Upcoming PTO Program on Sports Broadcasting

USPTO and China’s National Copyright Administration are co-sponsoring a program on IP (copyright) protection for sports broadcasts, an issue that has been under discussion at least since the Beijing Olympics (2008).  Here is the  announcement and a draft agenda.

The program will be held June 23, 2017 in Beijing.  Contact jia.liu@trade.gov for further information and registration.

US-China Entertainment Law Conference Highlights Business and Legal Developments

huayi

(From a presentation by Lisa Wang, General Counsel, Huayi Brothers Media Corporation)

The following is a readout of the US-China Entertainment Law Conference held at Loyola Law School of Los Angeles on November 2, 2016.  A list of the speakers is found at the end of the blog.  The program was co-hosted by USPTO and Loyola Law School.

Industry Trends:

 Although there have been several notable legal developments in entertainment law in China, the most dramatic changes have been in the market.  China is now the world’s second largest market for theatrical films, after the United States.  While box office revenue and attendance are down in the United States for motion pictures, China has experience incredible growth, with box office revenue nearly 50% in 2015 compared to 2014.   China will likely experience slower growth in 2016, and may enter a more sustainable rate of growth thereafter.   The industry is adapt to the increased importance of China through changing content to have wider appeal and including China in marketing and business development plans.   

Among the major China players, Wanda is now the largest owner of theatres in the world.  It acquired Legendary Pictures in a $3.5 billion media deal.  Tencent is the world’s largest purveyor of of videogames, with 4.2 billion USD in global revenues in 2015.  It is also the first ranked publisher on IOS and Apple app stores.  The Chinese market had 489.2 million video game users in the first half of 2016, with a growth rate of 30.1 percent compared to the first half of 2015.   Importantly, Chinese consumers now accept paying a fee for using online videogames.

 The investment trends for films from China include more direct investment in the United States and Europe, more collaborative production, and more local financing, especially for shows and including both television production and online productions.   Box office revenue will likely continue to grow, and online video will continue to disrupt ticket prices.  

Prof. Seagull Song of Loyola noted that in 2015, foreign films captured five of the top ten grossing films in China.  Market access restrictions are still impeding the market, and that the China market is still underperforming for its size.  However, with respect to market access restrictions, the dean of the Beijing Film Academy predicted that the current quota on foreign films is also likely to be relaxed, but that this relaxation is not likely to have much impact due to the preference of the public for locally made films.  

Regarding the on-line environment for content, Prof. Robert Merges of UC-Berkeley suggested that as platforms affect the distribution of content and provide increasing vertical integration, maintaining competition among the limited number of platforms is likely to become more difficult.  With vertical integration, Merges predicted that copyright is likely to become less important in China.  Branding will instead become more important to develop loyalty to a platform that provides a variety of content and services.   In addition, the development and ownership of data originating from platform services will become critical to platform success.

Taking a different approach, Prof. Eric Priest of the University of Oregon addressed the question of what happens when copyright is harder to enforce such as in the online environment.  With changing technologies, copyright allows its owners and creators to access new markets as they are created, providing them with some leverage with intermediary platforms, and helps stabilize the market for content creation by creating multiple revenue streams.  LeTV is an example of a company in China that began driving new copyright norms by investing in licensing of copyrighted content around 2009 and 2010.   The theme of a diversity of licensing revenue streams in addressing new markets and new technologies was later underscored by Shira Perlmutter of USPTO, who also look at trademark rights derived from copyrighted content in her key note speech, while also underscoring many of the continuing enforcement challenges foreign rights holders face.

As an example of the competitive challenges faced by copyright owners, Priest cited the example of ring back tones for music.  Seventy percent of China’s huge netizen population consume music.  However, most are not paying for this music – except for cell phone ring back tones.  Gross revenues received by mobile cell companies for ring back tones were nearly as high as gross revenue for the music industry in the United States.  However, the music industry received a paltry 105 million USD for its content from Chinese cell service providers compared to the 4 billion that was generated.  Thus, Priest’s discussion to a degree validated Merges’ discussion regarding how competition and integration were becoming increasing concerns.

