A Brief Review on the Copyright Law of the People’s Republicof China (Draft Amendments for Examination)

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(Author: Hongbin Zhang, Partner, Yuru Zuo Associate)

On June 6, 2014, the Legislative Affairs Office of the State Council circulated the “Copyright Law of the People’s Republic of China (Draft Amendments for Examination)” to the public for comment (“Draft for Public Comment”), before which the National Copyright Administration invited public comment on such draft amendments on March 31 and July 6, 2012, respectively.

Pursuant to the Draft for Public Comment, the newly revised draft consists of 90 articles in 8 chapters, while the currentcopyright law contains 61 articles in 6 chapters. In terms of the style, the provisions regarding “Limitation on Rights” and “Technical Mearsures and Rights Management Information” are separately listed in two chapters. Based on these re-designations, the draft amendments reflect a sequence of the “Copyright”, “Related Rights”, “Limitation on Rights”, “Exercise of Rights”, “Technical Mearsures and Rights Management Information” and “Protection of Rights”, which makes the style and structure of the copyright law more consistent with the systematization and logic of law.

In respect of the specific formation of clauses, the Draft for Public Comment incorporates several provisions of the Regulations for the Implementation of Copyright Law (“Implementing Regulations”), Regulations on the Protection of Right of Dissemination via Information Network, Regulations on the Protection of Computer Software and Interpretation of the Supreme People’s Court on Several Issues concerning the Application of Law in the Trial of Civil Dispute Cases Involving Copyright. Furthermore, it specifies the links between the copyright law and other laws and regulations, setting forth linked provisions on the application of law to the criminal punishment on the acts of infringement, the applications by the parties concerned for the preliminary injunction, property preservation and evidence preservation, the judicial affirmation of mediation agreements, as well as the administrative reconsideration and proceedings. Compared to the current Copyright Law, the Draft for Public Comment has made significant progress in the formation of provisions.

The proposed amendments to the Copyright Law are summarized as follows:
I. General Provisions
1. Authors
In response to a protracted dispute in academic circles, the provision of Draft for Public Comment regarding the authorship is revised by substituting the “natural persons, legal persons or other organizations” for original “citizens, legal persons or other organizations” (see Article 2) [1]. Upon this revision, the Copyright Law will be more consistent with relevant rules of international treaty.

2. Related Rights
The Draft for Public Comment introduces the concept of “related rights” (see Article 1), specifying that related rights shall be protected by the Copyright Law (see Article 3).
As defined in the Draft for Public Comment, “related rights” mean “the rights that publishers have in the layout designs of the books or periodicals that they publish, the rights that performers have in their performance, the rights that recording producers have in the audio recordings that they produce, or the rights that radio stations or television stations have in the radio or television programs that they broadcast or telecast”, and “shall automatically arise as of the date when a book or periodical using layout designs is first published, or when a performance takes place, or when the production of an audio recording is first finished, or when a radio or television program is first broadcasted or telecasted, without going through any procedure”. (SeeArticle 6)

3. Scope of the Protection of Copyright
Under the Draft for Public Comment, a basic principle of copyright theories is expressly set forth, that is, “the protection of copyright only covers expressions, and does not extend to ideas, processes, principles, mathematical concepts, operational methods or the like”. Moreover, the item of “news of current events” which is ineligible for copyright protection is revised as “mere factual information reported by newspapers, periodicals, radio stations, television stations, the Internet and other media”. (See Article 7)

4. Works
The current Copyright Law only lists the types of copyrighted works, while such works are defined under the Implementing Regulations. In the Draft for Public Comment, these definitions of specific works set forth in the Implementing Regulations are adopted in the law and the objects of rights are modified as follows:
(1) the provisions on the “video recordings” are removed from the part of related rights;
(2) the “works of applied art” is added, which shall be protected by the Copyright Law for a term of 25 years;
The current Copyright Law of China doesn’t contain any provisions on the works of applied art, but under the Provisions on the Implementation of the International Copyright Treaties, the works of applied art made by foreigners are entitled to copyright protection for 25 years. This super-national treatment has been condemned for a long term; therefore, the provisions on “works of applied art” are added in the Draft for Public Comment.
(3) “cinematographic works and works that are created in ways similar to film production” are renamed as “audio & video works”;
(4) “model works” are renamed as “three-dimensional works”;
(5) “computer software” is renamed as computer program, in order to protect computer files in the form of written works.

