The criminal judgment of 2017-Tai-Shang-Zi-No.31 made by the Taiwan Supreme Court on January 5th 2017 was associated with a copyright infringement case. The court held that the "Sole License" agreed in the contract differs from Exclusive License and merely restricts thecopyright holder from sublicensing the already licensed rights to a third party without excluding the copyright holder from exercising rights for his/her own purpose.

The defendant at issue was the representative of Company A, which relied on renting out karaoke machines and providing relevant services, and thereby was responsible for acquiring licenses to exploit songs therein. Knowing that Company B enjoys the copyright pertaining to lyrics or melodies of all songs at issue, the defendant still rented out the karaoke machines containing said musical works to a restaurant without the consent or license of Company B, thereby infringing the copyright of Company B.

The defendant was found guilty by the Taiwan New Taipei District Court in the criminal judgment of 2014-Zhi-Su-Zi-No.3, which states that the defendant infringed on the copyright of Party B by means of reproducing, without authorization, the musical works with intent to rent out such works. The defendant filed an appeal but was overruled by the Taiwan Intellectual Property Court in the criminal judgment of 2015-Xing-Zhi-Shang-Su-Zi-No.27. The defendant then filed an appeal with the Taiwan Supreme Court, and claimed that the court of the second instance breached its legal responsibilities of due diligence because it failed to investigate whether Company B had exclusively licensed its copyright to Company C and whether Company B was still legitimately competent to file a complaint against the defendant. The Supreme Court dismissed the appeal in the criminal judgment of 2017-Tai-Shang-Zi-No.31.

According to the judgment by the Supreme Court, the license of copyrights includes exclusive license and non-exclusive license. A non-exclusive license empowers the copyright holder to unlimitedly license to a number of parties his/her copyrights pertaining to the same work(s) without excluding the copyright holder from exercising the same rights for his/her own purpose or sublicensing the same rights to a third party for exploitation, while an exclusive license is a promise of monopoly, which prohibits the original copyright holder from sublicensing the same rights to a third party for exploitation and even exploiting the same rights for his/her own purpose. With regard to whether a license in dispute is exclusive or non-exclusive, the contract entered into by the parties involved shall govern or the license shall be presumed to have not been exclusively granted; that is, a non-exclusive license, provided that the parties did not expressly agree the particulars of the license. In the judgment, the Supreme Court accepts and confirms the so-called "Sole License" along with exclusive and non-exclusive licenses, on the grounds of the agreement between the two parties.

According to the license contract presented to the courts of first and second instances, Company B licensed Company C the rights to reproduce the songs at issue to create karaoke MIDI products for business use, and conferred on Company C the rights of publication and renting out such products; however, the license contract specified that Company B granted Company C a "Sole License" to reproduce the video/audio products and to distribute and rent out such products. The two parties agreed that during the period of the contract, in the event that a third party reproduces the works at issue without the authorization of Company C or distributesor sells such reproduced works without the authorization of Company C, Company C shall instantly inform company B, which will turn to legal remedies to hold that third party responsible for infringement. The Supreme Court considered that the aforementioned articles were sufficient to prove Company B and Company C did not agree an exclusive license in the disputed license contract and thereby the contract did not exclude Company B from exercising itscopyright or exercising the right of instituting legal proceeding underits own name to excludeothers' infringement. This differs from an exclusive license, which excludes the copyright holder from not only sublicensing the same rights to a third party within the licensed scope but also exercising licensed rights and copyright for his/her own purpose. As a result, Company B merely non-exclusively licensed Company C to reproduce works at issue and rent out products containing works at issue and was competent to file a complaint against the defendant's infringement upon itscopyright.

Therefore, the Supreme Court dismissed the appeal as groundless.