IP Challenges:

Prof. Song gave a brief presentation on some of the top entertainment cases in areas such as defamation, ideas/expression dichotomy, merchandising rights, and first look rights of publishers.

In trademark, several speakers discussed the Kung Fu Panda / merchandising right case, which has also appeared in this blog.  Not all speakers were in favor of this modest trend of creating a new “merchandising right.”  In the United States, the issue was first addressed by our courts and later adopted into amendments in the Lanham Act which look at likelihood of confusion based on misleading endorsement or sponsorship of a product or service. (Trademark Law Revision Act of 1988 – concept of “confusion as to the sponsorship”), as well as the Federal Trademark Dilution Act of 1995 (protecting famous marks against either the blurring of their distinctiveness or the tarnishment of their reputation caused by unauthorized uses of identical or similar marks not solely on related goods but also on unrelated goods.)  In the United States case law requires a case by case analysis, particularly for unrelated goods and services, where the plaintiff can show a likelihood of confusion as to “sponsorship.”  Cynthia Henderson of USPTO underscored that in China, there may be a greater need for a merchandising right because of rampant bad faith filings,  lack of flexibility under China’s first to file system, lack of protection for lesser known marks, and difficulties in addressing infringements for protection across different classes of goods and services.

Prof. Zhang Ping. from Peking University, discussed the various possibilities for protecting the title of a work under Chinese law, including trademark protection, copyright protection and unfair competition.  Trademark protection in her view, could be deficient since  “in [the] real world, one does not pursue trademark protection for the title of a work until this work gains certain commercial value.”  In such instances, unfair-competition protection might be pursued as a supplemental remedy.   Prof. Zhang gave the example of the famous Wahaha mark (1989), which was originally the title of a popular song (1954).  A court determined that the creator of the song did not enjoy copyright protection in the title.  Unfair competition and merchandising rights may help in addressing these issues .

Several speakers addressed problems in copyright protection for live television entertainment, including but not limited to, live sports broadcasting.  Rebecca Borden of CBS noted that the scope of content that has uncertain protection under current Chinese copyright law incudes live broadcasts of sporting events (about which I have previously blogged), but also includes award shows, games shows, annual galas, etc.  Award shows have many similarities to sporting events, including filming of live reactions to awards/unexpected reactions, driving viewership in conjunction with unique performances or achievements, etc.  Prof. Jiarui Liu of the University of San Francisco noted that recognizing the creation of a professionally produced live sports broadcast as a creative work would likely provide the most stable protection for the investment in these works.

The video gaming industry also faces a number of IP challenges, as noted by Zhang Xin of Tencent and Song Haining of the Junhe Law firm.   Haidian District Court has been the epicenter of litigation involving onine gaming IP issues.  Total  adjudicated cases in 2014-2015 involving copyright were 183; trademarks 17, and unfair competition 9.  Courts have been willing to impose progressively higher damages, including damages based on actual or implied revenues attributable to the copyrightable infringement.  Due to the large amounts at stake, some cases will also satisfy criminal thresholds, and the public security agencies have been supportive.  See, eg., WeMade v. Xiaoxian (2016), which involves potentially billions of RMB in damages.

Charles Feng of East & Concord Partners gave an excellent presentation on preliminary injunction (PI) practice in China, an issue I have covered elsewhere on this blog.   Mr. Feng gave permission for me to post his ppt here.

In Mr. Feng’s view, the likelihood of prevailing on the merits is based on a calculation of the “certainty to prevail” minus “opposing evidence.”  If there is sufficient evidence and clear facts, which do not involve complicated comparison or necessitate judicial verification, a plaintiff is more likely to prevail.  PI’s are also rare in invention patent or software infringement cases.  The case should also not involve disputable or controversial issues, such as those involving the originality of a work, the doctrine of equivalents,  a prior-art defense, the similarity of marks  or goods, the well-known status of a mark, etc.  

