Category Archives: Eric Priest

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USPTO and Renmin University Copyright Protection Program Highlights Importance of Copyright Reform for China

revenuestreams

Last July 20, 2016，USPTO and Renimin University jointly hosted a program at Renmin University on Copyright Developments in China and the United States.  The program was covered by some of the specialty media.  Here’s a brief summary regarding some of the four key developments in China that I abstracted from the speakers at the conference:

  1. Building upon some of the path breaking work of Eric Priest and others, there appeared to be near unanimity amongst the speakers and audience of the importance of revenue diversity for China’s creative industries to thrive.  Amongst the areas highlighted, were the importance of public performance rights, of licensing for digitalization of content, of small claims procedures for copyright owners, the utility of collective management in certain contexts, and the importance of providing copyright protection for sports broadcasting (as opposed to using neighboring rights or antiunfair competition law).  The current copyright licensing environment in China uniquely supports one exclusive license, but even that revenue source is vulnerable to non-renewal if piracy erodes the value of buying legitimate content and may therefor not be sustainable in the face of “piratical” or free competition.  Musicians, as an example, are heavily dependent on public performances and secondary sources of revenue, such as DVD/CD/ streaming sales are thin.  Revenue diversity can also included non-copyright revenue streams, such as trademark rights, and perhaps merchandising rights.  Efforts have also been underway to increase pledging of copyrighted content, which can help with financing of copyrighted content.
  2. Many of the Chinese speakers spoke about increasingly creative enforcement approaches, such as the Sword Network Campaign,  enhanced administrative supervision over platforms (16 video sites/20 music sites/20 literary sites) and punitive damages.  Although they are still a minority of criminal IP cases, there is an increasing number of  criminal referrals from administrative cases (from 2005 to 2015, more than 450 cases were referred to criminal prosecution).  Article 287 of the newly amended Criminal Law, which provides for criminal liability by reason of providing computer services was noted as a potential area for expanded criminal copyright liability.
  3. Technology and globalization were making enforcement increasingly more difficult, while at the same opening up possibilities for more efficient enforcement techniques.  Audiovisual use of the internet was one of the most popular reasons in China to be online (73.2% of netizens view AV products in China). Music is a close second (72.8%), while literature was only 43.1%.     Copyright protections which did not extend to interactive (online) environments, were increasingly undercutting revenue streams.  China’s reservation under article 15(1) of the WIPO Performance and Phonograms Treaty was noted (“(1) Performers and producers of phonograms shall enjoy the right to a single equitable remuneration for the direct or indirect use of phonograms published for commercial purposes for broadcasting or for any communication to the public.”).  The increasing complexity of the copyright environment, including the environment for licensing was highlighted as a theme in both the United States and China.   Media box piracy was identified as a problem (see 湖南快乐阳光vs 清华同方).  A case involving use of parasitic software to modify the original code was noted, under the Antiunfair competition law ( 鹏讯 [深圳] v 上海虹连网络)
  4. Regarding enforcement, the efforts of the courts to develop precedential or guiding cases to resolve complicated emerging issues was also underscored, particularly due to the extensive delays in passing copyright law reform, which has now been ongoing for several years.  There were over 70 research topics underway as part of the copyright law reform.  There needs to be increased scope of protection of copyright and improved mechanisms for enforcement.  Some of the difficulties in providing copyright protection to certain areas were traced back to the original training program in 1985 in Nanjing on copyright law, which was provided by European experts, and introduced European concepts and models, such as neighboring rights.    Changes in substantive law and judicial practice, such as providing for treble damages,  sampling of allegedly infringing content, establishing a requisite standard for “originality” vs a non-original product (see 北京乐东 vs 北京昆仑 concerning copyright in entertainment software characters) idea vs. expression in variety shows (See Beijing High Court’s: 关于审理涉及综艺节目著作权纠纷案件若干问题的解答), harmonization with other laws (such as the Antiunfair Compeittion Law),  how much copying constituted infringement, discovery of source code to verify infringement of software products, and specialized IP courts/three-in-one (administrative/civil/criminal) tribunals were all noted.  In addition, an expanded scope for audiovisual works, or lowering of the creativity required for cinematographic works were noted as possible approaches to providing protection for sports broadcasts.   Rights holders were also selecting overseas venues for litigation where rights were sometimes better protected.

In general, the speakers agreed that China needs copyright reform for its own needs, and that this reform was not due to outside pressure. In addition, there are increasing opportunities for collaboration between the United States and China on the creation and distribution of copyrighted content, which appear to be mirroring increased collaboration in science and technology.  Ultimately, China needs improved copyright protection and enforcement in light of its own desires to increase its soft power, and support its creative industries.

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Three Upcoming Programs

If you are near Portland, Oregon, Prof. Eric Priest of the University of Oregon, Chief Judge Rader (ret) and I will be talking at the University of Oregon about our joint efforts with the US Chamber on China IP related matters.  The program will be held form 12:00 to 1:30 on May 6th at the University of Oregon White Stag Building, 70 NW Couch Street, Portland, Oregon,  RSVP: teevee@uoregon.edu.  Oregon CLE is pending.

