Interest measurement in judgments on disputes over copyright infringement in China

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(Author: Yang Xiuqing Professor and Doctor of Laws, CCE Law School, China University of Political Science and Law; Source: China Intellectual Property)

The dispute over copyright infringement not only concerns the protection of interests of both litigants, but also usually concerns the public interests; therefore, the measurement of interests is unavoidable in a final judgment. This article is based on an analysis of the necessities and weaknesses of measurement of interests. It focuses mainly on the explanation of the applicable rules of interest measurement during the process of civil judgment on disputes over copyright infringement, in the hopes of preventing the arbitrary abuse of interest measurements.

I. Statement of the problem

In January 1960, the Shanghai opera Spark Amid the Reeds held its first performance. The stage direction of the play stated that the play was made through “collective creation, written by Wen Mu.” In 1964, the cover of the play of the Shanghai opera Spark Amid the Reeds published by Shanghai Culture Press also stated the play was made through “collective creation, written by Wen Mu.” Wen Mu wrote the play and was the director of Shanghai Hu Theater (Hu Theater).

He passed away in June 1995. His wife Ms. Xiao and six children were his legal heirs and a lawsuit was brought to determine ownership of the play. In August 1999, in the case of Shanghai Hu Theater v. Yangtse Audio & Video Publishing House for its infringement of copyright in publication and issuance of the VCD of Shanghai opera Spark Amid the Reeds, Shanghai No.1 Intermediate People’s Court ruled that the play was a service creation and its copyright belongs to Shanghai Hu Theater.

In March 2002, Shenyang TV filed an application with the Liaoning Bureau of Radio and Television seeking approval to shoot the TV play Sha jia bang , which was adapted from Spark Amid the Reeds . They received approval and the shooting started in March 2005. The families of Wen Mu and Hu Theater learned about the shooting of Sha jia bang and raised objections to the theater group. They stated they did not approve of the adaptation from Spark Amid the Reeds and requested the theater group to stop shooting. Representatives of the theater group once communicated with the families of Wen Mu and Hu Theater about the adaptation in Shanghai, but no authorization was given from Hu Theater or the families of Wen Mu.

On April 12th, 2006, State Administration of Radio Film and Television issued the publishing license of the TV play Sha jia bang . From then on, the play was shown on dozens of TV channels including Shandong TV, Jiangsu TV, Shanghai TV and Beijing TV. The titles show “The play is based on the Shanghai opera Spark amid the Reeds written by Mr. Wen Mu of Shanghai Hu Theater”; the credits showed “Joint Production Units: The Society of China for Researching New Fourth Army and Anti-Japanese Base in Central- China, Shenyang TV, Jiangsu Broadcasting Corporation, Changshu Commission of the Communist Party of China, Changshu Municipal People’s Government, Beijing Huancong Video Culture Co., Ltd., Beijing Zhushi United Media Co., Ltd.”

On May 9th, 2006, the plaintiffs bought one VCD and one DVD of the TV play Sha jia bang from the defendant Yunli Company. The back cover of the VCD packing box was marked with a notice stating that it was “exclusively distributed by Guangzhou Youle Cultural Transmission Co., Ltd., published by Qilu Audio & Video Publishing House.” The plaintiffs then brought a lawsuit in the court, believing Hu Theater and Wen Mu shall be the joint copyright owner of the play of Spark Amid the Reeds , and the defendants had infringed the plaintiffs’copyright, and asked the court to order the defendants to stop infringement and compensate for losses.

After hearing the case, the Shanghai No.2 Intermediate People’s Court decided that credits of the TV play Sha jia bang involved in the case showed the play was based on Shanghai opera Spark Amid the Reeds written by Wen Mu of Shanghai Hu Theater, and the defendants Zhushi Company and Huancong Company without approval acknowledged that their shooting was based on adaptation, so the defendants’ infringement was definite. According to the relevant provisions of the Copyright Lawof China, any use of a work, through adaptation or any other means, without the permission of the copyright owner is as an infringement act. The infringer bears the civil liabilities to stop infringement, publish an apology and clarification to undo the consequential damages of misleading the public, and compensate the other party for losses.