In assessing the public interest, the court also looks at issues such as the necessity of intervening against fake and shoddy goods, supporting the security of people’s life, environmental conservation, etc. Generally, preliminary injunctions are rejected in case of a pharmaceutical products related patent and SEP’s.

Among the cases he cited: Telpa v. Media Plus(灿星)(Voice of China case), where  the defendant may have used trademarks completely incorporating plaintiff’s registered mark, and there was also trade name infringement.  A contrary case example is HBSA v. General Administration of Sport, involving the  跤王 “Wrestling King” mark in in Cl. 41 covering.  The General Administration of Sport organized games called “China Wrestling King Competition”. During the litigation, the defendant claimed the fair use defense. The Beijing No.2 Intermediate Ct.  noted that “Given the alleged mark of Wrestling King is a generic name, which may not be registered as a mark, and that the Trademark Review Adjudication Board has accepted the application for invalidation, the court does not believe that there is likelihood of prevailing on the merits.”

The concluding panel, which was moderated by me, included a lively discussion over IP, rule of law, the importance of the Chinese market, the role of the Chinese government, and the future direction of “entertainment law” in China.   Monique Joe highlighted the differences and unpredictability in the way the TM law is applied to address infringement and squatting issues.  Joshua Grode noted that he thought IP issues were not a major factor in deals.  Sheri Jeffrey noted that many deals do not contemplate the full scope of rights that may be licensed or created, including rights

Prof. Ma Yide refuted assertions that China is not protecting IP or that there were regulatory risks in China that made investment unattractive, noting that the growth in the market was likely the single biggest attractive force for foreign investor. Regulatory uncertainty was noted as a major factor in driving investors away from co-productions, despite a higher revenue share (47%) for coproduction versus an imported film.  The lack of certainty also dries down liquidity.  Putting together Robert Merges’ comments, the deal makers on the last panel, and the concerns about over the uncertainty of copyright protection in certain areas, several speakers questioned whether copyright was becoming the “chopped liver” of the entertainment sector – beautiful to look at, but rarely exploited in the proper way, which was a somewhat negative way to end an otherwise very positive and forward- looking program.

The preceding are my personal observations only.

SPEAKER LIST

Rebecca Borden Senior Vice President and Associate General Counsel, CBS
Mark Cohen Senior Counsel, United States Patent and Trademark Office
Jay Dougherty Professor, Loyola Law School, Los Angeles
Charles Feng Partner, East & Concord Partners
Neil Graham Attorney Advisor, Office of Policy and International Affairs,                                        United States Patent & Trademark Office
Josh Grode Partner, Irell & Manella LLP
Sheri Jeffery Partner, Hogan Lovells LLP
Monique Joe Head of Trademarks, Dreamworks Animation
LIU Chun-Tian  Dean,  Renmin University Intellectual Property Academy
LIU Jia-rui Assistant Professor, University of San Francisco School of Law
MA Yide President, Beijing Zhongguancun IP Research Institute
Robert Merges Professor, University of California Berkeley School of Law
Shira Perlmutter Chief Policy Officer, United States Patent & Trademark Office
Eric Priest Associate Professor, University of Oregon Law School
Bennett Pozil Executive Vice President and Head of Corporate Banking, East West Bank
SONG Hai-ning Partner, Junhe Law Firm
Seagull Song Professor, Loyola Law School, Los Angeles
Simon Sun Executive Vice President, Le Vision Pictures USA
Lisa Wang General Counsel, Huayi Brothers Media Corporation
Michael Waterstone Dean, Loyola Law School, Los Angeles
Martin Willhite Chief Operating Office and General Counsel, Legendary Pictures
WU Manfang Dean,  Beijing Film Academy School of Management
ZHANG Ping Professor, Peking University Law School
ZHANG Xin Legal Director, Tencent Interactive Entertainment

 

 

 

 

Video Game Equipment Ban to Be Lifted Nationwide

In a development that speaks to both recent developments that seek to drive more value for the content industries in China, as well the vitality of the Shanghai Free Trade Zone as an experimental pilot, the Ministry of Culture has lifted the ban of video game consoles in China.

