A Porpourri of Autumn Copyright Developments

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Here’s a mix of copyright updates:

On October 13, Tencent and Netease signed a deal for Netease to takes licenses on 1.5 million songs.  Tencent, as I previously reported, has actively been promoting the legitimate use of music on-line.   The current “Sword Net” campaign was is focusing since mid-July on music, and these actions may be a reflection of the campaign’s efforts. Over the summer, NCA had specifically mandated that ISP’s should stop making unauthorized music available on line.  Anecdotally, I have heard that it is getting harder to find illegal music to download.  NCA’s crack-down, including an effort to remove two million songs from the on-line environment was also noted by the media.

Also on October 14, NCA issued new guidance for website service providers (关于规范网盘服务版权秩序的通知), which requires service providers to take proactive measures to screen copyrighted content being uploaded, including for works that have previously been removed, works that are the subject of a notice and takedown, and works specifically listed by NCA.  The rules also require service providers to not provide any support to users to illegally share unauthorized works, and requires users to make a reasonable explanation to service providers if there is abnormal logging-on activity. These rules require something more than responding to notice and take-down requests, and (laudably, in my opinion) appear responsive to the perspective that the late Prof. Guo Shoukang told me, that the obligations set forth in China’s DCMA-type laws and regulations should evolve as technology evolves.

Another important development of late is the formation in September of a sports IP committee under the China Intellectual Property Law Studies Association.  Hopefully, this committee can help spur better protection under China’s IP regime of live sports broadcasts, amongst other sports-related IP issues.

Developments in Online Civil Copyright Enforcement in China: NCAC’s Analysis

The National Copyright Administration of China (NCAC), in its 2014 Annual Report Online Copyright Protection in China (2014年中国网络版权保护年度报告), analyzed published opinions on online civil copyright cases involving the “right of transmission to the public” (making available right)  drawing on three public databases (the Supreme People’s Court’s “中国知识产权裁判文书网” 、 “中国裁判文书网” ,and Peking University’s “法宝数据”).

There were 1650 reported civil opinions on online infringement in 2014, an increase of 18.8 percent from last year. Audiovisual cases occupied first place, at 44.5 percent of these opinions.  Literary works constituted 390 cases, or 23.6 percent. This was an increase of six times over last year. Graphical works were 363 cases, a 3.3 times increase. Video games totaled 56 cases and music was last of these major categories with 20 cases, or about 1 percent, a decrease from last year of 80 percent. In total these categories constituted 98 percent of reported cases.

The report identifies that were 86 cases involving 11 of the 20 websites that were subject to supervision by China’s copyright administrative authority (NCAC), and were 5.2% of the total cases.  These cases were a declining percentage of online infringement cases compared to past year.  It appears that NCA is using this data to show the effectiveness of its administrative mechanisms.

The decline in music cases, in my estimation, likely reflects the great difficulty the music industry faces.  Music is a priority area for NCA this year.  Improvements in administrative IP protection planned at the beginning of 2015, including a recently launched campaign,  will also hopefully reduce the level of infringement by key internet companies and/or support more effective civil enforcement in this sector.

Plaintiffs in online copyright cases were mostly enterprises, and defendants were mostly internet companies. Individuals were a small number of the plaintiffs (about 6.4 percent), which was about the same as last year. Online media companies were principal defendants (87%).  The remaining 13 percent consisted of traditional media companies, including traditional publishers, newspapers, motion picture studios, and television stations.

Civil online cases were principally heard in Guangdong, Beijing and Zhejiang with about 70 percent of the cases.  Zhejiang jumped from fifth place last year to third place.   Fujian also showed a significant increase.  A large share of the audiovisual infringement cases in Guangdong involved Kuaibo (www.qvod.com).  The regional distribution of the cases also shows that there was a drop in audiovisual cases in Beijing, but an increase in other areas such as written works.  Most of the plaintiffs in Beijing were well known companies in such fields as motion pictures, cultural product distribution, and internet technologies, which in NCAC’s view could suggest a maturing of the Beijing environment towards protecting a greater variety of content owners.

The increase in cases in Zhejiang in online cases is due to the rapid increase in online industries in that province, which also has consequences for trademark counterfeiting. As I recently reported, online counterfeiting has also become a priority for China Customs in China, with Zhejiang also figuring prominently in seizures of exports at such ports as Hangzhou and Ningbo.

The report also notes that there were 30 online criminal copyright cases as well, and that fines and punishment had increased, with one fourth of the cases involving fines over 500,000 RMB.

Note that I tried to compare this data with the data that is available on www.ciela.cn.  Unfortunately the data sets do not match well.  CIELA analyzes data by cities and provides more granular detail on proceedings and outcomes (length of time, damages, “win” rates, etc.).  Moreover, CIELA does not breakout on-line copyright cases.  I was thus unable to reliably further validate NCA’s observations in this report.

The NCAC report was released on April 22, 2015.  However, with only 219 hits since it was placed on line as of today, it remains a “sleeper” of a report, notwithstanding the dramatic growth in online copyright issues in China.

China Online Legitimate Music Copyright Promotion Alliance Established

China Daily and Chinese news services, including Legal Daily, reported that an Online Legitimate Music Promotion Alliance 中国网络正版音乐促进联盟 has been established on January 29, 2015 in Beijing.  The alliance brings together 30 companies and organizations including international music companies such as Sony and Warner, domestic music websites such as Kugou, Kuwo and 1ting and industry associations such like the Music Copyright Society of China and the International Federation of the Phonographic Industry, as well as songwriters such as Li Haiying 李海鹰.

Tencent which has a licensing arrangement with Warner Music, noted at the ceremony that the sustainable development of the music industry depends on copyright protection.   Tencent urged legal steps, such as model cases to create deterrence, active administrative supervision, increasing damages for infringement, and increasing penalties. Other speakers noted the importance of advertisers working together to curtail placing advertisements on pirated sites, as well as enforcement actions.   Beijing Copyright Bureau’s Wang Yefei 王野霏, a veteran of many copyright enforcement battles, was quoted by the Legal Daily as saying that it was important that “bad money not drive out good money” in copyright, and that the “trying time of walking a fine line in copyright has gone.” (网络音乐领域的版权乱象决不可能容忍它长期存在,一定不会让劣币驱逐良币,试图打擦边球的时代已经一去不复返了).

The Legal Daily article noted that according to the 2014 China Music Development Report (2014年中国音乐产业发展报告) there were 453 million internet music users in China in 2013.  However, according to IFIPI data, total revenue from music in 2013 was about 500 million RMB, (82,600,000 USD), which is only a “several Chinese dimes” per user.

At the January 29 launch event, China’s National Copyright Administration’s Zhao Jie 赵杰 announced that online music and literary works are key areas for enforcement in 2015.  These enforcement efforts build upon China’s existing “Sword Network” campaigns and other administrative actions to deal with on-line piracy.

This alliance also appears to be an important step in bringing together foreign and domestic rightsholders in IP.