1. INTRODUCTION

The National Copyright Administration of China ("NCAC") released the first draft amendments to China's Copyright Law at the end of March 2012 ("March Draft"). Based on the more than 1,600 comments received from industry, government departments, rights owners' organizations and other stakeholders, the NCAC revised the March Draft and issued a second one on 6 July 2012 ("July Draft").

  1. WHAT'S CHANGED?

It is clear from comparing the March and July Drafts that a majority of the provisions have undergone some amount of changes. More notable changes in the July Draft as compared to the March Draft include:

  1. Statutory licensing of sound recordings is removed

The controversial Article 46 allowed for use of the work of artists without license from the copyright owner after the works had been published for three months. To the relief of many in the music industry this article is now removed.  

  1. No registration requirement to obtain statutory damages

The requirement that the copyright or agreement regarding a copyright transaction must be registered in order for statutory damages to be applicable is no longer included in the July Draft. This will significantly relieve copyright owners of the administrative burden of ensuring registration.  

  1. Infringement liability widened

The July Draft adds that network service providers who abet or assist others in infringement of copyrights are jointly and severally liable for the infringement. This makes the harbour less safe for network service providers.  

  1. Damages for repeat infringements increased

The July Draft increases the punitive damages for wilful infringement that has occurred two or more times. The damages are upped from one to three times (in the March Draft) to two to three times (in the July Draft) the damages calculated based on the loss of the copyright owner, the unlawful proceeds of the infringer, the normal price of the copyright transaction or the statutory damages.  

  1. Limitation on disposal of works

The July Draft provides that before an owner of an original work of fine art that is exhibited outdoor dismantles or destroys the original, he must inform the author within a reasonable time. The author is entitled to protect his/her copyright by repurchase or reproduction of the work unless otherwise agreed between the parties.  

  1. Fair use definition is enlarged

The July Draft modifies the exhaustive fair use list into an open-ended list by adding "other circumstances". The interpretation and application of that item will be at the discretion of the courts in individual cases. While leaving it open ended, the article is rounded off with a new addition limiting the fair use of published works in the following way: "the use shall neither affect the normal use of the works concerned nor unreasonably compromise the legitimate rights and interests of the copyright owners".  

  1. More details on performances under employment contracts

The July Draft provides that copyright ownership is decided by the agreement between the individual performer and the employer. Where there is no specific agreement, the copyright in such work is owned by the performer. An exception to this is that copyright in a performance of a group of performers under employment contract is owned by the employer and the performers have the right of authorship. Where the copyright is owned by the performer, the employer has the right to use the performance for free within its business scope.

Where a producer hires performers for production of an audio visual work, the producer shall pay remuneration to the performers. The producer further has: (i) the right to license others to make reproductions, distribute, or rent the audio visual work or the reproduction of the work; and (ii) the right to communicate the work to the public via information networks. However the lead performers have the right to authorship and the right to obtain reasonable remuneration from others' use of the audio visual work.

  1. Reasonable remuneration from others' use of sound recordings

The July Draft adds provisions that gives a performer and a producer of a sound recording the right to obtain reasonable remuneration from others' use of the sound recording, including broadcasting or communicating the sound recording to the public via information networks. This right also applies to foreign performers and producers of sound recordings under the principle of reciprocity.  

  1. CONCLUSION

Many of the changes are positive in that they strengthen the position of rights owners. The NCAC drafts are important in paving the way for the new copyright law, and the last stop is the State Council's Legislative Affairs Office, which will ultimately determine the final contents of the law. A third draft is expected in October this year, with the new law promulgated, hopefully, in 2013. We will continue to follow this issue closely and report on any new developments.