The ban had previously been lifted in the Shanghai Free Trade Zone in early 2014. The Ministry of Culture on Tuesday lifted the ban on video games and consoles effective retroactively as of June 30, 2015.

In its announcement, (文化部关于允许内外资企业从事游戏游艺设备生产和销售的通知) (Notice of Ministry of Culture Permitting Domestic and Foreign Enterprises Participating in Video Game Entertainment Equipment Production and Sales) as well as the related notice accompanying the announcement (游戏游艺设备内容审核管理办法)(dated June 24, 2015) (Rule for Managing Approval of Content for Video Game Entertainment Equipment), the Ministry noted that it will encourage “healthy” video games, with national characteristics, including “use of indigenous intellectual property.” (具有自主知识产权).   Self-censorship and reporting mechanisms are to be established by game developers and manufacturers.

Requests to lift the video game console ban had long been a staple of requests made to USTR by console manufacturers and game developers, as well as the International Intellectual Property Alliance.

How much will the removal of the ban stimulate the legitimate industry? This appears to be one of several efforts to bring more value and protection to copyrighted content in China. Among those recent developments are the market opening efforts announced in the recent Strategic and Economic Dialogue on marketing of flat-fee (non-revenue sharing) films in China, the availability of copyright protection for sports broadcasts, the grant of a preliminary injunction involving a US video game product, and recent licensing deals for music and sports broadcasts.

Beijing Court Grants Copyright Protection to Live Sports Broadcast

 

In a very positive development for Chinese football sports leagues, CCTV, Tencent, NBA,  as well as Olympic and other international sports competitions in China,  the Chaoyang basic level court in Beijing determined on June 30 that live broadcasting of a sports competition is sufficiently creative to be protectable under China’s copyright law in Sina v. iFeng(2014)朝民(知)初字第40334号). The case can be found here in Chinese.   The key language of the case with my very  informal translation is as follows:

新浪互联公司在本案中提出,涉案转播的赛事呈现的画面应受到我国著作权法保护的作品范畴。依照法律规定,具有独创性并能以某种有形形式复制的智力成果,才可构成我国著作权法所保护的作品。是否具有独创性,成为本院判断涉案赛事转播画面是否构成作品的关键。独创性意指独立创作且不具有对他人作品的模仿、抄袭。

In the present case the Internet company Sina raised an issue involving the presentation of broadcast screens (pictures) and their status as works under the copyright law. In accordance with the law, protected works must be original intellectual achievements that can be replicated in some tangible form. The key factor for this court in determining whether the broadcast of a live competition was original is the broadcast screen.   Originality means independently created, which is to say that it does not imitate the work of others or is a copy.
从赛事的转播、制作的整体层面上看,赛事的转播、制作是通过设置不确定的数台或数十台或数几十台固定的、不固定的录制设备作为基础进行拍摄录制,形成用户、观众看到的最终画面,但固定的机位并不代表形成固定的画面。用户看到的画面,与赛事现场并不完全一致、也非完全同步。这说明了其转播的制作程序,不仅仅包括对赛事的录制…

In broadcasting a competitive event, from the point of view of the overall production, the event broadcast and record production involves shooting by setting several or several dozens of  unfixed or fixed recording equipment as the basis to film and record to a final picture for the user or audience to see the final picture.  However a fixed position does not mean a fixed picture.  The picture that the user sees is not completely the same as taking place on the field, and it does not proceed completely or fully synchronized. This explains that the broadcast production process is not just a record of events, …

就此,尽管法律上没有规定独创性的标准,但应当认为对赛事录制镜头的选择、编排,形成可供观赏的新的画面,无疑是一种创作性劳动,且该创作性从不同的选择、不同的制作,会产生不同的画面效果恰恰反映了其独创性。即赛事录制形成的画面,构成我国著作权法对作品独创性的要求,应当认定为作品。从涉案转播赛事呈现的画面看,满足上述分析的创造性,即通过摄制、制作的方式,形成画面,以视听的形式给人以视觉感应、效果,构成作品。

In this regard, although there is no provision on legal standards of originality, but it should be understood that the choice of lens for recording events, editing, a new screen for viewing the picture, is undoubtedly a creative work, and the creation of different options and different productions, will produce a different picture of the effect that  precisely reflects its originality. The formation of the picture of the sporting event constitute originality under the Copyright Law of China and should be recognized as a work. From the perspective of this case, the picture screens presented satisfy the requirements of originality not only in their filming and production, but also in the auditory and visual style which thereby gives a final result of audio and visual sensations, thereby constituting a work.

