A Porpourri of Autumn Copyright Developments

spices

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.

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.

Tencent/NBA Ink 5 Year Deal – Expanding Tencent’s Legitimate Content Reach

basketball

While most people were focused on the Alibaba/SAIC controversy last week, the National Basketball Association inked a five year exclusive license with Tencent last week for digital content.

Effective on July 1, Tencent will become the exclusive digital partner of the NBA in China. Tencent will record a number of live NBA games and deliver the programming to its audiences. NBA live games and content will be available for fans to access. Tencent and the NBA will also launch the first-ever NBA League Pass in China, providing fans with access to a full season of live and on-demand NBA games online and via mobile devices.  Tencent and the NBA will also jointly manage and operate the NBA’s digital assets in China, including NBA.com/China and sites for all 30 NBA teams, NBA events, and merchandise. Tencent will also launch the NBA Game Time app on mobile devices.  Lastly, the NBA and Tencent will unveil the NBA Community including an NBA dedicated gaming section within the Tencent Games platform, a more integrated social commerce platform, and a premium subscription service. Tencent will also develop NBA-themed interactive games on its platforms.

The deal comes hot on the heels of another deal that Tencent signed with Warner Music in November.  Hopefully, this latest deal will have the added benefits of putting additional pressure on China to insure that live broadcasting and webcasting of sports games is subject to copyright protection and improving the distribution channels for legitimate NBA merchandise.

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.

Privacy and data collection in the PRC

by Paul Jones

China has been working on a form of privacy legislation since 2003, generally based on the European model. Drafts were produced in 2005, but the drafting has not moved forward very quickly. Continue reading

Innovation: China’s Top 50 Brands

Innovation continues to be an important topic and a key element in the Chinese market. WSJ China blog reported the results of agency Millward Brown and media company WPP’s annual research on the top 50 most valuable Chinese brands. So, just how have Chinese brands fared in the government’s priority to innovate?

The study analyzed the financial information of listed companies, ratio of attribution to corporate earnings from the brand(s), and paired it with data from a survey of consumers. A major factor in brand value comes from consumer perception of the brand’s progress in the area of innovation. While many brands have seen dramatic increases in brand value, others have seen declines or stagnation as a result of “a failure to innovate”. Not surprisingly, consumers in China value innovation as do their counterparts in other part of the world. Chinese brands who have had notable progress in this area include Tencent, maker of the Wechat app; Baidu, the internet giant; Hainan Airlines; and Septwolves, an apparel company selling upscale goods to China’s smaller cities.

For more discussion on China’s innovation, please see this article written by one of my students, Jae Zhou and a former colleague, Benjamin Bai.

Understanding China’s New Environment for Intellectual Property

On April 11th, Fordham Law School held its first China focused IP Conference, “Understanding China’s New Environment for Intellectual Property”.  The program covered a range of issues, from patenting trends, to challenges in design protection, and intellectual property protection challenges for cloud computing in China, with mixed panels of academics, practitioners, judges and government officials from both countries. Continue reading