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.

Top 10 Internet “Sword Action” Piracy Cases For 2014

sword

Let’s fight with gentle words Till time lend friends, and friends their helpful swords. (Shakespeare, King Richard the Second)

On January 14, 2015, the National Copyright Administration of PRC (NCAC), together with the National Internet Information Office (NIIO), the Ministry of Industry and Information Technology (MIIT), and the Ministry of Public Security (MPS), held a briefing in Beijing on the achievements of their campaign “Sword Action” (Jian Wang Xing Dong, 剑网行动) (or “Sword Network Campaign”).  This campaign is intended to address internet copyright piracy.

China has now carried out the “Sword Action” for 10 consecutive years.  According to information released at “Second China Seminar on the New Internet Copyright Issues”, this campaign has resulted in investigation of  4241 cases related to Internet piracy, including 1926 websites which were referred to MIIT for shut-down, the confiscating of 1178 servers and related equipment sets, and fines of 7.83 million RMB.  Perhaps most critically, 322 cases were transferred to judicial departments, presumably for criminal prosecution, or about a 7.6% “referral rate.”

Last year’s Sword Action covered a range of content types, including films and television programs, literature, and online games, with a particular focus on selling pirated products through Internet.  Here is a summary of these important cases, with our comments:

1.  Shanghai “Shooter net” (射手网)Infringing Audiovideo Works and Subtitle Translations

 

In September 2014, Shanghai Cultural Market Administrative Law Enforcement Team investigated the “Shooter Network” (www.shooter.cn) for alleged copyright infringement.  The investigation revealed that Shanghai Shooter Information Technology Co.  set up the ”shooter net” in shopping malls, for commercial purposes.  Shooter sold copies of their “2TB HD integrated video collection of resources” hard disk storage devices, “3TB HD super audio collection and other products”, with a total of about 100 units sold since May 2013.  In a separate investigation, Shooter subtitled “How to Train Your Dragon” and other television work without permission of the rightsholders and permitted users to browse, download and view these programs.  The site’s daily IP traffic was about 200,000, and daily visits were 400,000 page views.  The Motion Pictures Association of America certified that various titles were unauthorized and that films were subtitled without authorization of the copyright owner.   Shanghai Information Technology Co., Ltd. agreed to stop the infringement, and the site was shot down in November 23, 2014. A 100,000 RMB administrative punishment was imposed. This case alerted subtitle translation sharing groups that their previous sharing activities may constitute a form of copyright infringement.

2.  “Yi Dian Wang Ju” Company (一点网聚公司) Disseminating Literary Works

On December 2014, NCAC investigated on Yi Dian Wang Ju Company for allegedly disseminating literary works on-line.  The company, without the permission from Beijing weekly magazine, Beijing Finance World Culture Media Co., Ltd, and Beijing Figures World Culture Media Co., Ltd, disseminated 246 written works to public.  NCAC imposed a 100,000 RMB administrative punishment on the company.

3.  “Jian Gong Family” (建工之家) Website Software  

The copyright administrative law enforcement department of Yangzhou City (Jiangsu), together with Heze City (Shandong), investigated the “Jian Gong Family” website.  The website charged a membership fee and offered a number of cracked versions of software online and for downloading.  As of September 15, 2014, it had 1,430,332 website members, and on-line members of 6268.  The copyright administrative law enforcement department of Yangzhou imposed a 100,000 RMB administrative fine.

4.  Mr. Liu On-line Games Copyright

 

The Ministry of Public Security (MPS) of Heilongjiang Province together with NCAC investigated a Mr. Liu for allegedly infringing the copyright of an on-line game named “Zhu Lu Zhong Yuan”.  The infringed online games were operated through VPN proxy services, with rental servers inside and outside in China.  The companies used third-party payment platforms for cash flow.  There were hundreds of thousands of players and the scale of the website was close to that of genuine games. On July and August of 2014, Liu as well as other parties were arrested.  The court sentenced Liu and the technical directors of the computer service with maximum penalties of 3 years and 6 months imprisonment, and fines ranging from 400,000 RMB to 60,000 RMB.

