China IP: Beneath the name change, what is the connotation of the change?
Mr. Zhu: A copyright collective management organization has two more functions than an original industrial rights-keeping organization. The first is that a copyright collective management organization, with authorization of the right owners, is entitled to collectively exercise film projecting rights, broadcasting rights, leasing rights, information network dissemination rights, duplicating rights and other rights that right owners can not exercise effectively, sign licensing contracts with users in their own names, charge users for royalties and forward the royalties to right owners. This is in accordance with the Copyright Laws and the Collective Management of Copyright Regulations. The other function is the ability to participate in lawsuits and arbitration activities involving film copyrights or concerning other rights in the name of the Association.
China IP: Regarding the commonly concerned copyright royalties of cinematographic works, what preparations have you made?
Mr. Zhu: When we were preparing for the establishment of the Association, we formulated, after repeated discussions and revisions, the Charging Standard of Royalties for Copyright Collective Management of Cinematographic Works (Draft) and the Forwarding Method of Royalties for Copyright Collective Management of Cinematographic Works (Draft), and distributed them to all member institutions for opinion solicitations. After several amendments, we submitted them to the Council for review and to proper authorities for approval. Last year we carried out a great deal of preparatory work to implement the charging. Firstly, we asked for instructions and support from relevant governmental organizations and judicial departments. Secondly, we consulted with other collective management organizations or invited them to our association to share their instructions and experiences in conducting collective management work, and to discuss with them and find out solutions to problems existing in copyright collective management. Thirdly, we communicated with users, and conducted deeper investigations into network companies which supplied cinematographic works to Internet bars. In addition we invited Netmovie, VALE, Veegoo and some Internet bar theaters to the association to talk about the payment of royalties. Fourthly, we discussed the initiation of charges with the administrative departments, industrial societies and user groups in charge of copyright, film, culture and transportation for Shanxi, Shanghai, Guangdong, Beijing and Hebei. We have reached cooperation agreements regarding charges for film royalties with the relevant administrative departments in Shanxi.
China IP: How will you start charging this year?
Mr. Zhu: After the Chinese New Year, our Association will hold a General Assembly, at which point a new leadership will be elected and the Articles of Association, Charging Method and Forwarding Method will be adopted in accordance with the Copyright Collective Management Regulations. We have also made several work plans on charging royalties, including: (1) reporting to the NCAC the charging standard and forwarding method of copyright royalties of cinematographic works and applying for a public notification; (2) signing mandatory administration licensing agreements with right owners at the General Assembly; (3) carrying out targeted charging works focused on Internet bars and transportation vehicles; (4) negotiating with local qualified charging institutions on cooperation issues and trying to fulfill the implementation of charges by signing contracts with local charging institutions in more than 20 provinces and cities within this year; and (5) strengthening financial management and forwarding the royalties to right owners in time and in the full amount, as stipulated by the Forwarding Method.
The uneven rights-keeping road
China IP: What are the major campaigns you have launched to safeguard the rights of film owners?
Mr. Zhu: Over the past five years, since the establishment of our association, we have been actively involved in safeguarding the rights of film owners. From 2005 to 2008, we assisted several member units in proceedings against infringing TV stations, Internet bars and network companies concerning such films as On the Mountain of Tai Hang, Charging out Amazon, Clay Fear, Dreams May Come, Eyes of Heaven, Flying Sword and Love Battlefield. All the disputes ended up with us defeating or reconciliation with the other parties, and the compensation amount for each film varied from 20,000 Yuan to 300,000 Yuan. In 2006, we cooperated completely with film right owners and sent a total of twenty-one letters to users suspected of infringing or broadcasting piracy, requesting them to safeguard the legal rights of film owners. To date, six cases have been resolved and more than 2 million Yuan in claims have been paid. In the following years, we sent a total of thirty-five letters demanding infringers stop their activities; we sent twenty-six lawyers’ letters, and handled twelve copyright controversy cases, and were paid more than one million Yuan in compensation. In 2008, fifty-two letters were sent to infringers demanding they cease their activities; we sent three lawyers’ letters, and three TV stations and two Internet bars were prosecuted. Then, last year, we sent a total of eighteen right-safeguarding letters, most of which ended up with reconciliation. Though these right-safeguarding activities did not bring us too much compensation, they provided an excellent deterrent effect upon film infringement and broadcasting piracy, especially by national TV stations. According to the statistics from the sixty-eight TV channels we monitored, the film infringing and piracy rate in 2009 dropped 42% compared to 2008 In 2009, there were thirty channels with no traces of piracy broadcasts of domestically produced films.
China IP: What kind of obstructions or problems have you encountered in the process of defending film owners’ rights?
Mr. Zhu: There are many problems. Firstly, right owners have weak right-safeguarding awareness. High costs and time consumption cause them to back off from lawsuits. Even if they win the lawsuits and either put infringers in prison or impose a fine on them, they will be paid nothing. They lose more than they gain; this is why so many right owners in China waive their legal rights.
Another problem is that we don’t have a well-developed legal system. A court is always faced with difficulties and obstacles in determining the amount of compensation. The biggest difficulty is evidence. In most cases, plaintiffs fail to save proof of their costs. In other cases they adopt ineffective litigation strategies, do not put forward sufficient evidence to prove their loss, and cannot provide reliable accounting records, which makes profits and damages hard to calculate. There are even cases where neither party can provide any evidence. Under such circumstances, the court has to apply to the “statutory damage” principle, and at their own discretion can impose penalties of less than 500,000 Yuan upon infringers. This brings a great deal of discretion in judicial determinations.
The third big problem is corporate crime. A few years ago, several TV stations were so defiant that they broadcast one to two hundred pirated films a year. They turned a blind eye to civil actions against them and we could do nothing to them. Actually, according to Civil Law and Criminal Law, the legal representatives should be directly answerable for corporate crimes. But in practice, especially when the offending corporations have certain backgrounds or are big monopolistic businesses, the “officialdom standard system” usually predominates. It seems that high administrative ranks can shield them from legal sanctions. There is one TV station broadcasting more than 100 pirated films a year, which already constitutes a crime, but no court is willing to hear the case and no public security organ is willing to investigate it. If the legal representative of the TV station was sentenced to prison for several months, even with a suspension, he would serve as a good deterrent to similar crimes. But for now, in the name of “state-owned” and “doing for the public,” he is still trampling down the law.
By Kevin Nie, China IP
(Translated by Hu Xiaoying)
