China: Draft Revisions To Chinas Copyright Law - Your Opportunity To Provide Feedback

Last Updated: 30 April 2012

Earlier this month, the National Copyright Administration of China (NCAC) released a draft of proposed revisions to China's Copyright Law. The draft, which updates and expands the law, aims to improve the general level of copyright protection available in China, and to bring China's Copyright Law into line with international standards.

Feedback on the draft has been requested by 30 April 2012. This Alert summarises some of the key amendments that have been proposed, and contains our initial observations in relation to them.

I. New categories of 'work'

a) Works of applied art - Article. 3(9). Although Regulations for the Implementation of International Copyright Treaties, issued by the National State Council in 1992, made provision for the protection of works of applied art, the current Copyright Law, enacted in 2001, makes no mention of such works. In practice, some foreign IP holders have managed to protect their works of applied art as works of fine art; however, the specific inclusion of such works in the law should reduce many of the uncertainties that have existed.

b) Audio-visual works – Article 3(12). The existence of separate categories of 'cinematographic works' and 'visual recording works' in the existing law has resulted in considerable confusion, particularly in the Karaoke industry. The introduction of a separate category of 'audio-visual works, that includes both 'cinematographic' and 'visual recording' works, should clarify the situation.

II. Scope of protection

a) Right of reproduction – Article 11.2(1). The right of reproduction has been specifically extended to include reproduction 'in digital format'; however, issues surrounding the making of three-dimensional copies of two-dimensional works, and vice versa, have not been addressed in the Draft.

b) Right of further royalty collection – Article 11.2(13). Copyright owners will benefit from the new right introduced in relation to works of fine art, photographic works, and original manuscripts. Each time such works are assigned, the original author is entitled to share the revenue derived from the assignment.

c) Right of dissemination via information networks – Article 11.2 (8) The Draft has extended the scope of this right by including a reference to live broadcast and transmission via information networks.

d) Extended rights of radio and TV stations – Article 38. The rights of radio and television stations have been extended to include the right to prevent the transmission, recording or reproduction of programmes in the internet environment.

III. Copyright ownership

a) Derivative works – Article 13. The Draft makes it clear that the user of a derivative work must obtain the consent of both the primary right holder and the creator of the derivative work, and compensate both.

b) Collaborative works – Article 14. While the existing law deals with remuneration for the use of individual contributions to collaborative works, it makes no provision for remuneration in relation to collaborative works where the individual contributions cannot be used separately. This omission has been rectified. The Draft provides that in this situation the copyright is held jointly; if the authors cannot reach agreement one author may not unreasonably prohibit the exercise of copyright by the others, provided that any revenue must be distributed among all the authors.

c) Audio-visual works - Article 16. Unless otherwise agreed, the producer is the owner of copyright. When using the script or music, however, he must obtain a licence from, and pay compensation to, the authors. This is an expansion of the rights currently granted to authors.

d) Works in fulfilment of employee's obligation – Article 17. The Draft simplifies the ownership of works created in the course of employment. The ownership should first be agreed by the parties; however, in the absence of agreement, copyright will belong to the employee and the employer will be entitled to use the work free of charge for the purposes of its business. There are some exceptions e.g. engineering and product designs, the copyright in which will belong to the employer, with the employee having a right of authorship.

IV. Term of protection:

In respect of most works, the term of copyright remains unchanged. Consistent with international practice, works of applied art will be protected for 25 years from the date of first publication.

V. Limitation of rights

a) Three step test – Article 39. The Draft elevates the 'Three-Step-Test', referred to in the Implementing Regulation, into law i.e. the use of published works without the license of the copyright owner must neither affect the normal use of the works concerned nor unreasonably prejudice the legitimate rights and interests of the copyright owner.

b) Authorised use ofComputer Software - Article 41 to 43. Provisions contained in the Computer Software Regulations, enacted in 2002, are elevated to law by the Draft. These include provisions that the authorised user is allowed to install the software into the computer, reproduce it for the sake of backup, and make necessary alterations to it for the purposes of adaptation to a practical application environment. Such reproduction or alteration cannot be provided to any third party and should be destroyed when the authorisation terminates.

a) Sound recording of musical works - Articles 46 and 48. Once a sound recording has been published, other sound recording companies may, without the consent of the primary copyright owners, produce their own version of the recorded works, provided they follow the procedures set down by the appropriate copyright administrations, and pay royalties to a relevant collective society in accordance with the fee standard formulated by the National Copyright Administrations. This provision has been the subject of much concern among sound recording companies and song writers. They have already submitted their comments to the National Copyright Administration.

VI. Technological protection measures and rights management information

An entire new chapter, Chapter 6, is devoted to the protection of technical measures relied on by copyright owners to protect their copyright works.These provisions demonstrate the legislature's desire to do what it can to strengthen the protection available to copyright owners.

VII. Damages – Article 72. This Article introduces detailed provisions clarifying the damages available for copyright infringement. Compensation will be on the basis of the owner's actual loss or, where that is difficult to calculate, the illegal gains of the infringer. Where both are difficult to calculate, it will be on the basis of a reasonable multiple of the royalty payable on normal trading. Where that, too, is difficult to determine, the Court may award damages up to RMB 1 million (approx. US$158,000). This is progress as the existing upper limit was RMB500,000; however, in order to obtain these damages there is an additional requirement for registration of the copyright or relevant agreement. Although registration is not compulsory, copyright owners may now feel obliged to register. For repeated copyright infringers, punitive damages one to three times higher than the above damages have been introduced into the law. This also represents significant progress.

VIII. Administrative enforcement – Articles 73 and 75

The enforcement power of administrative authorities has been increased. They are entitled to seize or confiscate infringing products, and examine or reproduce the sales invoices and contracts etc relevant to the infringing activities. Whereas previously the precondition to an administrative authority taking action was that the infringement should be "detrimental to the public interest", now it is that the infringement is such as to "impair the order of the socialist market economy" – a precondition that should be more easily satisfied.

IX. Mediation – Article 83

Last but not least, the draft contains provisions for the copyright administration department of the State Council to establish a mediation committee for the mediation of copyright disputes. The mediation agreement will be legally binding. The availability of mediation should provide a speedier and less costly means of resolving copyright disputes.

Our comment

Our copyright team, led by Tim Smith and Sharon Qiao*, is actively engaged in the Copyright Law revision process, both as client adviser and expert commentator. It will be making submissions in relation to the Draft and will be happy to include any concerns you may have. If you wish to add your voice, please let us know by 25 April 2012.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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