On June 2, 2016 in Beijing, IP Key will be cosponsoring a program on Infringement of Intellectual Property Rights Online.  Information is available here.

Another upcoming program on June 8 is in Alexandria, Virginia with the USPTO and George Mason University on licensing.  Although not strictly speaking a China-related program, I expect there to be  considerable discussion around China’s licensing environment.  Amongst the speakers will be Director Lee of the USPTO, Commerce Deputy Secretary Bruce Andrews, FTC Commissioner Ohlhausen, and former USPTO Director David Kappos.  I will also be speaking at this program.  The conference agenda and a link to registration are available here.

 

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Warner Music and Tencent Enter Into Strategic Partnership: From the Licensing Bubble to Michael Buble?

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Top 10 Internet “Sword” Piracy Cases For 2013

On December 30, the National Copyright Administration of PRC (NCAC), together with the National Internet Information Office, the National Internet Information Office , the Ministry of Industry and Information Technology (MIIT), and the Ministry of Public Security (MPS), held a briefing on the achievement of “Sword Network Campaign” for 2013 (Jian Wang Xing Dong, 剑网行动), which dealt with internet copyright piracy.

 During this special operation, a total of 512 complaints and reports from all over the country have resulted in 190 administrative cases and 93 (presumably criminal) judicial cases.  In addition, 137 sets of servers and related equipments were confiscated, and 201 websites were referred to MIIT for shut-down.

The cases show an increasing sophisticated by China’s administrative agencies in handling the complex challenges posted by on-line infringements.  In particular, the cases showed increasing use of cross-provincial cooperation, cooperation with agencies such as public security, procuratorate and MIIT, and an increasingly active role for local “cultural task forces”.  Enforcement agencies took steps to shut down or confiscate servers, pursue third parties who provided payment services, and work on cases which an international element.  Companies that might otherwise be viewed as local “champions”, such as Baidu and Taobao were not immune from enforcement actions.  Less traditional forms of infringement, such as infringement of the copyright in industrial standards were pursued as well.  The cases also demonstrate a geographic breadth, which is no doubt due to the augmentation of the administrative copyright authorities’ personnel with support from numerous other national and local agencies.

Here is a summary of these important cases, with our comments:

1. Beijing – Baidu Network Technology Co., Ltd. (北京百度网讯科技有限公司) and Shenzhen QVOD Technology Co., Ltd (深圳快播科技有限公司)

On Nov. 19, the NCAC established a case against Baidu and QVOD in response to the compliants from Youku (优酷), Tencent (腾讯), Letv (乐视), Sohu and other rights holders. The investigation revealed that Baidu and QVOD facilitated public access to massive piratical websites through targeted search and hyperlinks.  This constituted infringement of the copyright holders’ “making available’ and harmed the public interest. Baidu and QVOD received an administrative sanction of 250,000 RMB respectively on December 27th, which appears to be the highest statutory penalty that NCA could levy for this type of matter.

Prof. Eric Priest from the University of Oregon has noted the following with respect to this case:

“I think the major players in China, including Baidu, are inevitably tending toward offering legitimate content, at least in the video space. The MPA and the film industry as a whole in China have done a good job over the last several years of cultivating a group of local stakeholders who have taken on the internet piracy fight as their own. These stakeholders aren’t just local copyright owners—they include leading local websites like Sohu and Youku Toudou. This does more than just increase the number of local plaintiffs involved in copyright lawsuits. It has helped change the norms in China’s online video industry. Today the expectation within the industry is that the major players play by the rules and stream licensed content. It puts considerable pressure on major sites that provide access to unlicensed content because they are now acting outside the norm. I think it also empowers authorities like the NCAC, because if no one is following the rules then meaningful enforcement is difficult and rather impotent across the board—the laws and the actual industry practice are so misaligned. But when the industry norms and laws begin to converge, authorities are emboldened to take action, and the action resonates more with its targets, in this case Baidu and Qvod.”

Prof. Priest’s observations on the pressure put on major sites that offer unlicensed content can equally apply to many of the cases that follow.

 2.Beijing – Si Lu Wang(思路网)

In early 2013, Beijing municipal and local authorities formed a task force to investigate “siluhd.com”, the largest HD web portal in China.  The website users paid a monthly fee to access 18,772 HD films and TV dramas, as well as 3316 music works, and 208 video games. This website had more than 10 thousand active users on a daily basis, generated more than 20,000,000 illegal downloads cumulatively, and had 1.4 million registered users. In April, the task force arrested 11 suspects．This case is still under further investigation.

3. Shanghai – Online Sales of Foreign ISO Standards

NCAC received a complaint from the Standardization Administration of China (SAC) that some websites were selling ISO standards without authorization.  Shanghai municipal authorities investigated this matter with the assistance of the Copyright Protection Office of National Standards Committee’s Working Group and the Shanghai Quality and Technical Supervision Bureau. The investigation revealed that since 2010, the suspect Wang and his accomplices founded “www.pdfstd.com” and five other websites to sell thousands of foreign standards. Wang and his accomplice rented four servers from aboard but also employed overseas third-party payment services.  Wang and Yi were arrested on September 24th and are awaiting sentencing.  Their online payment cooperator is also under investigation.