II Copyright
1. Division of personal rights and property rights in copyright (Article 13)
Though the current Copyright Law stipulates that “copyright shall include the following personal rights and property rights”, it fails to distinguish the personal rights from the property rights. As set forth in the Draft for Public Comment, other than the right of publication, the right of authorship and the right of integrity which are the personal rights, any other types of rights shall be construed as the property rights. Such division demonstrates that the Chinese copyright law carries on the dualistic theories.
(1) Removing the right of alteration
Under the current Copyright Law, the right of alteration is “the right to revise or authorize others to revise one’s work”, and the right of integrity is “the right to protect one’s work against misrepresentation and distortion”. These two types of rights overlap with each other and it is even held that these rights are same in essence; therefore, the right of alteration is deleted and incorporated in the right of integrity in the Draft for Public Comment.
(2) Removing the right of compilation
Under the current Copyright Law, the copyright includes the “right of compilation” which is the exclusive right held by the copyright owner, while it’s also stipulated that “compilations of certain works, extracts from works, or data or other materials that do not constitute a work are works of compilation, provided that they show originality in terms of the selection or arrangement of their contents. The copyright in a work of compilation vests in the compiler”. Since the “right of compilation” can actually be covered by the “right of reproduction”, the provisions on the right of compilation are deleted and the provisions related to compiled work are reserved in the Draft for Public Comment.
(3) Incorporating the right of production into the right of adaptation (Article 13.2.8)
Under the current Copyright Law, the right of production is defined as “the right to fix a work in a medium using a cinematographic process or a process analogous to cinematography”, overlapping with the meaning of the right of adaptation which is “the right to change one’s work and thereby create a new original work”. In a way, the right of production is a special form of the right of adaptation; therefore, the right of production is incorporated into the right of adaptation in the Draft for Public Comment.
Other than the abovementioned revisions, “the right to make additions and abridgements, alter the sequence of instructions and sentences or otherwise change a computer program” is added in the right of adaptation. This description actually accounts to the right of
alteration in the Regulations on the Protection of Computer Software. Since the right of alteration is deleted in the Draft for Public Comment and any alteration to the computer program is hardly deemed as somewhat personal attribute and thus is unsuitable to be incorporated into the right of integrity, when amending the Copyright Law, the legislators have attempted to reserve the right of alteration, specially referring to the alteration to computer program, as a part of property rights. However, this revision was excluded at last because of its lack of distribution.
(4) Incorporating the right of projection into the right of performance (Article 13.2.5)
Under the current Copyright Law, the right of projection is defined as “the right to publicly show one’s work of fine art, photographic work, cinematographic work or work created by a process analogous to cinematography by means of technical equipment such as a film projector, slide projector, etc”, actually overlapping with the scope of the right of performance by means of machine, i.e., the right to publicly broadcast the performance of one’s work by various means. In the Draft for Public Comment, the right of production is deleted and the definition of right of performance is revised as “the right to publicly perform one’s works by singing, playing instruments, dancing, recitation or otherwise, and the right to disseminate one’s works or the performance thereof to the public by using technical devices”.
(5) Revising the right to broadcast by the right to broadcast and telecast (Article 13.2.6)
The right to broadcast is derived from the related provisions of the World Intellectual Property Organization Performances and Phonograms Treaty. For the purpose of binding the wireless broadcasting and disseminating of works to the public by wire or wireless means, the provision on the “right to disseminate via network” was added in the 2002 Amendment to Copyright Law. The right to broadcast and the right to disseminate via network are substantially related to the dissemination of works, but they fail to fully cover the disseminating acts.
In order to avoid being constrained by the literal meaning of “broadcasting”, the right to broadcast is amended as the “right to broadcast and telecast” in the Draft for Public Comment which further provides that the right to broadcast and telecast means “the right to broadcast and telecast or re-broadcast and retelecast a work to the public in a wireless or wired way, and the right to disseminate the telecasting or broadcasting of the work to the public by using technical devices”. The definition of the right to broadcast and telecast applies to the non-interactive way of dissemination, to solve problems, such as televising live and fixed-time broadcasting (telecasting), encountered in practice, while the term right to disseminate via information network apples to the interactive way of dissemination.

