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Explanation of China’s Copyright Law coming into force in June 2021

May 17, 2021


Explanation of China’s Copyright Law coming into force in June 2021


 


Asamura Patent Office Chinese Lawyer
 Zheng Xinjia


The revision of Copyright Law of China

The Standing Committee of the National People’s Congress adopted a decision on amending the Copyright Law on November 11, 2020. The new Copyright Law (hereinafter referred to as the “New Law”) will come into effect on June 1, 2021.

It took 9 years for this amendment to be approved. Back in 2011, the National Copyright Administration commissioned academic institutions to draft expert proposals, with three draft amendments being published in 2012, and stakeholders’ opinions solicited in relevant fields in 2017. In 2020, the amendment was finally submitted to the Standing Committee of the National People’s Congress for consideration.

Unlike the previous two amendments for WTO accession and corresponding to the requirements of WTO rulings, there is no pressure from outside for the revision of the Copyright Law this time. The main reason for this amendment is to take into account the changes in the mode of trading and dissemination of works caused by social changes and technological progress, as well as the consequent demands for the copyright system from various parties associated with the works. This also explains why the approval process of this amendment took such a long time.

The revision involves the definition of work, collective management organization of copyright, fair use, and copyright protection etc. This article will focus on four points of the revision, namely the definition of work, copyright collective management organization, broadcasting right, and amount of compensation, to help gain deeper understanding of the Chinese copyright system through comparison with the Japanese copyright law.

 

I Definition of work

On the basis of the overview description of intellectual achievements in areas such as literature, art and science that have originality which can be fixed in certain forms, Article 3 of the New Law defines works, modifies the miscellaneous provision of paragraph (9) of the same article, and changes cinematographic works and works created by methods similar to making films and audiovisual works, which expands its definition and provides a basis for judicial recognition of new types of works.

This revision was motivated by various new creative achievements emerged in recent years. The first concerns the application of the miscellaneous provision.

A related case is a musical fountain copyright case heard by the Beijing Intellectual Property Court in 2018. The court of first and second both acknowledged that the musical fountain formed a unique expression in terms of music, lighting and color changes, and had originality. However, based on the miscellaneous provision of the current law (other works ruled by laws and administrative regulations], it was difficult to directly identify the musical fountain as a new type of work when the law and administrative regulations did not specify it as a work. Finally, the court protected the copyright of the musical fountain in the form of a fine art work.

In the case of applying the new law, the court could directly invoke the miscellaneous provision of paragraph (9) (other intellectual achievements that meet the characteristics of the work] to protect the copyright of the musical fountain. 

Another amendment involves the definition of online games.

・In the dispute of computer software copyright ownership between Yuedong Zhuoyue and Kunlun Yuexiang in 2014, the court identified the game’s character image as a fine art work and gave protection on copyright law (1).

・In the case of copyright and unfair competition dispute between Yaoyu Culture and Douyu DOTA2 about game live broadcast in 2015, the court held that the game match screen was not a work under the copyright law. The act of taking screenshot of game for live broadcast was not found to be an infringement from the copyright perspective (2). Finally, the anti-unfair competition law was used to protect the plaintiff who had the right to live broadcast the game.

・In the copyright and unfair competition dispute case of the Miracle MU game between Zhuangyou and Shuoxing in 2015, the court considered that the overall graphics, character names, and scenes of the game had unique designs and could be reproduced in tangible form and were protected in the form of film-like works (3).

In the copyright infringement dispute of Tianxiang Interactive, Iqiyi and Snail Digital’s “Hua Qian Gu” and “Taiji Panda” in 2018, the court, on the other hand, protected the game’s rules of play while finding the game to be a film-like work (4).

In addition to the individual differences in litigation requests and cases, the limitations of the current copyright law in the recognition of works is also a factor that cannot be ignored for the different definition of court. The reason is that the composition and process of the game screen, in addition to the original setting of the maker, is also highly related to the player’s operation.

This makes it different from traditional film-like works that express emotional thoughts through consistent shots, and it is also difficult to simply categorize it into other existing types of works, resulting in different interpretations by various judges in trial practice.

The recognition of online games as film-like works in recent years can be regarded as an expedient measure to protect the copyright of games. Under the application of the new law, the court may not be bound by the type of work and may directly identify it as a new type of work or categorize it as audiovisual work if its originality is confirmed.

The change of definition of work makes it easier to be protected by copyright law.

The Supreme Court of Japan basically confirmed that game software is a film work in its 2001 verdict. The decision was final, and its first trial verdict found the game software to be the exact opposite of the conclusion of the final ruling (5). The Japanese copyright law interprets a cinematic work as “a work rendered in a manner that produces a visual or audio-visual effect analogous to that of cinematography, and that is fixed into a physical object”.