 4. Jiangsu – Copyright Infringement of Jiangsu Cathay Xin Dian (国泰新点) Software  

 In December 2012 Cathay Xin Dian reported that the piracy of its software product “A Little Wisdom”(“一点智慧”),  which is popular in the construction industry, had been sold on Taobao (淘宝) illegally since 2010. An investigation by Jiangsu authorities revealed a well organized and wide spread criminal network. On March 29th, the Police Administration of four provinces, Jiangsu, Anhui, Hunan and Zhejiang took unified act to attack the net work: arrested 12 suspects, crashed 4 criminal gangs, shut down 13 online shops, and destroyed 8 piracy dens, where the counterfeiting software (“加密狗”) had been produced, stored, and sold.  The Police Administration of Zhangjiagang City thereafter destroyed another den in Chengdu on June 5th.  This case, involving up to 650 million RMB, is currently under prosecution.

 5.   Beijing –  Online Shop “Sunshine Education”(“阳光教育”)Engaged in Selling of Pirated Children’s publications

 In October of 2013, the Beijing Municipal Cultural Market Law Enforcement Team started investigation of the Taobao shop “Sunshine Education”. The investigation evidenced that this online shop together with four branch shops were selling pirated children’s publications, cartoons, and children’s music discs. The Shop concluded 33,000 deals since 2006, including 160,000 RMB between June and October 2013. Four suspects were arrested and 6000 pieces of pirated audiovisual products were seized. The case is still under investigation.

  6. Zhejiang – ‘Popcorn Net’ (爆米花) Illegal Online Dissemination of Film and Television Productions

 In September of 2013, upon receipt of NCAC’s transfer letter, the Copyright Administration of Zhejiang Province established “popcorn” website case (www.baomihua.com)’ alleging an online infringement in response to a complaint from the International Federation of Phonographic Industries. The website disseminated without permission 52 film and television works, and 10 music videos for its members to viewing online and download. On October 14th, Zhejiang Province Copyright Administration issued a warning to the operator of this website with a 100,000 RMB administrative penalty.

 7.  Yangzhou – “www.dm5.com” Illegal Online Dissemination of Pirated Comics

 In October of 2013, the Copyright Administration of Jiangsu Province established the case of “www.dm5.com” (“动漫屋”网站).  The case involved alleged infringement of comic works, and was filed in response to a complaint from a Hong Kong association.

The operator of the website conducted webpage design, website promotion, and software development and other network technology services. Since 2009, the operating company has posted more than 70 pieces of infringing works without copyright holders’ permission and had been profiting illegally from advertising. On November 6th, the company received an administrative sanction of 100,000 RMB from the Yangzhou City Culture Market Law Enforcement Team of Jiangsu Province.

 8. Anhui – ‘Sound Bashing Network’ Copyright Infringement

 In August of 2012, after a preliminary verification of another IFPI complaint, the Copyright Administration of Anhui Province assigned the ‘sound bashing network’ “音扑网” case to Huangshan Municipal Copyright Bureau.  The Huangshan Municipal Copyright Bureau determined that the website offered 264 infringing songs and should be subject to criminal prosecution. 

 9. Shandong – Kang and Others’ Infringement of “Legend of Mir” (“热血传奇”)

 In November of 2012, Jinan, Shandong authorities cracked the “Rose Team Server Case.” “玫瑰小组私服案”. The task force learned that the source of Legend of Mir’s game server is www.3KM2.com, which duplicated and issued Mir’s server software without permission from the right holder of the online game, Shanghai Shengda Network Development Co., Ltd (NASDAQ：SNDA). The suspects obtained more than 40 million RMB illegal profits as service fees for their development and sales of the counterfeit game.

The Jinan Police reached out to other provinces including and arrested seven principal suspects, including shutting down 110 game servers. This case is now under prosecution.

10. Shanghai – Copyright Infringement of Music Apps on Mobile Devices

On April 16, 2013, on another complaint of IFPI, the Shanghai Municipal Cultural Market Law Enforcement Team brought a case against an information technology company which provided an Android app for mobile devices to enable users to search, browse, play, and download copyrighted music works without copyright holders’ permission. The infringed works include 47 songs of Jason Chan. The infringer thereafter immediately corrected its mistake after the investigation.  On June 21st, Shanghai authorities decided to mitigate the administrative penalty to a fine of 28,000 RMB.

Although this news is very positive, what remains to be seen is a comprehensive report on overall copyright administrative enforcement efforts.   NCAC has not issued such a report in years.  Unlikely other administrative agencies, we do not know how many cases NCAC overall brings on behalf of foreigners, how many get transferred to criminal prosecution, average fines, etc.  Considering the accomplishments to date, I hope that such reports can be prepared in the future. 

 Prepared by Mark Cohen with assistance of Amanda Ma.