However, Sha jia bang is a classic of communist writing, large funds have been invested in its shooting, and its broadcast has generated positive social effects. A simple judgment of banning this play is not good for the transmission of communist culture. Therefore, the court communicated with the parties several times. After the court’s careful mediation, all parties finally reached a compromise. Regarding Sha jia bang , the defendants, Zhushi Company and Huancong Company, agreed to acknowledge the infringement, to publish an apology, and compensate the plaintiffs for economic losses. The plaintiffs agreed to allow the defendants to broadcast Sha jia bang on the Chinese Mainland for fees. Regarding Spark Amid the Reeds, the plaintiffs agreed that Hu Theater should have copyright ownership of the play and the Wen Mu families should have the right of the play’s authorship. After the reconciliation agreement was signed, the defendants fully performed the agreement, and the plaintiffs withdrew their claims from the court.

Judged from the legal relations concerned in the case, the defendants have acknowledged the unapproved adaptation and shooting, so the fact of infringement is very definite. However, should the defendants be required to stop publishing and broadcasting the infringing TV play because of their infringement? Obviously, a judgment ordering the defendants to stop infringement act would be unreasonable and may damage the public interests. Therefore, how a court should reasonably balance the interests of the parties and the social public interests is key to finding a reasonable judgment of the case, and balancing the interests in the process of judicial judgment is the core aspect.

II. Necessity of interest measurement in civil judgment

Although pursuance of determinacy has been the eternal dream of judges in civil judgment, in reality, absolute determinacy can not be realized in any way. This is because judicial judgment is actually a meditation between legal norms and realities and it is a process of correspondence and assimilation between “ought-to-be” and “to-be.” Non-determinacy of interest measurement is mainly reflected in two aspects: Firstly, judged vertically, different times have different values, which appears as different interest measurement criteria in reality. Secondly, analyzed horizontally, people of the same time may have different understandings about interests according to their different experience. Therefore, interest measurement is not pure reasoning; instead, it’s a meditation between norm and reality.

Interest measurement method in civil judgment believes that the law is about distribution and protection of interests, and the most important task of law and legal science is to balance different conflicting interests in reality. When a judge has no means of handling the real needs in social life according to the logical structure, he needs to review and measure the interests of different parties involved in the case, and assist justifiable interests and the interests that are more worthy of protection win out.

Appearance of interest measurement method is a historical inevitability, which to a certain degree shows the social necessity of existence of interest measurement. The increasing diversification and complication of cases caused by the rapid development of economy may drastically conflict with the positive law which has limitation and unpredictable nature, and as a result, there is usually disharmony between the abstract legal norms and concrete cases. With the increasing diversification of interests and value, in the discovery process of civil judgment, there are inevitable measurements and selections between different conflicting interests or values; as a result, judges have to pay attention to interest measurement, and may be confronted with greater challenges in interest measurement. Therefore, interest measurement is not only a process of thought for discovering judgment, but also a judicial method.

Although not all cases have only one correct result, the judge shall give a reasonable judgment to each case. Therefore, measurement of legal interests is mainly aimed at building a substantial connection between individual cases and legal norms. The process of thought of legal interest measurement is actually a spiral circulation in hermeneutics, that’s moving between norms and facts. Judges do not measure cases completely free of values and with pure objectivity. They have prejudices and the moral sense that comes with prejudices, they probe into the meanings of law in individual cases through the conversation and weigh between norm and truth, past and presence, and themselves and society, and finally draw a reasonable and acceptable conclusion. Therefore, the application of interest measurement in judgment is actually an inevitable requirement for value and interests diversification.

III. Defects of interest measurement in civil judgment

When judges combine discretion with interest measurement, the discovery of judgment is certainly vested with freedom. This is why interest measurement is controversial as a kind of legal methodology.

During the discovery process of civil judgment, judges actually take value relativism as a basis to compare the concrete interests between both parties involved. Owing to the strong subjectivity of interest measurement and the lack of specific applicable norms of the overall structure of interest measurement, arbitrariness is hard to avoid in the process of interest measurement. The main reason for appearance of defect in interest measurement in civil judgment is that judges’ behaviors of interest measurement are subjective. For the discovery process of civil judgment, the primary function of interest measurement is to combine the abstract legal rules expressed through concept with concrete cases. During this process of combination, judges will unavoidably be involved with the balancing and judgment of system value and interests of the parties concerned in the case. Besides, the non-determinacy of the referred criteria during interest measurement of judges also gives interest measurement more subjectivity, because interest measurement stems from the extensive and deep conflict of interests existing in the increasingly complicated society, and elimination of the deviation possibly caused by the over subjective interest measurement can’t be independent from the specific criteria of interest measurement, namely the evaluation criteria of different interests and general rules and criteria for adjustment of conflict of interests; otherwise, the process of using interest measurement to find judgment has inevitably certain subjective arbitrariness.