The Tokyo District Court in the first trial held that the ideas and emotions expressed through a cinematic work need to be consistently presented in the work and that the presentation is fixed on some physical object. The game software did not express the author’s thoughts or emotions through visual or audio effects similar to those of a movie and could not be regarded as presentation that is fixed on a physical object, therefore it could not be considered a movie.

The Tokyo High Court in the second trial overturned the first trial’s understanding of the issue and held that the elements of a cinematic work do not imply that “ideas and emotions need to be consistently presented in the work”, but only that the three elements of being presented in a film-like effect, being fixed on a medium, and being a work in itself are satisfied respectively to be considered a cinematic work. The court decided the fact that the images shown in the game software were created and prepared in advance by the author of the game, and then selected and decided by the user’s actions, does not prevent the two-way interactivity from being considered as a work of expression.

Eventually, the Supreme Court supported the judgment of the Tokyo High Court, which established the basis for judging game software as a film work, and extended it to online games, which has been used ever since.

 

II Role of Copyright Collective Management Organizations

In this amendment, the provisions of Article 8 of the new law for copyright collective management organizations have been substantially added. Particularly, it emphasizes that copyright collective management organizations are non-profit legal persons, adding that they can act as parties to mediate on behalf of copyright owners and relevant right holders. In addition, the obligations of the management organization in collecting and distributing royalties are fixed in the law, and the responsibility of the competent copyright authority in supervising the management organization is clarified. The reason for this amendment may be related to the frequent incidents of copyright disputes related to copyright collective management organizations in recent years.

Here is an example of the most well-known copyright collective management organization, the Music Copyright Society of China (hereinafter referred to as the “MCSC”). According to a public notice on the MCSC’s website in January 2021, the annual licensing revenue of the MCSC for 2020 was approximately 408 million yuan, with 14 million musical works under management. However, according to relevant reports (6), the role played by the MCSC in maintaining the order of the copyright market is still limited, and copyright owners often do not seek help immediately from the MCSC when they encounter problems in defending their rights, while the MCSC seems to be unable to respond properly due to various reasons.

For this purpose, the new law adds to the statement that management organizations can conduct litigation and arbitration on behalf of copyright owners in their own names to reduce the cost of management organizations in defending the rights of right owners and increase their operational enthusiasm. The current situation of unclear collection and distribution of royalties and lack of supervision has also been regulated accordingly.

The most typical copyright collective management organization in Japan, which performs functions similar to those of the MCSC, is the Japanese Society for Rights of Authors, Composers and Publishers (hereinafter referred to as “JASRAC”). JASRAC was established in 1939 and currently manages 95% of the musical works produced by professional musicians in Japan.

In 2009, JASRAC was ordered by the Fair Trade Commission to take exclusionary measures (an administrative order requiring companies with violations to immediately stop the violations and restore order in the market) for its package contract with television stations violating the Unfair Competition Prevention Act. However, the Fair Trade Commission revoked the order in 2012.

One rival of JASRAC– NexTone sued the administrative action for revoking the order of the Fair Trade Commission in the court until 2015 when JASRAC ended the dispute by changing the content of its package contract.

The Japanese industry has debated the need for a unified copyright management organization.

That being said, in the present era of the rapid increase in the volume of information and the development of self-media, the annual uploads of YouTube alone are estimated to exceed one billion, and the existence of a one-stop organization for the unified management of copyrights will undoubtedly facilitate both copyright owners and users, and will be beneficial to the operation efficiency of society as a whole. However, the monopoly problem that may be caused by its excessive market share needs to be effectively managed by the regulator to avoid.

Although there is still space for improvement, the way JASRAC calculates and allocates royalty fees and the extent to which they are publicized is still worth learning from(7). For example, for song royalties for concerts, users can estimate the approximate amount of royalties directly from its official website based on concert ticket prices, the number of seats in the venue, the number of songs, and the duration of public performances. The calculation of the allocation ratio of copyright owners and other rights holders can also be directly accessed from the official website, which greatly facilitates copyright owners and users to calculate their own income and cost.

It is very gratifying to see that in October 2020, the MCSC opened the service of searching individual allocation of royalties in the form of APP on its website (8). It can be expected that the unified copyright management organizations can provide better services to copyright owners and users in the future.

 

III Content of broadcasting rights

In paragraph (11) of Article 10 of the new law, the broadcasting right of the copyright property right has been amended. Specifically, the description of “public broadcasting or dissemination of works by means of wireless system, and the dissemination of broadcasted works to the public by wire transmission or retransmission” was changed to “public dissemination or rebroadcasts works by means of wire or wireless systems”.

This amendment is aimed at filling the vacuum in the broadcasting right and the right of information network transmission in the current law by including non-interactive communication acts, that is, network timed broadcast and real-time broadcast, in the scope of regulation of broadcasting right. This helps protect works which are currently infringed in network timed broadcast, including game screen, live sports screen, musical works, etc.

