On November 11, 2020, the Standing Committee of the National People’s Congress passed the latest revision to the Copyright Law (“CL”). The CL was enacted in 1990 and was amended twice, in 2001 and 2010. The new amendment will take effect on June 1, 2021.
The reform introduces some significant wording changes to make the language of the Copyright Law more consistent with other civil laws in expression (such as the substitution of “citizens” with “natural persons”, or “movie works and works created in a manner similar to filmmaking” with “audio-visual works”). The CL also introduces technological protection measures.
Besides these, however, the focus of the amendment is on the penalties that will be applicable in case of copyright infringement; competent authorities will be provided with increased powers when investigating such illegal acts.
The amended CL, with reference to the liabilities triggered by infringement, reiterates what was already stated by the previous version of the law. However, it introduces an additional penalty rule that was not provided before.
The CL provides a list of activities that are deemed to be copyright infringements and states that persons who have committed the said acts shall bear civil liability to cease the infringement, eliminate the bad effects of the act, make an apology, or pay compensation for damages.
These acts of infringement include:
(1) Reproduction, distribution, performance, screening, broadcasting, compilation, or transmission of others’ works to the public through information networks without the consent of the copyright holder, unless otherwise stipulated in this Law;
(2) Publication of books for which another party has exclusive publication rights;
(3) Reproduction or distribution of audio-visual recordings of a performance or transmission of the performance to the public through information networks without the consent of the performers, unless otherwise stipulated in this Law;
(4) Reproduction or distribution of audio-visual recordings or transmission of audio-visual recordings to the public through information networks without the consent of the producers of audio-visual recordings, unless otherwise stipulated in this Law;
(5) Broadcast or reproduction of radio and television programs without the required consent, unless otherwise stipulated in this Law;
(6) Intentional circumvention or sabotage of the technical measures adopted by rights holders for protection of the copyright or copyright-related rights of their works, audio-visual recordings, etc. without the consent of the copyright holder or the holder of copyright-related rights, unless otherwise stipulated by laws and administrative regulations;
(7) Intentional deletion or alteration of electronic data for rights management of works, audio-visual recordings, etc. without the consent of the copyright holder or the holder of copyright-related rights, unless otherwise stipulated by laws and administrative regulations; and
(8) producing or selling a work the authorship of which is counterfeited.
When the act of infringement harms the public interest, the competent copyright authority shall order the persons to stop the act and give them a warning, confiscate illegal income, confiscate and destroy the violating copies as well as materials, tools, and equipment used for manufacturing such copies. If the case constitutes a criminal offence, criminal liability shall be pursued in accordance with the law.
For the above-mentioned activities of infringement, the reform also introduces an additional penalty if public interest is harmed – a fine not higher than RMB 250,000 (approx. US$38,022) may be imposed in case of lack of any illegal income, difficulties to calculate such income, or when the illegal income is less than RMB 50,000 (approx. US$7,604). In case the illegal income is RMB 50,000 or more, a fine ranging from one to five times the illegal income may be imposed.
These penalties were not stated under the CL before the amendment. Thus, this change reveals the intention of enhancing the deterrent effect of the sanction to prevent future copyright infringements and increase the protections of such rights.
Some of the most remarkable changes made by the amendment to the CL pertain to matters concerning damages. Indeed, the latest amendment to the CL provides new criteria for calculating damages compensation, increases the statutory damages, and introduces punitive damages.
With reference to the calculation of the damages’ compensation, while the previous version of the law simply referred to the actual losses suffered by the right holder, and where it is difficult to compute the actual losses, to the illegal income gained by the infringer, the new CL provides new damage calculating method.
According to the revised CL, where the copyright or copyright-related rights are infringed, the infringer shall make compensation based on the actual losses suffered by the right holder or the illegal income of the infringer. The rights holder can freely choose either of the standards that is more preferential to them.
Besides, the revised CL introduces the possibility to refer to the royalties when calculating damages in the copyright infringement. When it is difficult to calculate the actual losses or the illegal income, the compensation can be calculated by referring to the royalties for such rights.
Moreover, the revised CL brings in punitive damages for willful infringements. Where the case is serious, the infringer may need to pay a compensation ranging from one to five times the damage amount determined based on the actual losses, illegal income, or royalties.