5.  “HD Movies Download Website”(高清影视下载网)

 

MPS of Yangzhou City (Jiangsu) investigated the “HD Movies Download Website” for  infringing copyright.  Mr. Hu set up ”高清影视下载网”(www.gaoqing.tv), which he maintained and operated.  His wife was responsible for finances and procurement.  The service provided HD movies to copy and sell through their website and a Taobao store(淘宝)(affiliated with Alibaba) of a Mr. Ding.  Mr. Hu sold the membership invitation code of the website on the Taobao store, generating illegal revenue of 900,000 RMB in 2013.  The court sentenced Mr. Hu to a prison term of 1 year and 6 months and fined him 160,000 RMB.  Mr. Ding was sentenced to 6 months with a fine of 60,000 RMB.

6.  “999 Treasure Net” (999宝藏网) Software

 

MPS (Anhui) investigated the “999 Treasure Net”, for offering pirated Windows operating system software to download.  The website also offered advertising, bundled plug-ins and collected membership fees.  The infringers made an illegal profit of more than 2.5 million RMB.  The court sentenced 6 individuals to imprisonment ranging from 1 year to 3 years with fines ranging from 50,000 to 150,000 RMB.  NCAC gave the informer a 10,000 RMB reward.

7.  Mr. Liu Selling On-line Audiovisual Products

 

MPS of Zibo City (Shandong) and NCAC investigated three Taobao shops for selling pirated audiovisual products. Liu X, Song X, and Yang X, profited from downloading videos of calligraphy and education from the Internet, and employed Sun X to copy about 41,200 disks.  The illegal business profit was more than 4 million RMB.  In August of 2014, 11 related individuals were arrested, and 3,400 pirated CD’s were seized.  The case has been transferred for criminal prosecution.

8.  Hubei – A Number of Sites Suspected of Infringing “Comic Guests” 《知音漫客》Magazine

 

Hubei Province MPS investigated a number of sites of unauthorized dissemination of a network magazine “Comic Guests”.  Twelve key sites and organizations were identified, and three allegedly infringing website have been investigated, leading to the arrest of five suspects. The case has a value of about 13 million RMB and is being further investigated.

9.  Tan X Selling Pirated Software On-Line

 

In May 2014, Yongzhou Lingling District Public Security Bureau (Hubei) investigated Tan X and others for online sales of pirated software programs.  The investigation determined that Tan X had been pirating Microsoft software CD’s, printing blank software key labels with passwords, make pirated software discs, and selling on Taobao through a number of stores – “DELL HP IBM服务器”、“电脑软件批发”、“金英团队”、“迷彩指望”、“鑫城软件”、and “樱花肆虐的季节” (translations: “Dell HP IBM Server”, “Computer Software Wholesale”, “Kim / Gold Brave English team”, “Camouflage Expect”, “ Xincheng Software”, “Cherry Ravaged Season.”)  MPS has since arrested 5 suspects and the case has been transferred to prosecution.

10.  Guangdong “3 • 24″ Network Wholesaling Pirated Books

 

In March 2014, MPS together with the Cultural Market Comprehensive Administrative Enforcement team of Guangzhou, on the complaint of the China Construction Industry Publishing House, undertook a joint investigation on “3 • 24” network, which was thought to be pirating books on a wholesale scale.  The investigation revealed that Xiang X rented a room to store 28,000 copies of 53 editions of pirated books in order to wholesale these books for sale to stores at low-cost.  Based on the sales inventory, purchase receipts and other clues, the enforcement team arrested several vendors, destroyed eight “black” warehouses, four logistics companies, and a point of sale network.  Law enforcement also seized more than 500 pirated editions with 150,000 copies and more than 7 million Mayang (码洋) (book discount notices).  Enforcement authorities filed 35 cases and nine suspects were detained, of whom two were approved for arrest.

 

Comparing to the prior Sword Action of 2013, the “Sword Action” of 2014 entailed more interdepartmental cooperation.  It also struck at several important commercial networks, including physical and on-line stores.  These campaigns also show an impressive national scope, close coordination with MPS, a high referral rate and an interest of officials in addressing complex and emerging copyright issues.  Music piracy cases are noticeably absent from this list.

While these efforts are laudable, good cases may not be enough to drive social reform.  What remains to be seen is a comprehensive report on overall extent of copyright administrative enforcement efforts.   NCAC has not issued such a report in years.  For example, we do not know how many cases NCAC overall brings on behalf of foreigners, how many cases transferred to criminal prosecution, average fines, types of content being enforced, role of on-line and physical markets, etc.  Such data would enable meaningful identification of areas where enforcement is more likely to be aggressively pursued, as well as provide useful comparisons to other forms of enforcement in China.

We welcome any corrections or further detail on the above (prepared by Mark Cohen and Yao Yao).

 

 

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.