MoFo News Item

The New Copyright Law in China

12/20/2001

China has revised its copyright law to comply with the provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (the "Trips Agreement"). The revisions have updated the old law to provide more comprehensive protection for copyright owners in China. New forms of intellectual property rights in the Internet era and protection of such rights have been granted. The new law contains provisions on injunctive relief and statutory damages so as to strengthen enforcement of intellectual property rights after China enters into the WTO. This article summarizes the essential aspects of the revisions and provides a synopsis of the level of protection available to owners in China.

The Standing Committee of the National People's Congress passed the Decision Concerning the Revision of the Copyright Law (the "Decision") at its 24th meeting in Beijing on October 27, 2001. The new Copyright Law has altogether 60 clauses which include revisions of 41 articles, deletion of 5 articles, and addition of 11 new articles. The revisions have extended the scope of protection of copyright to copyright owners.

Expansion of the Scope of Protection

The new Copyright Law has expanded the scope of protection for copyright owners to acrobatic art works, architectural works, and three-dimensional works. Acrobatic art works (Za Ji) are a traditional Chinese works that are popular among the Chinese people. Architectural works and three-dimensional works are expressly provided for under the Bernie Convention for the Protection of Literary and Artistic Works, which China acceded to in 1992. These works are now specifically protected pursuant to the new Copyright Law in China.

It is also interesting to note that works of applied art are expressly provided for under the Berne Convention. However, China does not provide protection to works of applied art by way of copyright under the old Copyright Law. There is no express provision for works of applied art under the new law. Protection may be sought as a type of ("graphic works") under the new law. In addition, the owner may also seek protection under the Patent Law if such works of applied art meet the requirements for external design patents under the Patent Law.

Expansion of Rights of Copyright Owners

Under the old law, "copyright" is defined to include the following moral rights and economic rights:

  1. the right of publication;
  2. the right of attribution, i.e., the right to affix one's name to a work in order to indicate the author's identity;
  3. the right of revision, i.e., the right to revise and authorize others to revise the work;
  4. the right of integrity, i.e., the right to protect the works against misrepresentation and distortion; and
  5. the right to exploit the work and to receive remuneration from such exploitation.

The Detailed Rules for the Implementation of the Copyright Law (issued by the National Copyright Bureau on May 30, 1991) contains detailed definitions for the various forms of exploitation, including reproduction, performance, broadcasting, exhibition, distribution, production through cinematization, televising or video recording, adaptation, translation, annotation, editing, etc.

These various forms of exploitation of the copyright are now included as separate rights of the copyright owners under the new Copyright Law. They are grouped into 17 distinctive rights as follows:

  1. the right of publication;
  2. the right of attribution;
  3. the right of revision;
  4. the right of integrity;
  5. the right of reproduction;
  6. the right of distribution;
  7. the right of leasing;
  8. the right of exhibition;
  9. the right of performance;
  10. the right of show;
  11. the right of broadcasting;
  12. the right of transmission through computer information network;
  13. the right of production through cinematization;
  14. the right of adaptation;
  15. the right of translation;
  16. the right of compilation;
  17. other rights that should be owned by copyright owners.

Among these rights, the right of leasing, the right of show, the right of transmission through computer information network and the right of compilation are new forms of rights that have been added to the new law. The right of transmission through computer information network is defined as the right to provide works to the public by way of online or wireless transmission through the computer information network to enable the recipient to obtain the works at a time or location of their own choice. The copyright owner now has the definitive right to transmit his works online through the Internet. Any unauthorized transmission of his works online will constitute copyright infringement on the Internet.

The new law states that China's State Council will set out separate regulations for the protection of computer software and online transmission of copyrighted works. It therefore remains to be seen how the right to online transmission will be protected and enforced in practice.

The right of compilation refers to collection of works, components of works or data that may not constitute works or other materials, which, by reason of the selection and arrangement of the content, constitute intellectual creations. It is said that the right of compilation enables database owners to claim copyright to their databases. This right will no doubt have impacts on the development of digital data in the digital economy in China.

The Broadcasting Right

Previously, Chinese radio and TV stations enjoyed unlimited broadcasting rights in respect of copyrighted works. Under Article 43 of the old Copyright Law, published works could be used without prior consent from the copyright owner or payment of a license fee. This was in sharp contrast to the rules for the use of foreign works in China by Chinese radio or TV stations. These rules required that radio and TV stations had to obtain prior consent of foreign copyright owners if they wished to use foreign copyrighted works. This difference suggested that the Chinese radio and TV stations enjoyed "super national treatment" when they broadcasted Chinese copyrighted works.

The new law now divides works into published works and unpublished works. When Chinese radio or TV stations want to use unpublished works, they are required to obtain prior approval and pay a fee to the copyright owner. With regards to published works, radio and TV stations do not have to obtain prior consent from the copyright owner, but they are required to pay the copyright owner a fee.

Therefore the unlimited broadcasting rights enjoyed by Chinese radio and TV stations are now being restricted under the new law, in particular in relation to unpublished works.

The Right of Performance

Previously, a performer (a performing individual or unit) who wished to use for a performance another's unpublished work had to obtain consent from the copyright owner and pay remuneration. However, a performer who wished to use another person's work for commercial performance did not need to obtain consent from the copyright owner. This has now been changed to require performers to obtain consent from the copyright owner and pay remuneration in all cases. If a unit is organizing the performance, such unit is obliged to obtain consent from the copyright owner and pay remuneration to the copyright owner.

