In a recent second-instance judgment, the Shanghai Intellectual Property Court upheld its original judgment by rejecting the appeal of Yuanmeixin Children's Toys Sales Co., Ltd. (hereinafter referred to as Yuanmeixin Company) in dispute against Entertainment One UK Co., Ltd. (hereinafter referred to as Entertainment One Company) and Astley Baker Davies Co., Ltd. (hereinafter referred to as Astley Baker Company). 

Entertainment One Company and Astley Baker Company claimed that they were the copyright owners of Piggy Page series cartoons. The art works involved had enjoyed great popularity after being created and put on the market. With more than ten years of continuous efforts, the cartoon and a series of products, including toys and cartoon books developed based on the characters of the cartoon, had been widely accepted by people of all ages and countries in the world, including China. 

According to investigation, Yuanmeixin Company sold a large number of children's scooter products with the image in "Peppa Pig" in its e-commerce platform without authorization, and the sales volume was huge. Yuanmeixin Company's behavior seriously infringed the copyright enjoyed by the obligee, and should bear the legal responsibility of stopping the infringement and compensating for the losses. 

Entertainment One Company and Astley Baker Company hence requested the court to order Yuanmeixin Company to compensate for economic losses and reasonable expenses totaling 103,000 yuan. 

After hearing the case, the Court of First Instance held that, Entertainment One Company and Astley Baker Company are the copyright owners of the art works involved. The overall shape and facial features of cartoon patterns on the alleged infringing goods sold by Yuanmeixin Company, including eyes, ears, nostrils, mouth, etc., are basically the same as those of the images in the rights works (except in the number of eyelashes and the flush on cheeks), which can be confirmed to be substantially similar copyrighted art works. Yuanmeixin Company's sales behavior infringed the distribution rights of Entertainment One Company and Astley Baker Company. Therefore, Yuanmeixin Company was ordered to compensate economic losses and reasonable expenses totaling 19,300 yuan. 

After the first-instance judgment, Yuanmeixin Company filed an appeal, arguing that the alleged infringing products had engaged in click farming, and the sales displayed on the platform were not actual number; also, the alleged infringing products had demonstrated its manufacturers, which could be deemed as legal sources. Therefore, the defendant requested the court to reduce the amount of compensation of the first trial. 

The focus of the dispute in the second instance of this case lies in whether the legal source defense advocated by Yuanmeixin Company can be established and whether the amount of compensation in the first trial is reasonable. 

According to relevant laws and regulations, to advocate the defense of legal source according to law, one should prove the fact of legally obtaining the alleged infringing products, including legal purchase channels, reasonable prices and direct suppliers. In this case, Yuanmeixin Company did not provide any evidence, and the logo "平乡具小叮咚儿童玩具有限公司" at the bottom of the manual alone could not prove that the alleged infringing products sold had legal sources. 

Yuanmeixin Company cannot prove originality of the WeChat records, transfer records and billing forms submitted in June and August 2020. Therefore, it is impossible to identify the parties involved in the WeChat record and the bill payment. Nor had the company revealed the connection with the links and the goods involved. Therefore, the evidence submitted by Yuanmeixin Company can't prove that there is click farming in the sales data of the alleged infringing products, and that the billing behavior violates the principle of good faith and recognized business ethics. 

Yuanmeixin Company lacks the grounds for claiming a reduce of compensation. Under the circumstances that Entertainment One Company and Astley Baker Company failed to prove the actual losses suffered by infringement or the benefits obtained by Yuanmeixin Company due to infringement, the Court of First Instance comprehensively considered factors, such as the type and market value of the works involved, the price and sales quantity of infringing goods, the nature and consequences of infringement, and the rationality of rights protection expenditure, and determined that Yuanmeixin Company shall compensate Entertainment One Company and Astley Baker Company for economic losses and reasonable expenses totaling 19,300 yuan, and deemed that such amount was not improper. Based on such ground, Shanghai Intellectual Property Court made the above judgment.