China: what you need to know about the amended Copyright Law

Highlights of the amended Copyright Law

•  Introduction of punitive damages for serious, willful infringement (Art. 54): Similar to the situation under the latest versions of China's other intellectual property laws (i.e. the Trademark Law, the Patent Law and the Anti-Unfair Competition Law), the Copyright Law (see here in Chinese) now provides that willful and serious infringements are punishable with up to five times the determined amount of direct damages. This marks the first time that punitive damages are adopted in the Chinese Copyright Law.  It remains to be seen how the Chinese courts will interpret the two conditions for the award of punitive damages, namely that there is "seriousness" and "willfulness" in the infringement committed (e.g. does infringement with mere knowledge of the existence of a copyright qualify as willful infringement, or is a specific intent to infringe required?). On the other hand, it is worth noting that while such punitive damages under the amended Copyright Law will only be available from its date of entry into force, i.e. 1 June 2021, copyright owners may in fact already be able to claim punitive damages under the new Civil Code, which will enter into force on 1 January 2021.

• Higher cap for statutory damages (Art. 54): Statutory damages under the Copyright Law are discretional, lump- sum damages granted by a court when the evidence to support the claimant's claim of direct damages, assessed as the claimant's loss or the infringer's illegal gain, is not sufficient, or when such damages cannot be proven by the claimant.  As a matter of practice, it is by far the most frequently used manner of determination of damages by the courts in copyright infringement cases in China, and the increased cap for statutory damages is therefore very important for copyright owners in China.  Under the amended Copyright Law, the range of the statutory damages, within which the court can exercise its discretion in awarding damages, is significantly raised from the current maximum of RMB 500,000 (USD 76k) to an amount between the new minimum of  RMB 500 (USD 76) and the new maximum of RMB 5 million (USD 760k) under the amended Copyright Law.  It is noteworthy that the amended Copyright Law now adopts a minimum amount for statutory damages, which, though very low at RMB 500 (USD 76), could be helpful for copyright owners who are claiming serial infringements of copyright.

• Evidence burden shifting for damages (Art. 54): Similar to the provisions in China's new Patent Law, the amended Copyright Law contains a provision allowing for the shifting of the burden of proof from the copyright owner to the infringer relating to damages calculation.  When the claimant has exhausted its effort to provide evidence - where the evidence needed to calculate the damages (e.g. accounting books and other materials) is held by the infringer - the court can order the infringer to provide such evidence. If the infringer refuses to submit it to the court when ordered to do so, or submits fabricated evidence, the court can determine the amount of damages based on the initial evidence and calculations of the copyright owner, while also taking into account an aggravating factor - being the failure of the infringer to satisfy their burden of supplying contrary evidence. This is a welcome move which also largely reflects existing judicial practice.

• Further liberalization of types of copyrightable works (Art. 3): The amended Copyright Law aligns closer to the open-ended concept of copyright found in the civil law copyright tradition, by adopting a broader open ended list of copyrightable works. Under the former Copyright Law, the open ended category of works included: "other works as provided for in laws and administrative regulations". This open ended category is now further liberalized to "other intellectual achievements that meet the characteristics of a work", i.e. not requiring the intervention of the legislature or administrative authorities. This codifies the existing practice of the courts to also grant copyright protection for categories of 'works' not explicitly listed in the Copyright Law. This was illustrated by the Beijing IP Court (ruling on appeal) in 2018 (Beijing Water Design Technology Co Ltd, vs Beijing CSCA Technology Co. Ltd.), when it recognized the copyright protection of a 'musical fountain' in an infringement case, i.e. a fountain choreography accompanied by a sound-and-lights show.

• Replacement of the category “cinematographic works” by the broader term “audiovisual works” (Art. 3): The amended Copyright Law modernizes the category of "cinematographic works" and revamps it to the broader concept of "audiovisual works". While it remains to be seen how the courts will interpret this provision in practice, it is expected that this will facilitate the copyright protection for sports, gaming and music video programs, whether online or offline.

• Broadening of rights in sound recordings and broadcasting rights (Art. 45 & 47): The amended Copyright Law broadens the scope of certain neighboring rights (also known as "related rights"). For example, Article 45 extends the scope of protection of sound recordings with the right of dissemination (both wired and wireless) and the broadcasting right. Article 47 clarifies that the right of retransmission for broadcasting organizations comprises wired and wireless means as well as broadcasts via information networks. This suggests that Internet livestreaming (e.g. sports and e-gaming events) could be covered by the broadcasting right, thus potentially providing an answer to a previously contentious and unsettled issue, i.e. neither the broadcasting right nor the right in information network dissemination is considered adequate to provide copyright protection for Internet livestreaming of sports and e-gaming events. This right also seems to be sufficiently broad to cover interactive and on-demand services to consumers.

• Rules on collective management organizations refined (Art. 8): The amended Copyright Law provides more detailed provisions on copyright collective management organizations. In particular, the amended Copyright Law stipulates that these organizations shall collect royalties from users based on authorization (i.e. not an automatic right), and that the royalty rates shall be negotiated and determined by the copyright collective management organization and the relevant user representative. The amended Copyright Law provides that if such negotiation fails, the copyright administration can make a ruling, which can be appealed to the courts. It is also possible for the parties to bring such case straight to the courts. Collective management organizations are also obligated to regularly publish general information such as information on royalties, management fees, the undistributed portion of the royalties, etc.; this will allow for some level of scrutiny on their activities.

• Codification and harmonization of pre-existing rules, and transmission into national law of provisions from international treaties: The amended Copyright Law also incorporates various rules previously contained in administrative regulations (e.g. rules regarding technological protection measures and originality) and international treaties, e.g. the Marrakech Treaty (Article 24 par. 12 of the amended Copyright Law concerning fair use limitations now includes access to published works for visually and otherwise impaired persons), and the Beijing Treaty on Audiovisual Performances (Article 52 par. 8 of the amended Copyright Law concerning copyright infringement now additionally protects the rental rights of audiovisual performers). The amended Copyright Law also aligns its terminology closer to international treaties, such as redefining the term "citizen" to "natural person" and "other organizations" to "unincorporated organizations".

Next steps

Should you have further questions about the amended Copyright Law, or should you require a full English translation of the amended Copyright Law, please contact any of our lawyers listed on the right.

Authored by Stefaan Meuwissen, Eugene Low and Yu-An Chang