In addition, the revised CL amends the provision concerning the statutory damages by raising the maximum amount – previously up to RMB 500,000 (approx. US$ 76,045) and now up to 5 million – and by stating a minimum amount (RMB 500 or approx. US$76) that was not provided before the amendment of the law.
Thus, in case of intentional infringement, the new CL provides that the compensation that is due to the right holder shall range from one to five times the amount determined based on the above criteria and, if the actual loss of the right holder, the illegal income of the infringer, and the royalties are difficult to calculate, the people’s court shall, based on the circumstances of the infringement, award compensation of not less than RMB 500 (approx. US$ 76) but not more than RMB 5 million (approx. US$ 760.456).
The new CL, by raising the statutory damages and by adding quintuple damages for intentional infringement, ulteriorly strengthens the deterrent effect against copyright infringements.
Similar to the recently amended patent law, the new CL introduces a shift in the burden of proof, providing that when the right holder has provided evidence about the infringement, but the relevant account books or materials are held by the accused infringer, the court may order the latter to provide the said account books and materials. If the infringer refuses to comply with the court’s order, or provides false account books and materials, the people’s court may determine the compensation amount with reference to the claims of the rights’ holder and the evidence provided.
In addition to this, during the trial of a copyright dispute case, the court shall also order to destroy the infringing copies as well as the materials, tools, and equipment used for manufacturing the infringing copies, or order to prevent the aforesaid materials, tools, and equipment from entering into commercial channels, without compensation.
The said amendments undeniably favor the rights’ holder, indeed, by shifting the burden of proof. In case of lack of cooperation by the defendant, the compensation will be calculated based on the plaintiff claim, while, on the other hand, by allowing the court to order the destruction of the infringing copies (and any other material used for manufacturing them) and preventing the commercialization, the protection of the copyright is strengthened.
The revised CL introduces provisions related to technological protection measures (“TPM”), which are a set of technologies used for protecting copyright and rights related to copyright.
The CL thus authorizes the use of such measures and prohibits others from circumventing or destroying TPM, or from intentionally providing others with technical services to do so, unless expressively provided by laws and administrative regulations.
The CL provides a list of exceptions, stating that in any of the following cases, TPM may be circumvented, provided that technologies, devices, or components used to circumvent technological measures are not made available to others, and that the other rights enjoyed by a right holder in accordance with law are not infringed:
The violation of the said prohibition leads to civil liabilities and as further clarified above, a fine may be also imposed.
The provision of TPM is not completely new to the CL. In fact, the previous version of the CL already provided the act of circumventing technological measures as infringement of copyrights, but the express possibility of using the TPM as lawful measures to protect such rights is an innovation introduced by the reform.
Hence, with such provisions, the reform expands the scope of the law by including TPM among the measures that a right holder shall implement to protect the copyright, thus reshaping the CL according to the emerging needs of copyright’s protection caused by the development of information technology.
The amendment of the CL introduces a new provision conferring to the copyright authorities’ additional powers when investigating suspected infringements.
More specifically, pursuant to the revised CL, the copyright authorities are entitled to:
The CL also clarifies that when the copyright authorities exercise the above powers, the parties concerned shall assist them and shall cooperate with them.
The introduction of such a provision is not of secondary importance. In fact, the possibility of taking measures against suspected infringements, either by preserving any possible evidence of the wrongful act, or by collecting relevant information, undeniably strengthens the protection of the copyrights.
The reform of CL is the response of the Chinese government towards the increasing number of lawsuits for copyright infringement in China, including those for digital piracy. Hence, the law establishes a system of fines for infringements, and strengthen copyrights’ judicial protection.
In this regard, increasing the statutory damages together with the introduction of punitive damages, the shift of the burden of proof in judicial proceedings, and the measures to destroy infringing copies and manufacturing tools – all cumulatively produce a heavy deterrent effect and, at the same time, strengthen the copyright protection either before or after the trial.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at email@example.com.
We also maintain offices assisting foreign investors in Vietnam, Indonesia, Singapore, The Philippines, Malaysia, Thailand, United States, and Italy, in addition to our practices in India and Russia and our trade research facilities along the Belt & Road Initiative.
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