDP Software with encryption measures belongs to the protection scope of computer software copyright; (ii) Whether the conducts that Company B develops software which compats the ENG format file outputted by JDP Software of Company A constitutes software copyright infringement to the Plaintiff.

The Court of the first instance held that according to Copyright Law and Regulations for the Protection of Computer Software, the protection scope of computer software copyright is software program and documentation. The source program, target program and relevant documentation of JDP Software of Company A are protected by laws. ENG file outputted by JDP Software is data file. The outputted format file that ENG file uses is the outcome that the JDP Software’s target program runs on the computer, which is not coded command sequence or symbolized command sequence or symbolized statement sequence itself and cannot be run and executed by computers.Moreover, ENG file is the outcome that JDP Software runs on the processing program computer rather than its inherent part. It is the outcome after the user input processing information and these data do not belong to the copyright owner of JDP Software. Therefore, the data and file format contained in the ENG format data file do not belong to the composing part of JDP Software program of Company A, which do not belong to the protection scope of computer software copyright.

Above all, the Court of first instance rejected the claims of Company A.

1.2 Brief Introduction to the Second Instance of the Case

Company A didn't agree with the ruling and appeal to the Higher People's Court of one city.

Appellant alleged that
(1)   JDP Software is not produced as a general commercial software for market sales but as a part of the JD System which is sold by the Appellant, Company A. JDP Software does not output files by the standard NC format but the custom ENG format and Company A keeps on upgrading the encryption strength of such file format so as to prevent the application of JDP Software in general numerical control system. NC Software developed by Company B avoided and destroyed the technical measures taken by Company A resulting to the decoding of ENG format file outputted by JDP Software. According to Article 24, Item 3 of Regulations for the Protection of Computer Software, the said acts have constituted the copyright infringement to JDP Software of Company A.

(2)   According to Article 8, Item 1 of Regulations for the Protection of Computer Software, software copyright owner has the right to decide whether to publish the software or not. Owing to the non-disclosure of the file format, data structure, command meanings and cryptographic algorithm of ENG format file of Company A, Company B infringed the right of publication of Company A to the software. Company A requested the Court to abrogate the judgement and support the Appellant’s claims during the first instance.

Appellee defended that

the ENG format file outputted by Company A’s software did not belong to the software protected by the Regulations for the Protection of Computer Software. Its acts did not belong to infringing acts. Company B requested the Court of the second instance maintain the original judgement.

Upon hearing, the Court of the second instance verified that: the facts ascertained during the first instance are confirmed.

The Court of the second instance hold that:

(1)   Whether the acts of Company B constitute malicious avoidance of technical measures.
According to Article 24, Para 1, Item 3 of Regulations for the Protection of Computer Software, acts of intentionally avoiding or breaching the technical measures adopted by the copyright owner to protect his software copyright are infringing acts to copyright. The above regulation embodies the restricts on malicious avoidance of technical measures and the protection on computer software copyright. Copyright owner can take technical measures to protect its software copyright according to laws and regulations so as to safeguard its legal interests. That actors intentionally avoid and destroy the said technical measures constitutes the infringement to software copyright and shall bear relevant liabilities according to laws and regulations. However, the said regulation on “malicious avoidance of technical measures” cannot be blindly used. The above regulation mainly restricts the acts of malicious avoidance of technical measures conducted in connection with protectable software copyright. That the copyright owner sets unique file format for the outputted data, takes encryption measure on such file format and restricts machines of other brand reading data saved by such file format in order to ensure the dominant status in the market of the machine which is bundled with its software, which did not belong to the acts that the copyright owner take technical measures to protect its software copyright referred in the above regulation. That others who develops software which can read the specific file format set by the copyright owner does not constitutes the infringement to the software copyright.

(2)   Whether Company B infringed the right of publication of JDP Software of Company A
Due to the fact that ENG format file of JDP Software of Company A does not equal to the software referred in Regulations for the Protection of Computer Software. Therefore, Company A does not enjoy the right of publication of ENG format file. The acts that Company B developed software which can read ENG format file do not constitute the infringement to the right of publication of Company A’s software.

Above all, the Court of the second instance sentenced: reject the appeal and sustain the original judgement.

2.   Case Review

Texts and font files (WORD、RTF、EPS，etc.), multi-media files (MID、MPEG、AVI, etc.), graphics files (BMP、GIF、JPG、PSD，etc.), compression algorithm files (ZIP、RAR、TAR，etc.) are different file formats outputted by various application software. Some software publishes its format standard hoping more software of third parties to be compatible with them (for example: PDF format of Adobe Company); some software never publishes its format standard from the beginning to the end (for example: iTunes of Apple). According to the case we reviewed above, we hold that the software vendors have their own discretion of whether to publish the file format standards which are independently developed by them, meanwhile, we also agree with the Court’s opinion that format file of software do not equal to the software defined by Regulations for the Protection of Computer Software; then, how to legally protect file format deserves our research and study.

(1)   Whether file format of software is protected by Copyright Law of the People's Republic of China
Although software file format does not equal to the software defined by the Regulations for the Protection of Computer Software, if the file format system is the intelligent fruit of the developer expressed in the form of material (for example, technical documentation), in our view, it shall be protected by the Copyright Law, provided, however, this kind of normal copyright protection is not the legal protection mode that the software providers pursue.

(2)   Whether the software file format which is unknown to the public can be protected as trade secret
According to Article 10 of Anti-Unfair Competition Law of the People's Republic of China, if the file format system developed by the software provider with encryption measures is not in the public domain, profitable for the oblige and with applicable features, such software file format may be protected as trade secret. Note: According to Article 12 of The Interpretation of the Supreme People’s Court on Some Issues Concerning the Application of Law in the Trial of Civil Cases Involving Unfair Competition, the business secrets obtained through independent development and research or reverse engineering shall not be affirmed as an infringement upon business secrets prescribed in Items (1) and (2) of Article 10 of the Anti-unfair Competition Law. In the above case, even if Company A sues Company B for the sake of malicious avoidance of technical measures (technical information of file format), there is still legal risk of losing the case.

(3)   Whether software file format can be protected through the application of patent
We are in favor of this opinion. The first international documentation standard UOML of China uses the patent license mode of RF on RAND (Free of Assembling and Reasonableness with No Discrimination). Compared with UFO, UOML is not a saving format but a interface standard which supports many kinds of documentation format including UOF. Therefore, for the patent application of software file format technology and its protection, we shall pay long-term devotion and research.