Draft Amendment to China's Copyright Law

by Sheppard Mullin Richter & Hampton LLP

[author: Jiamu Sun]

The Copyright Law of the People’s Republic of China (“Copyright Law”) came into effect on June 1, 1991, and has since been followed by two rounds of revisions. The first round of revisions was in order to accommodate China’s entry into the World Trade Organization (“WTO”), and became effective on October 27, 2001. The second round of revisions was in order to implement WTO rulings in Sino-USA intellectual property rights disputes, and became effective on April 1, 2010.

On March 31, 2012, the National Copyright Administration of China (“NCAC”) released for public comment the Copyright Law for the People’s Republic of China (Draft Amendment) (“Draft”). As compared with the previous two rounds of revisions, the revisions contained in the Draft are rather comprehensive.

Some key features of the Draft:

Registration of Copyrights and Related Rights

Although the formation of copyrights and related rights follow the principle of “automatic protection” (i.e. all creative works are subject to the protection of the Copyright Law as soon as they are produced), there still exists two problems. First, it is hard to protect the copyrights of owners of unpublished or anonymous works. Second, transaction parties have difficulties in determining the status of rights.

As a result, the Draft clearly provides that the copyright owner and the holder of related rights may register their copyright or related rights with the special registration agency established by the copyright administration department of the State Council. The registration certificate is preliminary proof of registration.

However, the Draft does not provide the standards concerning registration fees, nor does it provide the rules concerning the registration of copyrights and related rights. Instead, related departments in the State Council will take charge.

Copyright Ownership

First, with regard to the works of legal persons, the Draft adds the requirement that such works shall be funded by legal persons or other organizations and be published under the name of legal persons, other organizations or their representatives.

Second, with regard to joint work, the Draft adds that the authors of joint works shall have the right to file a suit.

Third, the Draft changes the rules concerning the ownership of the copyrights to audiovisual works. The Draft provides that the ownership of such copyrights shall be contractually agreed upon by the parties. In the absence of any such contractual agreement, the copyright shall belong to the producer, but the authors of the screenplay, song and music composition shall enjoy the right to receive remuneration from the subsequent use of the audiovisual works.

Finally, with regard to works created in the course of employment, the Draft simplifies the earlier stipulation that any such ownership shall be subject to the agreement of the parties. The Draft provides that in the absence of any such agreement, the copyright shall belong to the employee and the employer shall be entitled to use such copyright for free in the scope of their business, however, copyrights with respect to engineering design and product design shall belong to the employer, with employees enjoying the right of authorship.

Statutory Copyright Permission System

First, the Draft introduces new duties, such as prior registration before statutory licensing, paying remuneration through collective copyright management organizations, and indicating the sources. Where users of the works do not promptly complete these duties, the copyright administration department may issue administrative penalties according to the particular circumstances at hand.

Second, the Draft eliminates the exception to the statutory copyright licensing system created by the declaration prohibiting the use of others. That is, even if the author has declared that the use of works by others is not permitted, the declaration does not affect the statutory copyright license, the declaration of exclusive ownership of newspaper and periodical is an exception.

Third, the Draft adds graphic works to the category covered by the statutory copyright licensing system for textbooks.

Fourth, the Draft adds declaration of exclusive right of publication to the statutory license for reprinting.

Fifth, concerning statutory licenses for recording, the Draft sets a period of three months following the publication of legal recording. If certain requirements are met, other recording producers can use the aforementioned legal recording without permit of its copyright owner.

Finally, the Draft incorporates the stipulation on the statutory license for radio and television to broadcast recording products into the stipulation on the statutory license for radio and television to broadcast works.

Extended Collective Management of Collective Copyright Management Organizations

The Draft stipulates the principles of an extended collective management system. That is, the administrative copyright department of the State Council may authorize collective copyright management organizations that have great representativeness to conduct extended collective copyright management on behalf of non-members.

Civil Liabilities

First, the Draft simplifies the provisions on civil liabilities.

Second, the Draft stipulates that Internet service providers that providing purely technological services are not responsible for reviewing copyright and related rights.

Third, the Draft stipulates that if a person has already paid license fees to collective copyright management organizations and is brought to court for litigation, the user is exempt from compensation for infringement but shall stop such infringement and pay appropriate fees.

Finally, the Draft revises the stipulation concerning compensation for infringement. The Draft adds (i) a stipulation on the multiplier of the fee in copyright transactions, (ii) restrictive conditions to statutory compensation, and (iii) punitive compensation in the amount of one to three times the actual damages or illegal income for repeated intentional infringement.

Administrative Mediation of Copyright Disputes

The Draft tentatively stipulates an administrative mediation system for the resolution of copyright disputes. Among other things, this is in order to fully apply the expertise of copyright administrative departments, to utilize the efficiency and convenience of the administrative mediation system, to relieve parties of the financial burdens of being entrenched in litigation, and to reduce the pressures on courts. Given that such an administrative mediation system may be subject to an immense number of detailed procedural provisions, the Draft addresses only basic principles and leaves concrete items to be addressed by other regulations.

The Draft has solicited a large volume of comments. Among others, it was reported that the Draft’s statutory copyright permission system enraged some Chinese songwriters by its statutory copyright permission system stipulated in Article 46. The heads of the NCAC have indicated their dedication to continue exploring the best approaches in order to most equitably balance the rights of various stakeholders.

The Draft is an important aspect of China’s ongoing overhaul of its existing intellectual property protection regime. Among other things, the Draft updates the existing regime that was earlier established with an emphasis on a centrally planned economy, accounts for developments in high-tech, and is designed to better protect China’s national interests.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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