Although interest measurement has certain defects, the purpose of using the interest measurement method is to overcome the rigidity of law encountered in difficult cases, and to relieve its conflict with practical circumstances, so as to find a better program to solve the conflict of interests within the scope of law. Therefore, in the long run, interest measurement is designed to maintain the law instead of overstepping or even destroying the law. The essence of the legality of interest measurement is to restrict the arbitrariness of judges. This is a basic requirement of law and the nature of justice process.

IV. Applicable rules of interest measurement in civil judgment on disputes over copyright infringement

Although interest measurement may likely be misused because of its strong subjectivity, as long as the judgment derived from interest measurement is acceptable, interest measurement may also be fairly called a reasonable judgment thought. As an important criterion to evaluate whether the result of interest measurement is reasonable, the parties’ acceptability of the judgment depends mainly on the degree of satisfaction of the judgment to the parties’ expected interests from litigation. As long as the judgment is within the range of the parties’ reasonable expectations of the resolution of their interests through litigation, the parties concerned will accept the judicial result.

In civil suits, although the parties concerned will have certain unavoidable subjectivity and may even be irrational in determining his expected interests from litigation according to the truth of the controversial case, basically, the parties concerned still conforms to the current laws and regulations, legislative spirit and the concept of values recognized by society in determining his expected interests from litigation. Therefore, so long as the interest measurement made by judges can basically comply with these basic principles, the result of civil judgment shall be considered to have been acceptability.

In the process of civil judgment on disputes over copyright infringement, in order to prevent judges from abusing interest measurement to make unfair judicial judgment, it’s very necessary to define the certain applicable rules of interest measurement during the civil judgment on disputes over copyright infringement from the following several aspects.

1. Applicable rules for measurement of different interests
a. To specify the hierarchical structure of different interests
Interest measurement has comparatively strong subjectivity, so during the discovery process of civil judgment, if judges make no overall measurement about the interest structure, it may be hard to avoid arbitrary abuse of interest measurement during the judging of copyright infringement dispute cases.

According to the requirement of interest measurement, interests can be divided into “interests of the parties concerned,” “interests of the masses,” “system interests” (namely legal system interests) and “social public interests.” Moreover, interests of the parties concerned, interests of the masses, system interests and social public interests also form a certain hierarchical structure and a progressive relationship from concrete to abstraction as well as the relationship of containing and being contained. Specifically, interests of the parties concerned, including the different interests of both litigants. Interests of the masses are the interests from similar judgments to similar plaintiffs or similar defendants in similar cases, which can magnify the interests of the parties concerned and make a judgment about protection or not in combination with the system interests and social public interests. Therefore, interests of the masses are a bridge to connect the interests of the parties concerned and system interests and social public interests.

The concept of system interests is obscure and abstract. It means the inherently essential interests of a legal system. The value of l aw cons i s t s in the pursuance to invariability and appropriateness; it needs to consider the judgment results of similar cases in the future; in particular, interest measurement usually happens due to legal blank or legal explanation, which will inevitably make a difference to similar cases in the future; therefore, when judging a case, it’s necessary to make assessments about the impacts brought by the system interests.

The term social public interests is also an abstract and hazy concept which is used in parallel with national interests, collective interests and self interests; its principal part is the public, namely public society; therefore, the social public interests is overall interests instead of partial interests and it’s universal interests instead of special interests in contents. In a word, in interest measurement, it’s necessary to overcome arbitrariness, guarantee the appropriateness of cases, and follow the law of the hierarchical structure of interest. Such hierarchical structure requires judges to obey the following process of thought during adjudication: to lie on the central of interests of the parties concerned and connect interests of the masses and system interests on the basis of social public interests, and especially make overall measurement about system interests. This process will allow the judge to draw an appropriate conclusion, that’s to say, whether it’s necessary to protect the interests of the parties concerned.