The requirement to get consent from the copyright owner is contrasted by the rights of the performers in respect of their performance. A performer now has the right to give a license for live broadcast and public transmission of his or her performance for reproduction and distribution of audio and video recordings, and for online transmission of his or her performance. Furthermore, the performer has a right to receive remuneration for the use of each. The licensee must obtain consent from the copyright owner in respect to the use of the underlying copyright works in these instances.

Copyright License and Assignment

A copyright license is required if one wishes to use another's copyrighted work, except where such use falls into the permitted "fair use" categories. The copyright license should specify the specific kinds of rights that are being licensed to the user and indicate whether the use is exclusive or non-exclusive.

Previously a copyright license agreement was limited to 10 years. This limitation has been removed, and the parties are free to agree on the term of the license. There is no requirement for registration of the copyright license under the new Copyright Law.

An assignment agreement in writing is required if the copyright owner wishes to assign the economic rights as specified under the law. There appears to be no requirement for registration or approval of the assignment under the new Copyright Law.

Publisher's Right

Under the new Copyright Law, the publisher's exclusive right to publish a book under a contract with a copyright owner shall be protected by law. The publisher also has the right to license, or to prohibit others from using the typographic designs of the books or periodicals it has published. The right to the typographic design is protected for a term of 10 years from the date of first publication.

Collective Organization

The new Copyright Law permits copyright owners to authorize the collective organization or association of which they are a member, like the China Music Copyright Association, to assert their rights in copyright infringement cases and to act on behalf of the owners in initiating and defending legal actions or arbitration proceedings. These organizations are by nature non-profit organizations. The State Council is authorized under the new Copyright Law to issue separate regulations governing the establishment, rights and obligations of these organizations, and the administration of license fees.

Associations in specific sectors such as the Business Software Alliance in the computer software industry will benefit from these provisions. The ability of the association to act on behalf of its members in specific cases will help facilitate software owners to take class or collective actions in piracy and other cases.

Preliminary Injunctive Relief

The new Copyright Law introduces the concept of preliminary injunctions in an attempt to strengthen enforcement. Under the new Copyright Law, copyright owners, or copyright holders related to copyright, may request the People's Court to take injunctive relief measures to stop relevant infringing acts and to preserve the property if they have evidence showing another person is committing or is about to commit infringing acts, and their legitimate rights and interests would be irreparably damaged if such infringing acts are not stopped immediately.

The court will apply the procedures applicable to interim measures under the PRC Civil Procedure Law. In a civil action in China, the People's Court may, ex officio or upon request, order preservation measures such as attaching, sealing up, seizing or freezing property. Article 92 of the Civil Procedure Law provides that if a judgment might be impossible or difficult to execute due to an act of a party or for other reasons, a People's Court may, at the request of the other party, make a ruling for preservation of property. In the absence of such request, the People's Court may, when necessary, also decide on its own initiative to adopt measures for the preservation of property.

The party applying for an order of preservation will usually be required to provide security for the preservation. Such security will most often be in the form of a bank guarantee to the effect that the bank agrees to compensate the other party if the preservation turns out to be wrong and causes damage to the other party. Failure to provide such security will result in the application being rejected.

The Pre-Suit Preservation of Evidence

The new Copyright Law allows copyright owners or owners related to copyright to apply for pre-suit preservation of evidence where the evidence may be lost or difficult to recover without such measures. When the court receives the application, it must make a ruling within 48 hours. If the preservation order is made, such order must be executed immediately.

In giving such orders, the court may order the applicant to provide appropriate security. If the applicant fails to provide the requested security, the court will reject the application.

If the applicant fails to commence legal proceedings within 15 days of the date of the preservation order, the court should discharge the preservative measures.

Statutory Damages

An important provision has been added to the new Copyright Law with regard to statutory damages. Article 48 of the new Copyright Law provides that if the copyright and the related rights are infringed, the infringer shall pay damages equal to the amount of actual losses of the copyright owner. Where it is difficult to calculate the amount of actual losses, compensation shall be paid on the basis of the illegal income of the infringer. If it is difficult to calculate the amount of actual losses or the amount of illegal income of the infringer, the court has the power to award damages not more than RMB500,000 depending on the circumstances of the infringement case.

The amount of compensation should also cover the reasonable amount of expenses incurred by the copyright owner in its efforts to stop the infringement, which presumably includes the fees for investigations and legal services. The statutory damages rules will be very useful in practice where infringement is found but damages are difficult to calculate.

The new Copyright Law clearly demonstrates the Chinese government's efforts to meet its obligations under the Trips Agreement and other international conventions like the Berne Convention for the Protection of Literary & Artistic Works to which China is a signatory party. The expansion of the scope of protection to such works as architectural works, three-dimensional works, and typographic design right shows that drafters of the new Copyright Law have studied carefully the types of works under protection in international treaties. The inclusion of the right of transmission of works through the computer information network and the right of collection illustrates the Chinese government's awareness of the need to protect copyright owners in the digital economy so as to facilitate the development of e-commerce in China. The implementation of these new rights will depend on how the State Council will regulate these rights.

The inclusion of injunctive relief and statutory damages in the new Copyright Law is expected to improve the enforcement sector. Copyright owners should be aware of these provisions in pursuing protection and enforcement of their rights in China. It remains to be seen how the PRC courts will enforce these provisions to protect the interests of copyright owners.

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