2. Adding provisions on the right of droit de suite (Article 14)
The right of droit de suite means that, “the author of a work of fine art, a photographic work, a written work or a musical work or his successors or legatees shall have the right to share the profits from the portion of the appreciated value obtained from resale by means of auction of the original or manuscript of the work by the owner thereof after the first transfer thereof. The said right shall be exclusively enjoyed by an author or his successor or legatee”. The Draft for Public Comment doesn’t use the concept of “right of droit de suite”, but explicitly set forth the foregoing content of such right.

3. Rights of the authors of movies and television series to receive remuneration twice
As provided for in the Draft for Public Comment, the authors of films, television series and other audio-visual works shall include directors, screenwriters and the authors of the musical works created specifically for the audio-visual works. Issues concerning property rights and profit sharing of the copyright of films, television series and other audio-visual works shall be agreed upon by producers and authors. In the absence of such agreements or explicit agreements, the property rights in the copyright shall be enjoyed by the producers, provided that the authors shall enjoy the right of authorship and the right to share profits. (See Article 19)
Such provisions aim to protect the rights of the authors of films, television series and other audio-visual works, including directors, screenwriters, lyricists and composers, to receive remuneration twice, and to reduce the inequality between the hot selling films or television series and the penniless directors, screenwriters, lyricists or composers. Nonetheless, this provision is concentrated on the theory but has much less practical operability. The issue about how the authors share profits is still in need of further interpretation.

4. Right of redemption
As provided for in the Draft for Public Comment, where the original of a work of fine art displayed at a public space is the only carrier of the work, the owner of the original shall notify the author thereof within a reasonable period before dismantling, damaging or otherwise disposing of the work in fact, and the author may protect his copyright by repurchase, reproduction or other means, unless otherwise agreed upon between the parties concerned (see Article 22). With an aim to solve the conflict between the property rights and copyright, this provision is applicable to any potential damages to the copyright caused by the owner of property rights in disposal of property rights. However, this provision sets forth relatively strict conditions for application, to prevent the author from abusing its rights to interfere in the disposal of property rights.

5. Orphan works (Article 51)
It is inevitable for the orphan works in the context of digital environment with the development of grassroots authors. The user may suffer huge risks of infringement by using the orphan works, which is obviously harmful to the transmission of works and will cause an irreconcilable contradiction with the effective and efficient network transmission. In response to this issue, the Draft for Public Comment provides a special rule on the orphan works. Orphan works are published works that are still protected by copyright but “the identity of the copyright owner is unknown” or “the identity of the copyright owner is ascertained, but the copyright owner is unreachable”, despite due efforts of the users. The Draft for Public Comment further provides that the user may use the orphan work in a digital format after depositing loyalties with an institution designated by the copyright authority.

III. Related Rights
1. The rights of performers to lease and receive remuneration
In the Draft for Public Comment, the right to license others to lease the recordings of the performer’s performance or copies of such recordings is added as a right enjoyed by performers. (See Article 34.2.5)
The Draft for Public Comment further provides that if a producer employs a performer to produce an audio & video work, the producer shall execute a written contract with and pay remunerations to the performer. (See Article 37)

2. Performance given in the course of employment
The provisions on performance given in the course of employment are added under the chapter of related rights in the Draft for Public Comment. These provisions are based on the considerations that the relationship between performers and performing entities urgently needs to be addressed in practice. To respect the free will of parties concerned, the Draft for Public Comment provides that in the absence of an agreement between the parties concerned, the copyright in a performance given in the course of employment shall be enjoyed by the performer in principle, provided that, however, the copyright in a collective performance given in the course of employment shall be enjoyed by the performing entity. (See Article 36)