In the aforesaid civil judgment on the dispute over copyright infringement, the court does not simply decide that the defendants shall stop their infringement act according to the obviously existing infringement truth. Instead, it starts from the interests of the plaintiffs and defendants, and considers fully the social effects brought by the broadcasting of the TV play Sha jia bang , and gives the judgment that is acceptable to both litigants after an overall measurement about the reasonable use of copyright.

b. To specify the hierarchical relationship of different interests
Upon an analysis of the hierarchical structure of different interests, it’s observed that among the above said interests, interests of the parties concerned and interests of the masses essentially belong to individual interests, while system interests and social public interests belong to value interests. People can never make an effective and authoritative sequential arrangement about the interests which shall be acknowledged and protected by law via a philosophical approach. However, this does not mean that jurisprudence shall consider that all interests are on the same level or any qualitative evaluation is impracticable. For example, the interests of life is a legal prior condition for protecting other interests, so it shall be deemed to be more important than the interests of property. The interests of health are seemingly higher than the interests of enjoyment or recreation. “In most cases, interests either are involved with the same hierarchy, or totally heterogeneous to each other, so they can’t be compared in abstract. Under such circumstances, the sequence of the interests to be protected or harm shall be determined according to the degree of influence of the interests to be protected as well as the degree of harm of the interests supposed to concede to decide the proportion, so as to weaken the harm to the smallest degree or minimize the limit of harm as much as possible.”

However, during the discovery process of civil judgment on disputes over copyright infringement, when many interests are found to conflict with each other, in order to ensure the rationality and appropriateness of interest measurement, it is of crucial importance to determine the hierarchical relationship of interests. In other words, the interests with higher hierarchy ought to be protected with preference over that with lower hierarchy. Determination of the hierarchical relationship of interests is actually related to the following two aspects: one is the hierarchical relationship between different interests; the other is the hierarchical relationship between different interests of different subjects on the same interest.

c. Hierarchical relationship between different interests
In the discovery process of civil judgment on disputes over copyright infringement, it actually appears as the hierarchical relationship between individual interests and value interests and the hierarchy of value interests shall be set to be higher than the hierarchy of individual interests. During the adjudication of the copyright infringement dispute case analyzed above, the court’s ruling, which does not directly request that the defendants to stop their infringement, despite the fact that they are in fact infringing, is nothing more than the result of the measurement of such interests.

d. Hierarchical relationship between different interests of different subjects on the same interests
In the discovery process of civil judgment on disputes over copyright infringement, this issue mainly appears as the hierarchical relationship between different interests of the parties concerned in individual interests. It shall be defined that the interests hierarchy of the fundamental right enjoyed by the party concerned according to the Constitution is higher than the interests hierarchy of the specific rights enjoyed according to the substantive law; for example, the interests of life and health shall be higher than the interests of property, and the interests of freedom of speech shall be higher than the economic interests.

2. Applicable rules for measurement of the same interest
In juridical practice, although judges hope to find the judgment of a court case by means of legal logic, legal logic is not almighty. A principle or precedent may point to one conclusion at its logical extremity. The other principle or precedent may point to another conclusion with the same determinacy based on similar logic. With such conflict, we need to make a choice between these two aspects.

As to the above copyright infringement dispute case, in the discovery process of judgment, when judges are confronted with unavoidable right conflicts, and their protection of one right may damage the other right to be protected by law, judges need to make corresponding choices. If there are differences in hierarchical structure or hierarchy between conflicting rights, it’s advisable to make selective right protection according to the hierarchical structure of right or characteristics of hierarchy. However, when conflicting rights are on the same structural level or the same hierarchy, and judges can’t determine the preferential sequence of protection of both sides according to legal logic, they need to make interest measurement according to certain rules to protect one of the parties’ rights. Under such circumstances, it’s advisable to use the benefit maximization rule and loss minimization rule in economics for reference.

In determining the specific rules of economics, a basic hypothesis is usually taken as the premise, namely, a “human is the rational maximizer of self-interest,” based on which a basic rule of economics is established—the rule of maximization, also known as economic rationality rule. According to the maximization rule, “economic man” always pursues maximization of effectiveness rationally, except that the contents of maximization pursued differs between individuals. For instance, consumers pursue demand maximization; enterprises pursue profit maximization; governments pursue revenue maximization and so on. In civil suits, when judges can’t determine the priority of protection according to the different hierarchical structures and different hierarchies of right in front of conflicting rights, it may fairly be claimed to be a reasonable choice to use the benefit maximization rule to determine the right to be protected by preference among the conflicting rights.

The term benefit maximization rule means that during the judgment discovery process of hard cases with conflicting rights, the basic rule shall be the realization of maximized litigated property benefit when deciding which right shall be protected by preference. It is obvious that implementation of the benefit maximization rule is actually a pursuance to the optimal allocation of the power resources concerned in the case as well as the realization of maximization of the interests of the parties concerned and social interests through the optimal allocation of power resources.

