Baidu In Search of Copyright Solutions After NCA Fine, and Lawsuits May Follow Suit

By Danny Friedmann

 

Baidu Inc. and QVOD were each fined 250,000 RMB on December 27, 2013 for copyright infringement by the National Copyright Administration of China (NCA) and had to enjoin their infringing activities. The NCA started the investigation on November 19, 2013 after receiving complaints from Youku Tudou (since the merger in 2012 China’s biggest video website operator), LeTV, Sohu, Tencent, MPA, CODA, Wanda Films and Enlight Media; that Baidu Video, Baidu TV Stick, Baidu Yingyin media player and Baidu Video mobile app had infringed their copyrights. The complaints were also directed against QVOD, another software video player.

 

The Global Times reported that the 250,000 RMB was the highest fine the NCA could give to Baidu and QVOD. However, this would be only correct if the illegal earnings were no more than 50,000 RMB. If the illegal revenues exceeded 50,000 RMB the maximum is five times the amount of the illegal revenues, and they can also confiscate the equipment such as computers that is mainly used to provide the network service.  See Articles 18 and 19 Regulation on the Protection of the Right to Network Dissemination of Information (updated February 25, 2013 by Bridge IP Law).

 

Wang Fan wrote for the China Daily here about a campaign to deter illegal streaming of unauthorised videos in June, when 20 video website operators had to submit documents to the NCA to demonstrate that they had authorisation to stream 2,374 different films and television programmes.

 

250,000 RMB? What happened to the claim of 300 million RMB?

The administrative route is a relatively time and costs efficient mode of enforcement in China, but it lacks the remedy of compensation of damages. Therefore it was to be expected that on November 13, 2013, a consortium of video companies announced at a press conference at the Beijing Shangri-La that they were going to file a lawsuit against Baidu and claim 300 million RMB in damages. Paul Bischoff of Tech in Asia reported that Youku Tudou (since the merger in 2012 China’s biggest videosite), LeTV, Sohu, Tencent, CODA, Wanda Films and Enlight Media and other video companies were unified in the “China Online Video Anti-Piracy Alliance”.
According to Eric de Fonenay of MusicDish, Capital Copyright Industry Alliance Capital Protection Division, the China Radio and Television Association of the Television Production Committee, and many Chinese production companies gave acte de présence, see here. The Motion Picture Association of America (MPAA), Sony Pictures Entertainment, Warner Brothers, Disney and Paramount were present too, see here, although, according to Brid-Aine Parnell of The Register, the MPAA did not join the copyright infringement claim, see here. Ms Parnell wrote also that the alliance had tried to negotiate with Baidu, to no avail, because according to her Baidu would not agree to rules on violating copyright unless QVOD did the same.

 

Baidu argued that it took already four steps towards mitigating piracy: Research and development into an automatic piracy filtration system; Open complaint channels where a 24-hour team reviews reports of pirated content and consequently removes it; recommending high quality genuine content to steer users away from pirated material and Baidu’s web search will stop linking to pirated video sites.

 

Copyright infringement? Taking unfair advantage? 

 

According to Global Times’ Li Qiaoyi Baidu and QVOD were “identified as the top two violators of copyrighted video content for 2013” by Yu Cike, head of the department of copyright management, of the NCA.

 

The claim against Baidu and QVOD was that they deeplinked to copyrighted videos without authorisation: in other words that copyrighted content of third parties were directly accessible via Baidu or QVOD video players. This way, the rights holders were deprived of their right to communicate their works, performances or audio-visual recordings to the public (conform Article 8 WIPO Copyright Treaty to which China is a member since 2007, compare the language used in Article 26 Regulation), and internet users never had to visit the third parties’ sites, and devoid of advertisements on those sites. At the same time Baidu and QVOD were taking unfair advantage of the content, storage and bandwidth of the rights holders of the videos.

 

One can argue that the CJEU rule that “transmission and retransmission of works (even where those [users] streaming the content were legally permitted to view the original broadcast) constitutes a “communication to the public”, can be applied in this case as well. Read Annsley Merelle Ward’s analysis at IP Kat.

 

China has safe harbour provisions for online (network) service providers against secondary liability in case of copyright liability, comparable to the DMCA in the US (the E-Commerce Directive in the EU works horizontally, and is applicable to trademark infringements too, and is not just applicable to copyright infringement, anti-circumvention and technological adjuncts). Articles 18 (1) and 19(2) Regulation state that the network service provider is liable for copyright infringement if it is providing works, performances, or audio-visual recordings to the public through the information network without permission; and is obtaining economic benefits. The safe harbour provisions are not providing immunity against liability in case of actual or constructed knowledge, see Articles 22 (3-4), 23 Regulation.

 

Another claim was that Baidu provided access to video sites that host pirated content and do not have official licensing to operate in China. It was also stated that Baidu was profiting from advertising revenue sharing agreements with such sites.

 

Professor Eric Priest of the University of Oregon School of Law sets out in ‘The Future of Music and Film Piracy in China‘, that the conflicts about piracy of videos (at least for the part that are permitted by the Chinese authorities) could be prevented if China would apply an Alternative Compensation System (ACS) (where for example a percentage of the costs of an internet subscription via a fixed line of mobile will be redistributed to the rights holders in the relation to the usage of their works). The future Professor Priest outlined in his 2006 publication in Berkeley Technology Law Journal, is still worth considering today. The Institute for Information Law (IViR) in Amsterdam is doing a comprehensive study between 2012 and 2015 on ACS under the guidance of principal investigator Professor P. Bernt Hugenholtz, see here
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