Supreme People's Court Changes its Position on Copyright Law

www.haiwen-law.com

On May 18, 2006, the State Council issued the Regulations on Protection of Information Network Transmission Rights, which address the exclusive right of copyright owners to disseminate copyrighted works over the internet. The Regulations came into effect on July 1 2006. In order to bring the judicial interpretation of the Supreme People's Court in accordance with the State Council Regulations, the Supreme People's Court recently made an important revision to the main internet copyright law that was in effect prior to the promulgation of the Regulations in May.

Prior to the enactment of the May regulations, the governing statute related to disseminating copyrighted works over the internet was the Interpretation of the Supreme People's Court on Issues Relating to Application of Law in Hearing of Cases Involving Computer Network Copyright Disputes (the Interpretation), which was passed by the Adjudication Committee of the Supreme People's Court on November 22 2002. The Interpretation, and particularly Article 3, was originally intended to facilitate efficient transmission of content over the internet by providing that, unless the copyright owner expressly prohibits, works previously published in traditional media or on the internet could be republished, in part or in full, for use on websites without copyright infringement as long as the copyright owner was remunerated according to relevant regulations and the original source of the work was provided. As written, Article 3 put the responsibility on the copyright owner to explicitly prohibit works from being republished rather than putting the burden on the internet content provider to solicit authorization to republish.

However, effective from December 8 2006, the Supreme People's Court deleted Article 3 from the Interpretation. As a result, the republication of works of copyright owners on the internet without the consent of the copyright owner is totally banned under Chinese law. Internet content providers' former freedom, under Article 3, to republish what traditional media or websites had already printed, without incurring civil liabilities, has been restricted.

In contradiction of Article 3 of the Interpretation, Article 2 of the recently adopted Regulations states that the Copyright Law and the Regulations protect internet transmission rights of copyright owners first and foremost, not other parties who wish to republish copyright owners' works. Except as otherwise provided under laws and administrative regulations, any party that publishes the material of a copyright owner on the internet, including works, performances, video and/or audio products, must do so with consent and with remuneration paid to that copyright owner. According to the Regulations, however, republication of prior published works without authorization of the copyright owner is permitted in certain situations of "fair use" such as when the work is appropriately quoted for the purpose of introducing or commenting on the work; for news reporting purposes; for the distribution of a small number of copies for educational or scientific research purposes; and for public dissemination of news articles relating to political and economic development that were already published on the internet.

After the amendment of the SPC Interpretation, it is clear that except in such "fair use" situations, any person who wish to republish copyrighted works from traditional media or the internet will require the author's consent, whether or not the author has earlier made any express prohibition or not, and the payment of remuneration to the author.

In a case pending before the Second Intermediate People's Court in Shanghai, the Plaintiff, Mr. Duan, has alleged that the Defendant, Sohu, republished a novel authored by Duan on its website without prior his authorization.

The 100-chapter novel, Shanghai Lovers (上海相亲情人), was originally published in weekly installments, in agreement with the author, on Sina.com, and later on Mopu.com and other sites. However, Duan discovered in June 2006 that the Defendant was also publishing installments of the novel. By the time Mr. Duan filed the lawsuit against the website owner in July 2006, the Defendant had republished four volumes (72 chapters) of the novel and received up to 400,000 monthly hits. The Plaintiff is seeking compensation of Rmb100,000 and a public apology on the Defendant's website.

The case is the first of its kind, since the promulgation of the Regulations in June 2006 and the deletion of Article 3 from the Interpretation, in which a Plaintiff has claimed infringement of internet copyrights. The hearing of the case was held on December 27 2006, in Shanghai, just over two weeks after the Supreme People's Court deleted Article 3 from the Interpretation. How this affects the right of the Defendant to republish Shanghai Lovers on the internet will be critical to the case. To complicate the case even further, the Defendant has argued that the individual who published the novel on
Suho.com is not an employee of the website owner, and that Sohu.com should therefore not be held liable. It remains to be seen whether the court will find the defence valid. It is clear, however, that the deletion of Article 3 brought the judicial position of the Supreme People's Court in line with the Regulations of the State Council. This case is an interesting example of how the Chinese judiciary interprets law in China, taking into account the development of the administrative regulations from the State Council. The amendment imposes more stringent requirements (and therefore additional transactional costs) on internet content providers to better manage content originally published by other sources. This revision is a welcome relief to copyright owners, especially those within the traditional media, who have been struggling for lack of sufficient internet copyright protections.