The case may be appealed to the Beijing IP Court.  Damages of 500,000 RMB were assessed, plus costs and an injunction.

Update from August 6, 2015:  here’s the case in English language translation.

Update from March 11, 2016: Here’s a link to an article on a proposal by an official from Le TV to the NPC and CPCC on protecting copyright in sports broadcasts. The focus of the proposal is to strengthen sports competition intellectual property protection and promote the healthy development of China’s sports industries (“加强体育赛事知识产权保护 促进我国体育产业健康发展”). The first element of the proposal is to adopt the international standard of using copyright law to protect sports broadcasts as a “work”, which the author notes is available under US copyright law and has been recognized by nearly all European countries, according to a study from the University of Amsterdam (See Section 1.4.1).

How creative is the professional sports broadcast to merit copyright protection.  The video below from an NFL game gives some indication of what is involved.    (updated September 1, 2016 with this video).

Dueling Software Data in the Spring and A Changing Tech Environment

夜来风雨声, 花落知多少? (At night the sound of wind and rain; Who knows how many flowers have fallen?; Poet Meng Haoran, 689-740, “Spring Dawn”)

cherryblossoms

It is almost April, which means it is not only time for cherry blossoms in Washington, but, as we approaching IP Week in China (April 26),  — dueling software data.

Here’s a digest of how China’s recently released data compares to BSA data.

According an article published in SIPO’s newspaper, which reported on a press conference on March 20,  New Progress in China’s  Promotion of Software Legalization, in 2014,  83% of Central and State organs promote their institutions have completed software legalization;   826,700 were procured, operating systems, Office, antivirus software, with a purchase amount of 461 million RMB. A total of 4,112 firms included in the annual software legalization work; 3,715 enterprises completed software legalization through inspection and acceptance.   The most critical datapoint: at the end of December 2014, new computer pre-installed genuine operating system software pre-installed rates continue to move up for 8 consecutive years, to a rate in 2013 at 98.42%.

The data from the Busines Software Alliance, released in the June 2014 BSA Global Software Survey, tells a different story. According to BSA, China has an unlinced PC software rate of 74%, with an unlicensed value of $8.767 billion. This reflected a decline from 82 percent in 2007.  The commercial value of unlicensed software dropped from 8.702 to 8.767 billion from 2011 to 2013.

The good news is that both sides appear to degree that software piracy is declining. The bad news is that the Chinese view the glass as nearly full.  BSA views the glass as more than 2/3 empty.

There may be any number of reasons for the differences in data, including sampling and analytical differences, but also including the type of software under consideration (package/embedded/cloud-based, commercial/non-commercial, etc.), and the impact of technological changes on these differences.   The migration to smart phone, tablet and cloud platforms and increasing competition may also be affecting package software sales.

In an apparently unrelated development, Microsoft announced March 18, 2015, that it is offering Windows 10 upgrades to both licensed and unlicensed users in China.   Microsoft said that its plan is to  “re-engage” with the hundreds of millions of users of Windows in China.  Microsoft is also working with Lenovo Group, to help roll out Windows 10 in China to current Windows users, and it also is offering Windows 10 through security company Qihoo 360 Technology Co and Tencent Holdings Ltd, China’s biggest social networking company.

Based on the press release one additional positive outcome of the plan may be that this free upgrade (or, indeed, legalization) is intended to help with adoption of Microsoft’s Windows Mobile platform,  which reportedly will provide a universal app platform across a range of devices including Microsoft’s mobile platform.

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