3. The right of recording producers to receive remuneration
Under the current Copyright Law, With respect to a sound or visual recording produced by a sound or visual recording producer, the producer shall have the right to license others to reproduce, distribute or rent out the recording, or disseminate it to the public via information network, and to receive remuneration thereby. Such right is amended in the Draft for Public Comment by adding the right to receive remuneration from use of the sound recording in the ways of performance and broadcasting or telecasting. (See Article 40)

IV. Limitation on Rights
1. Fair use
The system for fair use of copyrighted works is a major system to place limitation on copyrights. Reasonable use refers to use of a copyrighted work, to the extent permitted by laws, without permission from and without payment of remuneration to the copyright owner, which will not constitute an infringement. With the aim to solve the problem that use of a work created by others in the relevant circumstances will not constitute an infringement on the copyright held thereby, the following adjustments are made in the Draft for Public Comment: (1) an open-ended provision on “fair use”, i.e. other circumstances, is added; (2) the use of works created by others for the user’s personal study or research is limited to reproduction of the parts of written works; (3) a provision that quotation of works created by others shall not constitute the main or material part of the user’s work is added; (4) the scope of media is expanded to the media of “networks”; and (5) a provision on the subsequent use of products obtained from copying, drawing, photographing or video recording artistic works at outdoor public places is added. (See Article 43)

2. Fair use of computer programs
Except for those limitations on the rights accrued from computer program as set forth in the provisions on fair use in theRegulations on the Protection of Computer Software, which are incorporated into the Draft for Public Comment, for example, Article 44 is derived from Article 16 of Regulations on the Protection of Computer Software and Article 45 is derived from Article 17 thereof, the Draft for Public Comment further provides that any use of computer program for the purpose of compatibility is reasonable, reflecting the response of legislators on the Copyright Law to the battle between QQ and Qihoo360.

3. Statutory Licensing
In the Draft for Public Comment, the five kinds of statutory licensing system of copyright under the current Copyright Law are amended by canceling the statutory licensing of use of sound recordings, while retaining the statutory licensing of compilation and publication of textbooks and reprinting by newspapers and periodicals (see Articles 47 and 48) and incorporating two of statutory licensing systems in respect of radio stations and television stations into one system (see Article 49). With respect to the statutory licensing of use of sound recordings, the current Copyright Law provides that where a sound recording producer produces a sound recording by using a music piece that has been lawfully recorded by another person as a sound recording, the copyright owner’s authorization may be omitted subject to payment of remuneration in accordance with the relevant provisions; if the copyright owner declares to prohibit the use of that work, the work shall not be used. In the draft amendments to the Copyright Law issued by the National Copyright Administration on March 31, 2012, such provision was revised as that “three months after the first publication of a sound recording, other publishers of sound recordings may, pursuant to the conditions set forth in Article 48 of this Law, use the musical work therein to produce sound recordings without permission from the copyright owner”. Upon such revision, even if a pre-condition of three months is required, the removal of saving clause in the original provisions triggered off strong opposition from music industry, particularly the singers. At last, by weighing costs and benefits, the National Copyright Administration removed the statutory licensing of use of sound recordings in entirety from the Draft for Public Comment.
In addition, the Draft for Public Comment further specifies the conditions for use of the statutory licensing, including: “(1) an application shall be filed with relevant organization for collective management of copyright for the record prior to the use of the work; (2) the name of the author as well as the title and source of the work shall be indicated during the use of the work, unless impracticable due to technical reasons; (3) within one month after the use of the work, relevant loyalties shall be paid to the right owner directly or via relevant organization for collective management of copyright according to the remuneration payment standards set forth by the copyright authority under the State Council, and the name of the author, the title and source and other information in respect of the work shall be provided to the organization for collective management of copyright. The foregoing remuneration payment standards shall apply to the activities of use of published works that are conducted upon the implementation of the Law. The organization for collective management of copyright shall publish record-filing information under the preceding paragraph in a timely manner, and establish an information inquiry system about the use of works, for relevant right owners to access information about the use of works and payment of loyalties free of charge. The organization for collective management of copyright shall transfer the loyalties collected under Paragraph 1 of this Article to relevant right owners within a reasonable period.” (Article 50)