In the framework of the current law, infringement of the rights of network timed broadcast and real-time broadcast may be recognized as infringement of the right of information network transmission, or as infringement of other copyrights, or as infringement of broadcasting right, and there is currently no consistent recognition in judicial practice. The following are the precedents.

・In case of Ningbo Chenggong Multimedia Communication Co., Ltd. vs Beijing Shiyue Network Technology Co., Ltd. concerning the dispute over the right of information network transmission of the TV series “Struggle” (9),the court held that as long as a portion of  work is available to the public at a time and place of their choosing through the information network, the transmitter of the work constitutes “making the work available to the public at a time and place of their choosing” regulated by the right of information network transmission.

Since the law does not require that a work be made available in whole or in part to the public at the time of their choice in order to constitute the conduct of the right of information network transmission, the court held that the network timed broadcast infringed the plaintiff’s right of information network transmission.

・Anle Films Ltd. vs Beijing Shiyue Network Technology Co., Ltd. and others regarding the copyright infringement dispute of the movie Huo Yuanjia (10), the court denied the possibility of using the right of information network transmission to protect timed transmission and instead used the miscellaneous provision stipulated in Article 10 Paragraph (1) Clause (17) of the Copyright Law for protection, and elaborated the corresponding reasons.

The right of information network transmission stipulated in the Copyright Law is aimed at the interactive network transmission behavior. In other words, network users can actively choose when and where to obtain a specific work, instead of only passively accepting the arrangement of the transmitter.

Later, the Beijing High Court issued the “Guidance on Several Issues Concerning the Trial of Cases Involving Copyright Disputes in the Network Environment (I) (for Trial Implementation) Regulations” in 2010 to conclude the issue, holding that the online broadcast of a work provided by a network service provider to the public through network according to a prearranged schedule does not constitute an act of information network transmission, and Article 10 Paragraph (1) Clause (17) of the Copyright Law shall be applied for protection.

In the case of CCTV International vs Baidu and Sohu regarding a copyright infringement dispute over the Spring Festival Gala (11), the court of second instance overturned the court of first instance’s conclusion of no infringement of broadcasting rights and held that the defendant’s unauthorized provision of a live broadcast of the Spring Festival Gala infringed the plaintiff’s broadcasting rights.

The above case shows that the confusion in the protection of rights caused by the inconsistency of the determination is expected to be improved under the framework of the new law.

Broadcasting right and the right of information network transmission are combined in Japanese copyright law as public transmission rights (Japanese: 公衆送信権), which includes automatic transmission to the public, wireless transmission and wired transmission, which already includes the form of timed live broadcast.

 

IV Compensation amount

Article 54 of the new law stipulates that the compensation for copyright infringement shall be given in accordance with the actual loss of the right holder or the illegal income of the infringer.

If it is difficult to calculate the actual loss or illegal income, the compensation may be made by referring to the royalty of the right. If the infringement is intentional and the circumstances are serious, the compensation may even be one to five times of the above compensation amount.

This amendment removed restriction that the court could only rule on the upper limit of 500,000 yuan when both the actual loss of the right holder and the illegal income of the infringer could not be determined. It also followed the trend of changing the calculation of the amount of compensation for copyright infringement in judicial practice.

In fact, in the case of copyright infringement dispute between Universal Corporation of America and Qian Chixue /Wangzi Beverage Company over the image of Minion, the court of first instance broke the upper limit of 500,000 yuan of compensation under the current law and supported Universal’s request for 5.1 million yuan of compensation in full according to the view of the new law, taking Universal’s Minion image usage fee as a reference. In other cases, there are also requests for copyright damages of more than one million or even several million yuan have been supported.

The determination of the amount of compensation under the Japanese Copyright Law is based on (1) the expected benefit; (2) the infringer’s income; and (3) the royalties that could have been obtained; these three items are the criteria for calculation, which are consistent with the new law. Thus, the new law has also partially harmonized with the international rules in the process of revision, bringing new air for the settlement of transnational cases.

 

(1)Reference Case:(2014)京民知初字第1号

(2)Reference Case:(2015)浦民三(知)初字第191号

(3)Reference Case:(2016)沪73民终190号

(4)Reference Case:(2018)苏民终1054号

(5)Reference Case:平成10年(ワ)第22568号

(6)https://ent.qq.com/zt2014/luantan43/index.htm

(7)https://www.jasrac.or.jp/info/create/calculation/simulation.html

      https://www.jasrac.or.jp/bunpai/rule1.html

(8)http://www.mcsc.com.cn/publicity/trends_663.html

(9)Reference Case:  (2008)海民初字第4015号

                            (2008)一中民终字第5314号

(10)Reference Case:(2008)二中民初第10396号

                            (2009)高民终字第3034号

(11)Reference Case:(2012)海民初字第20573号

                            (2013)一中民终字第3142号