I covered this topic during my recent webinar for the China-Britain Business Council about China Film Intellectual Property. Here is a summary of the main points I made.
China joined WIPO (the World Intellectual Property Organization) in 1980 and it introduced its first copyright law in 1990. China adopted modern intellectual property laws as a condition of joining the WTO (the World Trade Organization) in 2001.
The amendments of 2001 were the first round of modernization of China’s copyright law. A second round came into force in 2010. A bill representing a third round of amendments is now at an advanced stage. Incidentally, one of the biggest issues currently being debated is whether China should introduce a terrestrial public performance right for sound recordings. China is often criticized by the US for its copyright laws but China and the US have more in common than you might have thought when it comes to copyright — they are both among a small number of nations that do not regard sound recording copyright as including a terrestrial public performance right. In other words, in the US and China, when a recording of a song is played on free-to-air radio the record company and the recording artist are not entitled to receive any royalties. The interests of the record companies and the broadcasters are at odds here. For more on this, see Will Chinese Broadcasters Pay Public Performance Royalties to Record Companies?
The general principles applicable to copyright in the West apply to copyright in China. China recognizes the moral rights of creators. As in the US, copyright comes into existence by operation of law but copyright is also registrable. For more on the general principles, see China Copyrights: The Basics. Going beyond generalities, note that effective notice and takedown procedures exist for pirate content online. My firm handles many of these takedown applications. Depending on the sophistication of the Internet provider concerned, the applicant needs to prove that they are the copyright owner and the applicant’s attorneys need to prove that they represent the copyright owner. Another emerging area of interest is the registration of security over Chinese copyrights; i.e., the possibility of registering a kind of charge over a Chinese copyright.
Despite the pace of modernization, intellectual property remains a relatively new concept with little basis in Chinese history or culture, so copyright infringement is still a big problem. The Chinese generally have a different attitude to intellectual property. Confucianism is still influential. It tends to devalue novelty and innovation and to encourage mastery through emulation. The stigma applicable to copying or plagiarism in the West does not apply in China. To some extent, policies encouraging or requiring the disclosure of proprietary information by foreigners as a condition to the granting of business licenses have contributed to this. For instance, under the so-called “indigenous innovation” policy introduced in 2006, China’s state-owned enterprises were required to extract technology from foreigners through processes described as “co-innovation” and “re-innovation”. The issue is considered in AmCham China’s 2015 Business Climate Survey.
The biggest problem with the Chinese copyright system has been that copyright infringement proceedings do not deter infringers because damages awards are very low. In other words, if you sue someone for copyright infringement in China you won’t get much in the way of compensation. The evidentiary burden imposed on copyright plaintiffs is extremely high and, in the absence of sufficient evidence of infringement, damages are capped at 500,000 RMB (about 80,000 USD). For more on this see Copyright Extremophiles by Eric Priest.
Even in face of these problems, there have also been some encouraging developments in recent years. As mentioned in Copyright Extremophiles, the turning point came in 2009. At that time almost all online content was pirated and delivery platforms were all advertiser-supported — consumers were required to view ads before downloading pirate content. In 2009 Coca-Cola and Pepsi were sued for contributory copyright infringement because they were advertising on a Youku platform from which pirated content was readily available. That is, they were sued not for infringing copyright directly but for contributing to the infringement. The case was brought by members of a group calling themselves the “China Online Video Anti-Piracy Alliance”. Fearing a flight of advertising revenue, Youku moved rapidly to take down infringing content and allow only licensed content. Over the next couple of years, this resulted in an increase in average online license fees from around 1,600 USD per episode to around 300,000 USD per episode. The point here is that these improvements were driven by China’s copyright system.
Despite the difficulties, it is possible to protect intellectual property in China if appropriate steps are taken early enough. These steps include registering copyrights in China and entering binding contracts that deal properly with copyright issues in China. Unfortunately, foreigners often fail to take these steps and therefore ensure that they will have absolutely no redress in the event of a dispute. The myth that copyright cannot be protected then becomes a self-fulfilling prophecy.