The benefit maximization rule complies with the requirements of “active economics” or “positive economics.” However, for the damages or harms to both parties in the above mentioned copyright infringement case, the benefit maximization rule which complies with the requirements of “active economics” or “positive economics” seems hard to explain people’s behavior choice reasonably. By contrast, the loss minimization rule established according to the requirements of “passive economics” or “negative economics” may provide judges with more appropriate and reasonable explanations for them to find the result of civil judgment.

The term loss minimization means that when damages or harms have happened, people always try to minimize their own losses. Although “passive and active, and negative and positive” are not absolutely opposite, for the evaluation of the result of a certain thing, benefit and loss can be regarded as the positive and negative sides of the thing to some extent. Judged from one side, it belongs to loss minimization; while judged from the other side, it belongs to benefit maximization.

Despite all these reasons, the boundary between “passive and active” and “negative and positive” shall also not be mixed, because in the process when judges discover civil judgment, the judgment made according to the benefit maximization rule which complies with the requirements of “active economics” or “positive economics” is not only good for maximizing the interests of the parties concerned and society, but also good for the realization of legal system value as well as the establishment of a good legal order; while the judgment made according to the loss minimization rule which complies with the requirements of “passive economics” or “negative economics” mainly aims to minimize the losses caused by rights conflicts to the interests of the parties concerned and society as well as the damages caused by right conflicts to legal system value and legal order by choosing the right to be protected when rights conflict with each other.

From this it’s obvious that the benefit maximization rule is aimed to give active and expected guidance to people’s behavioral model and guide people to make positive behavior choices in the face of right conflicts; while loss minimization rule aims to guide people to try to improve the present status when damages or harms are caused due to right conflicts, so as to minimize the degree of damage to civil interests, legal system and legal order caused by behaviors. Therefore, when right conflicts have caused practical damages or harms, if judges still rigidly insist on the benefit maximization rule during the discovery process of civil judgment, it would not help and may make people question the rationality of the civil judgment made. In such cases, using the loss minimization rule to make civil judgment can usually turn the passive state of judicatory.

During the discovery process of civil judgment on the above stated copyright infringement case, judges have made an overall analysis and evaluation to the interests of the plaintiffs and defendants concerned in the case, and drawn a conclusion that the defendants have a clear act of infringement of the plaintiffs’ copyright. It does not matter whether it’s judged from the protection of the plaintiffs’ legitimate interests or the protection of intellectual property from infringement, namely the protection of social public interests, the defendants shall bear relevant liabilities for infringement. However, the defendants have invested a great degree of manpower and material resources in shooting the TV play Sha jia bang , and the TV play is shot in memory of the victor y of the Anti-Japanese War and its broadcasting has brought positive social effects. Therefore, if the defendants are ordered to bear the liability for infringement and stop broadcasting, the social value of the artistic work will be weakened and it will be a waste of resource for both the defendants and society.

It’s observed that in the case, if judges choose to protect the rights of plaintiffs from the legal copyright granted by law and order the defendants to bear the liability for infringement, it’s not only good for protecting the legal rights of plaintiffs, but also good for the realization of the value of state intellectual property law system; however, it’s doubtful that whether the judgment made according to the benefit maximization rule has social rationality. Therefore, under such circumstances when damages have caused by both parties’ right conflicts, the choice of using the loss minimization rule to actively take reasonable remedial measures to minimize the losses caused can yet be regarded to be more reasonable. Finally, after the court’s careful mediation, both litigants finally reached an agreement that the defendants acknowledged the infringement and would offer an apology in the newspaper, and compensated for the plaintiffs’ economic losses, and the plaintiffs allowed the defendants to broadcast the TV play Sha jia bang which is adapted from Shanghai opera Spark Amid the Reeds on Chinese Mainland by paying fees. In this way, on the one hand, it protects the plaintiffs’ copyright interests and property interests produced thereof, and minimizes the losses caused by the defendants’ infringement; on the other hand, it protects the resources invested by the defendants in shooting the work by requesting the defendants to compensate the plaintiffs for the losses and pay the charges for use. At the same time, it also protects the social value of the work, and minimizes the losses to the investment interests of the defendants for bearing the civil liability for infringement.

During the process in which the interests of both the plaintiffs and the defendants are balanced, actually, the value of the state intellectual property system is also effectively realized. Just as judge Kong Xiangjun said: in juridical practice, many right conflicts can’t be solved using the methodology of “life-or-death” or “you-or- me” reasoning; instead, measurement is made between two conflicting interests in the way of tolerance and coexistence, so that the conflicting interests can be restricted. This manner of judging is more in favor of compromise.