Case Summary
A company based in Shanghai runs a non-ferrous metal price information platform called “Shanghai Youmo Network.” This site offers consumers daily spot metal prices, known as SMM price data, for various metals such as copper, aluminum, lead, and zinc, totaling 1,249 price points. The information is collected through market research and analyzed using proprietary AI algorithms, gaining considerable recognition in the market.
However, companies Chang and Da, along with Group Ou, have been accused of providing data on their websites, WeChat mini-programs, and apps that closely mimic the SMM price data. Shanghai Youmo Network claims these companies are engaging in unfair competition and has filed a lawsuit seeking an injunction against the infringement, remediation of negative effects, and compensation for economic damages amounting to 18.76 million yuan, plus legal fees of 210,000 yuan.
The first-instance court found significant similarities between 101 non-ferrous metal price points published by Chang and Da and those from Shanghai Youmo Network. Specifically, the update sequences for certain metal categories were identical, and errors found in Shanghai Youmo Network’s data were also present in Chang and Da’s data. Judicial evaluations suggested possible human alterations in the timing of publication and recording rules for the price data on Chang and Da’s websites over the past six years.
Judgment Outcome
The Xiamen Intermediate Court found that the business models, services, and profit strategies of both parties were essentially alike, indicating a direct competition between them. The court examined several factors, such as the type of data, contributions from labor, competitive advantages, the usefulness of the data, and its commercial value. It concluded that Shanghai Youmo Network’s work in gathering, organizing, AI-analyzing, and publishing market prices for non-ferrous metals provided consumers with valuable insights into historical pricing and trends, thus giving them a competitive advantage that deserves legal protection.
The evidence indicated that the defendants had the chance to access the plaintiff’s SMM price data. A large portion of the price data released by Chang and Da was found to closely resemble that of Shanghai Youmo Network. Although the plaintiff presented evidence of how their data was created and initial signs of possible infringement, Chang and Da could not prove their data sources or adequately clarify the discrepancies in their published information. According to Article 108 of the Supreme People’s Court‘s interpretation of the Civil Procedure Law, this resulted in a presumption that they had used the plaintiff’s data without permission.
The court observed that Chang and Da did not engage in original work but instead profited from data owned by others, which violates established business ethics and represents “free-riding” behavior that disrupts the competitive environment of the big data industry. This conduct deserves a negative evaluation to protect the rights of data product developers and to promote a fair and orderly competitive landscape that respects the interests of all parties involved.
Considering various factors, including the costs associated with data formation, the extent of improper data usage, the scale of the infringing websites, membership fee structures, the duration of the infringement, and the degree of subjective malice, the court determined the compensation amount.
The Xiamen Intermediate Court ordered Chang, Da, and Group Ou to publish a written statement on their infringing platforms for seven consecutive days to mitigate the impact of their infringement. They were also required to compensate Shanghai Youmo Network for economic losses of 2 million yuan and reasonable expenses of 120,000 yuan, with Group Ou held jointly liable for 600,000 yuan and reasonable expenses of 36,000 yuan. Following the ruling, all parties appealed, but the Fujian Provincial High Court upheld the original judgment.
Judicial Insights
The “Supreme Court’s Opinions on Ensuring Technological Innovation through High-Quality Judicial Services” underscores the importance of legally addressing the unauthorized acquisition or use of data resources that constitute trade secrets, as well as other data usage practices that may disrupt competitive order. It advocates for a thorough evaluation of whether the accused actions violate business ethics, harm competitive order, or impede technological advancement, leading to a legal determination of unfair competition.
This case marks a significant precedent in the realm of unfair competition involving AI-synthesized data collection products adjudicated by the Xiamen court. The SMM price data in question is a self-collected derivative product resulting from in-depth analysis and integration using proprietary algorithms, possessing considerable economic and social value. This data not only generates commercial benefits but also provides a unique competitive advantage, which is legally protected under anti-unfair competition laws.
During the trial, the court employed electronic data appraisal to assess the formation timeline and potential tampering of the defendants’ extensive historical databases. It identified a possibility of tampering with the publication times of the defendants’ backend data. By appropriately distributing the burden of proof, and given that the plaintiff demonstrated its data formation process while providing preliminary evidence of potential access by the defendants, coupled with the defendants’ failure to substantiate their data sources or explain the inaccuracies, the court inferred a high likelihood of infringement.
Furthermore, the court balanced the interests of data collectors, users, and the public, recognizing that merely transferring data does not enhance consumer welfare. The infringing behavior significantly replaced the products or services offered by the rights holder, disrupting the competitive order of the big data industry and constituting unfair competition.
The key takeaway from this case is that entities involved in data processing hold competitive rights over derivative data products generated through AI. Should others wish to leverage these for innovative competition, they must adhere to principles of legality, moderation, and effectiveness. Unauthorized large-scale utilization of another’s data resources, where competitive benefits are outweighed by disadvantages, should be recognized as unfair competition.