China Making Improvements in Copyright Protection

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By Vivian Ni

Mar. 16 – China’s video web sites have made “fundamental” improvements in their use of audiovisual products with authorized copyrights, according to Yan Xiaohong, deputy director of the General Administration of Press and Publication. Now, at least 76 percent of movies shown on the country’s 18 largest video web sites are shown in authorized-copyright format.

While people living in China may still find it relatively easy to buy a pirated movie in DVD format on the street, or download a non-copyright edition of a book from the internet, China’s efforts to enhance its copyright environment is undeniable. Major progress in recent years includes the official shutdown of the download services provided by China’s main file sharing web sites such as BTChina and VeryCD, both of which were then major online platforms where pirated cultural products were uploaded and shared by netizens.

China is also going through the third-round of amendments to its “Copyright Law,” which was first approved in 1990 before being amended both in 2001 and 2010. During the previous amendments, new concepts were introduced in line with both technological developments and international practices.

While cracking down on piracy in one hand, China is advancing its copyright exchange regime in the other. The National Copyright Administration (NCA) is making an attempt to gradually “normalize” China’s copyright trading activities, Yan said at a forum held on February 17.

Copyright exchange is coming into fashion nowadays, as it benefits both copyright owners as well as users. A platform for such trading activities enables the owners to profit more efficiently, and lets buyers have greater access to obtain copyright use rights at lower costs.

As an experiment in copyright trading, the NCA established a National Common Market for Copyright Exchange in 2009. Up until now, key members of the association have conducted copyright trading transactions amounting to RMB1.8 billion. In addition, they are also making copyrights an emerging financing vehicle by providing loan services with copyrights as pledges.

Opinion: China gains momentum in copyright protection
Complaints from international investors regarding China’s poor intellectual property rights environment may have pushed China to make changes, but the increasing benefits the country is seeing by promoting copyright products have likely provided the government with even greater motivation.

For instance, with less access to pirated movies, Chinese citizens go to the cinemas more regularly and movie distributors have seen box-office revenues surge to US$2.1 billion in 2011. Recently, China reached a settlement with the United States to allow an additional 14 movies in 3D or iMax format to be imported from U.S. movie makers every year, in addition to the current cap of 20 standard movies. Although  U.S. studios can collect a greater portion of box-office proceeds based on the agreement (25 percent compared with the current 13.5 percent-17.5 percent), the increasing imports of those premium movies will still mean considerable growth in revenues for Chinese movie theaters.

The above-mentioned settlement on movie imports is also an outcome of a World Trade Organization (WTO) dispute filed by the United States back in 2007, where China’s scope of movie import restrictions was found inconsistent with its WTO obligations. This case – which indicates a trend that China may be pushed to hold a more open attitude to cultural product imports – requires the government to increase its efforts to protect the interests of domestic importers who pay money for foreign copyright use.

Another important motivation for China to fight piracy is the need to shield and encourage its own cultural development. As part of its plan to expand the country’s “soft power” to the whole world, the government has offered various incentives to boost its cultural industries, and has called for increasing mergers and acquisitions as well as international cooperation to improve the strength of its media platform. Such new tendencies in industrial upgradation have naturally increased the authority’s sense of copyright protection.

Dezan Shira & Associates is a boutique professional services firm providing foreign direct investment business advisory, tax, accounting, payroll and due diligence services for multinational clients in China, Hong Kong, India, Singapore and Vietnam. For further advice and specifics relating to IPR issues in China, please email china@dezshira.com, visit www.dezshira.com, or download the firm’s brochure here.

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One Response

  • Chris Devonshire-Ellis says:

    China is a perennial beast to whip when this subject crops up – but improvements are being made. Naysayers are finding a different – and curiously compliant China when it comes to IP. It shouldn’t come as any surprise – China issued more patents than any other country last year and it is Chinese innovation that will affect their own insistance upon fair play. Early days I admit, but the times they are a-changing.
    CDE

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