V. Exercise of Rights
In the Chapter “Exercise of Rights” of the Draft for Public Comment, the most significant highlight is the addition of Section “Collective Management of Copyright”, pursuant to which not only certain provisions of the “Regulations on Collective Management of Copyright” are included in the Copyright Law, the Chinese system of collective management of copyright is also adjusted substantially.
1. Extended collective management
In the system of extended collective management in other countries and regions, it is generally required that the members of copyright collective management organization with authorization to conduct the extended collective management of copyrighted works shall cover the majority of copyright owners in the jurisdiction of such organization. At present, neither of copyright collective management organization in China can meet such requirement. When drafting the Draft for Public Comment, legislators attempted to authorize the copyright collective management organizations to conduct extended collective management through the Copyright Law, but their effort was extremely opposed by right owners. Upon weighing costs and benefits, the application scope of the extended collective management system is limited as provided for in the Draft for Public Comment, that is, “where an organization for collective management of copyright can represent the interests of relevant right owners throughout the country as authorized by the right owners, it may exercise the copyright or related rights on behalf of all the right owners when their published musical or audio & video works are disseminated to the public through self-service karaoke systems and when their works are otherwise used, except where the right owners have declared in writing that the collective management is not authorized” (see Article 63).

2. Reaffirming the function of copyright collective management organization to collect royalties
The function to collect royalties is usually set forth in the articles of association of copyright collective management organization. The Draft for Public Comment reaffirms such function and confers the right to collect royalties on copyright collective management organization by laws. (Article 64)

VI. Technological Measures and Rights management Information
Under Article 48 of the current Copyright Law, intentionally circumventing or destroying the technological measures and intentionally removing or modifying the rights management information without permission, are defined as infringing actions. However, it’s evident that neither the technological measures nor the rights management information is copyrighted material. Only in the event that the interests of the copyright owner or copyright-related right owner are damaged due to circumventing or destroying the technological measures and removing or modifying the rights management information, they will be linked with copyright infringement. Therefore, it’s quite reasonable to specially establish a chapter with respect to the technological measures and the rights management information in the Draft for Public Comment.

Except for the definitions of technological mearsures and rights management information, other provisions of such chapter are derived from the Regulations on the Protection of the Right of Dissemination through Information Networks. But compared to the Regulations on the Protection of the Right of Dissemination through Information Networks, the Draft for Public Comment supplements such a case in which the technological protection measure can be bypassed, that is to “conduct encryption research or reverse engineering research of a computer program” (see Article 71.2.5).

VII. Protection of Rights
The Draft for Public Comment makes the following significant modifications to Chapter “Protection of Rights” in terms of the style and the specific formation of clauses:
1. The infringing actions which shall assume civil liability are defined by means of summarization instead of listing used in the current Copyright Law, expanding the scope of rights claimed by the right owner.
Articles 47 and 48 of the current Copyright Law list the infringing actions which shall assume only the civil liability and which shall assume civil liability and may suffer administrative penalties, respectively. In fact, any action to infringe the copyright shall assume civil liability, and the administrative penalties will be imposed only on those actions with damages to the public interests. The method of listing will make this clear idea complicated. Therefore, the Draft for Public Comment does not list the infringing actions which shall assume only the civil liability, but specifies those infringing actions which shall suffer administrative penalties and certain infringing actions in special circumstances by means of listing.

2. Adding the provisions on the liabilities of network service providers
The provisions on the liabilities of network service providers (Article 73) are mainly similar to those set forth in the Tort Liability Law. Based on the provisions of the Tort Liability Law, the Draft for Public Comment adds two provisions to regulate the actions of network service provider to instigate or help others to infringe (Article 73.4) and to explicitly state that the safe harbor rule is not applicable to the network service provider who provides the contents on the network (Article 73.5).

