The first substantial amendments to China’s Copyright Law in 20 years were passed in November 2020 and will come into effect on 1 June 2021 (the Amendments). The Amendments primarily focus on enhancing protections for copyright owners, better aligning China’s Copyright Law with international standards, and implementing the Beijing Treaty on Audiovisual Performances that entered into force in April 2020.

The heavy deterrence-related focus of the revised Copyright Law will strengthen protections for copyright owners, particularly relating to digital piracy.

The key amendments are as follows.

1. Damages

Some of the most notable changes are in relation to damages (Article 54 of the Amendments). The maximum statutory damages to be paid by an infringing party has increased from RMB500,000 to RMB5 million (from about AU$100,000 to AU$1 million), and must not dip below the new minimum of RMB500 (AU$100).

Damages will also now be calculated differently. The infringer must pay damages based either on the actual loss suffered by the rights holder or the illegal income of the infringer, as chosen by the rights holder. If it is difficult to calculate the actual losses or the illegal income, royalties can be used to calculate the damages.

New punitive damages have also been introduced to penalise parties that commit serious and willful copyright infringement. A culpable party may face damages of 1 to 5 times the ordinary damages awarded, being the loss suffered by the copyright owner or income gained by the infringing party. The introduction of these penalties demonstrates an intention to increase deterrence to prevent future copyright infringements.

2. Scope

The Amendments also extend the scope of China’s Copyright Law by broadening the definition of the term “works” to “intellectual achievements in the fields of literature, art and sciences which are creative new and original and can be presented in a certain form” (Article 3 of the Amendments). “Other intellectual achievements that fit the characteristics of works” are now also protected under China’s Copyright Law. These amendments should provide new and emerging copyright subject matter with greater protection under China’s Copyright Law.

Similarly, “cinematographic and works created by a process analogous to cinematography” is replaced with the more broadly defined “audio-visual works” (Article 3 of the Amendments). This amendment is consistent with the Beijing Treaty on Audiovisual Performances that was implemented in 2020. The broader definition seems focused on preventing piracy of live-streamed sports and online gaming broadcasts, as well as protection of emerging forms of works like short videos and animations.

Another adjustment that appears to target misuse of online gaming and sports materials is the redefinition of “the right of broadcasting”. The Amendments state that the “right to broadcasting” now means the right to publicly disseminate or relay a work by wired or wireless means, and to disseminate a broadcast work to the public through loudspeakers or other similar means for transmitting symbols, sounds and images. This allows communication through the Internet to be included in the scope of the right of broadcasting. This amendment also means that parties will risk infringing copyright if they broadcast the work of others without permission. This will particularly impact network broadcasters and those who stream content online in China.

3. Cooperative and derived works

Article 14 of the revised Copyright Law keeps the definition of co-authorship: where a work is created by 2 or more authors, copyright is jointly enjoyed by the co-authors. Those who do not participate in the work’s creation cannot become co-authors. As to the use of jointly authored works, the Amendments provide:

“The copyright of a work of joint authorship shall be exercised by the co-authors through negotiation; where negotiation fails, and there is no justified reason, no party may hinder other parties from exercising rights other than transferring, granting an exclusive license to others and pledging, but the benefits gained thereby shall be reasonably distributed to all the co-authors.”

Conversely, newly-added Article 16 and Article 45 set out that derived works may be exploited only with “double approval”; both the approval from the copyright owners of the derived works and of the original work.

4. Rights of actors

Article 44 of the revised Copyright Law adds a new duty, which better protects the rights and benefits of performers. New actors’ rights include the right to show their identity; the right to protect the character in their performance from distortion; and other rights as agreed by the parties. If the parties have not agreed or the agreement is not clear, the employer or performing entity shall enjoy the rights of service performance. Where the rights in a service performance are enjoyed by the performer, the performing entity may use the performance for free within its business scope.

5. Technical protection measures

Newly added Articles 49, 50 and 51 allow copyright owners to take technical measures in order to protect their copyright and copyright-related rights. Technical measures include “effective technologies, devices or components used for preventing or restricting others from browsing or enjoying works, performances, sound recordings or video recordings or providing the public through information network works, performances, sound recordings or video recordings without permission of the right owners”.

Unless subject to limited exceptions, these technical measures may not be intentionally circumvented or destroyed; and people may not manufacture, import or provide relevant devices or components to the public for the purpose of circumventing or destroying the technical measures.

The exceptions include:

• provision of a small quantity of published works for teaching or scientific research, where the works are unobtainable through normal channels;

• providing published works to people with dyslexia or reading-related disabilities and not for profit-making purposes, where the works cannot be otherwise obtained;

• fulfilling government duties;

• testing the security of a computer, its system, or network; or

• conducting encryption or reverse engineering research.

Permission of rights owners must be sought to:

• intentionally delete or alter the information on the management of rights on a work, layout design, performance, sound recording, video recording, or radio or television, except where it cannot be avoided for technical reasons; or

• make a work, layout design, performance, sound recording, video recording, radio or television available to the public, while knowing or supposed to know that the information on the management of rights thereon has been deleted or altered without permission.

6. Shift in burden of proof and destruction of infringing copies

The revised Copyright Law introduces a shift in the burden of proof. If the rights holder has provided evidence about the infringement, but relevant account books or materials are in the possession of the alleged infringer, the infringer may be ordered to produce these materials. Refusal to do so will increase the amount of damages.

The court may also now order the destruction of infringing copies, including destroying or preventing entry into commercial channels of the materials, tools, and equipment used for manufacturing the infringing copies.

7. Investigative powers

The revised Copyright Law gives additional power to copyright authorities when investigating suspected infringements, including allowing authorities to:

• question the relevant parties and investigate the relevant matters;

• conduct on-site inspection of premises and belongings;

• inspect and make copies of relevant materials including contracts, account books and invoices; and

• seal up or seize the premises and articles related to the suspected infringement.

Suspects are required to assist and cooperate with authorities doing the aforementioned actions.

Takeaways

Perhaps the most important takeaway from this legislative update is the increase in financial compensation for rights holders. Currently awards granted by the courts in China are not particularly high, and the significant increase signals that Chinese Intellectual Property authorities are increasing their focus on protecting the rights of copyright owners.

Businesses with dealings in China should also be aware of the new stronger protections for copyright owners, and should be cautious about using others’ work without permission – or risk liability for higher damages. Online broadcast and streaming service providers should be particularly aware of the new obligations.