China joined WIPO (the World Intellectual Property Organization) in 1980 and it introduced its first copyright law in 1990. China adopted modern intellectual property laws as a condition of joining the WTO (the World Trade Organization) in 2001.
2001 China intellectual property laws amendments
The 2001 amendments were the first round of modernization of China’s copyright law. A second round came in 2010. A bill representing a third round of amendments is now at an advanced stage. Incidentally, one of the biggest issues being debated is whether China should introduce a terrestrial public performance right for sound recordings. China is often criticized by the US for its copyright laws, but China and the US a fair amount in common when it comes to copyright — they are both among a small number of nations that do not regard sound recording copyright as including a terrestrial public performance right. In other words, in the US and China, when a recording of a song is played on free-to-air radio the record company and the recording artist are not entitled to receive any royalties. The interests of the record companies and the broadcasters are at odds here.
The general principles applicable to copyright in the West apply to copyright in China. China recognizes the moral rights of creators. As in the US, a China copyright comes into existence by operation of law but copyright is also registrable. For more on the general principles, see China Copyright Basics Going beyond generalities, note that effective notice and takedown procedures exist for pirate content online. The international IP lawyers at my law firm have handled many takedown applications. Depending on the sophistication of the Internet provider concerned, the applicant needs to prove that they are the copyright owner and the applicant’s attorneys need to prove that they represent the copyright owner. Another emerging area of interest is the registration of security over Chinese copyrights; i.e., the possibility of registering a kind of charge over a Chinese copyright.
Despite the pace of modernization, intellectual property remains a relatively new concept with little basis in Chinese history or culture, so copyright infringement is still a big problem. The stigma applicable to copying or plagiarism in the West does not apply in China. To some extent, policies encouraging or requiring the disclosure of proprietary information by foreigners as a condition to granting business licenses have contributed to this. For instance, under the so-called “indigenous innovation” policy introduced in 2006, China’s state-owned enterprises were required to extract technology from foreigners through processes described as “co-innovation” and “re-innovation”.
The biggest problem with China’s copyright system has been that copyright infringement proceedings do not deter infringers because damage awards are very low. If you sue someone for copyright infringement in China you won’t get much compensation. The evidentiary burden imposed on copyright plaintiffs is high and, absent sufficient evidence of infringement, damages are capped at 500,000 RMB (about 80,000 USD). For more on this see Copyright Extremophiles by Eric Priest.
There have been some encouraging developments in recent years. As mentioned in Copyright Extremophiles, the turning point came in 2009. At that time almost all online content was pirated and delivery platforms were all advertiser-supported — consumers were required to view ads before downloading pirate content. In 2009 Coca-Cola and Pepsi were sued for contributory copyright infringement because they were advertising on a Youku platform from which pirated content was readily available.
The case was brought by members of a group calling themselves the “China Online Video Anti-Piracy Alliance”. Fearing a flight of advertising revenue, Youku rapidly took down infringing content and allowed only licensed content. Over the next couple years, this resulted in an increase in average online license fees from around 1,600 USD per episode to around 300,000 USD per episode. The point here is that these improvements were driven by China’s copyright system.\
Steps to protect intellectual property in China
Despite the difficulties, it is possible to protect intellectual property in China if you take the appropriate steps early enough. These steps include registering copyrights in China and entering binding contracts that deal properly with copyright issues in China. Unfortunately, foreigners often fail to take these steps and therefore ensure that they will have absolutely no redress in the event of a dispute. The myth that copyright cannot be protected then becomes a self-fulfilling prophecy.
