Chain Store Infringement Under Fan Creation Banner: ¥2.98 Million Compensation Upheld
Operating dozens of chain stores selling over 1,500 derivative goods under the guise of fan art creation does not equal legitimate secondary creation. Courts ruled such large-scale commercial operation constitutes copyright infringement, ordering the defendants to pay total damages of 2.98 million yuan.
I. Dozens of Chain Stores Built on Unauthorized Fan Merchandise
Duomo Everything House, a well-known brand in ACG circles, ran dozens of offline chain stores nationwide via direct sales and franchising. It sold peripheral products featuring characters from miHoYo’s hit games including Genshin Impact, Honkai: Star Rail, Tears of Themis, Zenless Zone Zero and Honkai Impact 3rd, such as badges, standees and ornaments.
Its illegal business model: mass purchase fan artworks, rebrand them with its own logos and resell in stores. Multiple affiliated enterprises including Duomo Wanshi (Shanghai) Technology Center operated franchising businesses for large-scale infringing sales. After discovering the violations, miHoYo filed lawsuits against 3 companies and 2 investors, applying for property preservation to freeze defendants’ assets.
II. Defense: "Only Fan Artists Are Liable" — Court Rejects
The defendant claimed only fan illustrators, not the store operator, should bear infringement liability. The Xuhui District People’s Court dismissed this argument.
The court confirmed the defendants produced and sold merchandise with patterns substantially similar to miHoYo’s original artworks, and used game titles as commercial signs, constituting copyright infringement and unfair competition.
The court clarified miHoYo permits non-profit and small-scale profitable fan creation by individuals or amateur groups to foster positive creative interaction, with clear rules reserving space for compliant secondary creation. However, the defendant operated as a corporate entity with dozens of franchised stores across online and offline channels, far exceeding the permitted scope of fan creation. Small personal fan sales are allowed, but large franchised chain operations count as commercial infringement.
III. Appeal Defense: "We Are Only Consignment Sellers" — Appellate Court Confirms Manufacturer Status
Dissatisfied with the first-instance 2.98 million yuan judgment, the defendant appealed, arguing it merely consigned goods and was not the manufacturer. The Shanghai Intellectual Property Court overturned this claim.
Selecting products independently, affording proprietary logos and unified sales channels lead consumers to attribute goods to the chain brand, legally qualifying the operator as a manufacturer. This ruling blocks attempts to shift liability to amateur fan creators. Enterprises cannot market goods under the fan creation banner while passing infringement blame onto artists.
IV. Final Verdict: ¥2.98M Damages Draw Clear Line for Fan Creation Boundaries
The appellate court rejected the appeal and upheld the original judgment, ordering all defendants to bear joint and several liability for 2.98 million yuan covering economic losses and reasonable litigation costs. The infringement involved 141 game characters and more than 1,500 product variants.
This landmark case clarifies the legal boundary of secondary creation:
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Non-profit or small-scale profitable fan works by individuals/groups are legitimate and encouraged;
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Large-scale commercial operation by corporate entities exceeds the scope of fan creation and constitutes infringement.
The dividing line lies in the operator’s identity, business scale and sales model, not whether the artwork is fan-drawn. miHoYo stated it respects and supports compliant fan creation, yet will pursue full legal action against illegal commercial infringement without leniency.
Conclusion
The 2.98 million-yuan penalty serves as a clear legal warning for chain merchants. Fan creation is a core part of ACG culture, yet cannot be used as a shield for large-scale commercial infringement. Clear legal boundaries help maintain a healthy fan creation ecosystem.