3. Indemnification in connection with collective management organization
Article 74 sets forth the civil liabilities to be assumed by the user who has paid remuneration for use of copyright the owner of which isn’t a member of the collective management organization according to the contract executed with such organization, where the copyright owner has difficulty to exercise or control such rights. In respect of assumption of liability for indemnification if the user has concluded a contract with the collective management organization, the user shall make compensation for the loss of the non-member right owner according to relevant standard for loyalties under the collective management of copyright; if the user has not concluded a contract with the collective management organization, the user shall make compensation for the loss of the non-member right owner according to the principle of “compensation for damages in general civil torts”.
Paragraph 2 of the said article provides that in three circumstances where a user maliciously uses works of non-member right owner, the user shall make compensation for the loss of such right owner according to the principle of “compensation for damages in general civil torts”, but not relevant standard for loyalties under the collective management of copyright. This provision permits the non-member right owner to exclude the use of collective management of copyright and to claim on the user who maliciously uses the copyright involved through collective management organization for compensations in accordance with the principle of “compensation for damages in general civil torts”.

4. Compensation for damages
In respect of calculation of liquidated damages, the Draft for Public Comment provides that the right owner may claim compensation by choosing to base the damages on actual losses, the illegal income obtained by the infringer, a reasonable multiple of the cost of rights transaction, or a specific amount below RMB one million. (Article 76.1) The reasonable multiple of the cost of rights transaction is a new method to calculate the amount of liquidated damages, which is helpful to solve the problem about how to verify the actual losses or the infringer’s illegal income.
In respect of burden of proof regarding compensation for damages, the Draft for Public Comment states that “where the right holder has duly discharged its obligation of burden of proof, but the account books and materials related to the infringing acts are mainly controlled by the infringer, the relevant people’s court may, for the purpose of determining the amount of compensation, order the infringer to submit account books and materials related to the infringing acts. Where the infringer fails to provide such account books and materials or provides false account books and materials, the people’s court may render a judgment on the amount of compensation according to the claims of the right holder” (Article 76.3). The right owner’s burden of proof is reduced due to such provisions.

Comments
The current Copyright Law was revised on October 27, 2001 and February 26, 2010, respectively. The first revision was made to meet the minimum standards of protection under TRIPS, while the second revision resulted from the dispute over intellectual property rights between China and the United States. Only some minor articles were revised in response to outside pressure. Therefore, these two revisions were limited and failed to solve the dilemmas that the current Copyright Lawcan’t provide enough protection to the rights and the authorization mechanism and transaction rules for copyright don’t operate well. By contrast, the amendment made in this Draft for Public Comment is initiative and comprehensive. With the aim to meet the requirements of economic and technical development and with the participation and competition of various interested parties, this amendment covers more aspects of copyright issues.

The Draft for Public Comment makes significant changes to the Copyright Law in its structure and specific provisions. The amendments to the specific provisions reflect legislators’ principle of encouraging the creation of works, improving the protection of copyright and further combating infringing activities. In respect of encouraging the creation of works, the Draft for Public Comment values the right of authors and performers to receive remuneration and emphasizes to encourage the creation by means of raising the income of authors participating in the creation. In respect of improving the protection of copyright, it promotes the integration and perfection of the copyright system and related rights system to make the system of rights more perfect and to expand the scope of capacity of related rights; on the other hand, it perfects the remedy measures (e.g., the administrative mediation) and reduces the right owner’s burden of proof regarding the determination of infringing actions and compensation for damages (for example, it specifies that the right owner may transfer it obligation of burden of proof upon reasonably providing the proof and that the amount of liquidated damages may be calculated with reference to the multiple of royalties). In respect of combating infringing activities, more severe administrative penalties are imposed, the statutory amount of damages is increased and the punitive compensation is added pursuant to the Draft for Public Comment. Compared to the current Copyright Law, the Draft for Public Comment makes great progress on the whole.

Nonetheless, disputes remain over some provisions of the Draft for Public Comment, such as whether it’s proper to delete the statutory licensing of use of sound recording and the unduly development of the system of collective management of copyright in comparison to the current conditions of collective management organization. All of these problems are required to be further clarified or explored. In the course of amending the Copyright Law, the competition among various interested parties will also have profound impact on the ultimate tendency of the Copyright Law. We will follow up with the amendment process to legislation on copyright.

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