AllBright’s client Yongxu Liangchen Co. won the second and final trials in its case against two movie production companies accused of ambush marketing to benefit from Yongxu Liangchen’s “Bixian” horror movie series. The final verdict in the case, which is the first ambush marketing case in China’s movie industry, is a milestone in the industry’s development because it has set boundaries which define unfair competition practices in this sector. 

In June 2014, Yongxu Liangchen sued the two companies producing “Bixian Jinghun 3” for unfair competition because the defendants had been marketing their movie “Bixian Jinghun 3” by confusing audiences with the third installment of Yongxu Liangchen’s “Bixian” series.  

Beijing No.3 Intermediate People’s Court on July 1 ruled that Yongxu Liangchen had won the case and ordered the defendants to compensate Yongxu Liangchen 500,000 RMB and make public apologies in the Beijing Evening News and on Sohu.com. The defendants immediately announced that they would lodge an appeal. 

In the written judgment of the second trial in the end of November, 2014, Beijing No.3 Intermediate People’s Court said that the facts were clearly ascertained, the laws were correctly applied and court proceedings were lawful in the first trial. So the appeal was hence rejected and the original judgment was upheld. 

In fact, the “Bixian Jinghun” production companies began their ambush marketing three years ago, when Yongxu Liangchen was about to release the first movie in the series in May, 2012. Yongxu Liangchen spent 15 million RMB to produce “Bixian”, whose director is famous South Korean horror movie director Byeong-ki Ahn. Ahn was well known for his successful horror movies, such as “Gawi” (2000) and “Phone” (2002).  
Shortly after Yongxu Liangchen announced that “Bixian” would première in July, suddenly “Bixian Jinghun” started its promotion and was scheduled to hit the big screens in June. “Bixian Jinghun” purposefully marketed itself by misleading audiences to believe that it was, or that it was related to, the movie “Bixian”. 

“Bixian” eventually became the best-selling horror movie in China in 2012, grossing 62 million RMB in box office revenue. “Bixian Jinghun”, whose budget was only 2 million RMB, also earned 23 million RMB.  

In 2013, Yongxu Liangchen produced “Bixian 2”, also directed by Ahn, with a 20 million RMB budget and earned 82 million RMB – it again became the most popular horror movie of the year.  

In 2014, when Yongxu Liangchen announced that the Ahn-directed “Bixian 3” would be released in July, the defendants launched another ambush marketing campaign by promoting “Bixian Jinghun 3” even though they had never produced “Bixian Jinghun 2”. After another misleading promotional campaign, “Bixian Jinghun 3” premièred on April 4 and earned 32 million RMB. 

The “Bixian” series is Yongxu Liangchen company’s core competence and should be protected by law. Any unethical attempt to gain advantages by using unfair competition tactics should be severely punished by law. 

The verdict in the first ambush marketing case has had far-reaching influence. Two months after the final verdict of the “Bixian” case was given, the Beijing High People’s Court ruled that Wuhan Huaqi Movies & TV Production, the production company of “Ren Zai Jiong Tu” (Lost on Journey), had won its case against the production company of “Ren Zai Jiong Tu Zhi Tai Jiong” (Lost in Thailand) for ambush marketing. The defendants were ordered to compensate 5 million RMB and make public apologies. It is apparent that Beijing’s courts have followed the precedent set by Yongxu Liangchen’s case, which is positive for the whole industry.