Recently Hangzhou Intermediate Court affirmed the judgment of Hangzhou Internet Court that two Chinese companies Jufan Co., Ltd (hereinafter “Jufan Company”) and Jiale Toys Industrial Co., Ltd (hereinafter “Jiale Company”) in Shantou City, Guangdong Province shall pay 150,000 yuan (US$ 22,000) to Peppa Pig copyright holders Astley Baker David Limited and Entertainment One UK Limited for copyright infringement, and also stop producing and selling a product with Peppa Pig.

This case represents landmark for the protection of foreign enterprises’ intellectual property rights, makes alerts to the copycats and takes the lead in hearing through a new online court system, which was already highlighted in the working report made by the president of the Supreme People's Court, Zhou Qian, on March 12, 2019.

Let's get back to the case. On May, 2018, two owners of Peppa Pig found Jufan Company sold a mass of toys with the image of Peppa Pig's family and used one picture of Peppa Pig's family on the Taobao platform, which showed one manufacturer is Jiale Company.

Astley Baker David Limited and Entertainment One UK filed lawsuit against two above copycats and Taobao. After examination, Hangzhou Internet Court found that Jiale Company had been formerly authorized to produce and market toys utilizing the character of Peppa Pig.

Nevertheless the authorization was currently expired and not renewed, therefore the utilization of the copyright in breach of the license contract for character merchandising. Jufan Company couldn't provide its products has been authorized and obtained by legitimate means.

Zhejiang Taobao Network Co., Ltd. (hereinafter “Taobao”), as a network service provider, has performed the obligation of due care to cancel the disputed products' information. Therefore, Jiale Company and Jufan Company both were fined their infringement, but Taobao can't be held liable together with them.

Afterwards, Jiale Company filed an appeal to Hangzhou Intermediate Court arguing that it involved the breach of the contract for its sale channel beyond the agreement, but not infringement.

However, Hangzhou Intermediate Court opined that the agreement stipulated the sale channel was merely limited within Tianmao, Jingdong and Amazon online shop, but Jaile Company produced and sold the infringing goods and sold beyond the agreed sale channel.

Such conduct is not only regulated for Contract Law, but it also is regulated for Copyright Law.

According to Article 122 of Contract Law, the injured party has the right to choose whether to demand that the breaching party bear the liability for breach of contract or infringement of rights in accordance with other laws.

In this case, the copyright owners' claim for the infringement of Jiale Company and Jufan Company shall be supported.