The Court’s Judgments

Note:
1. Codes of works: ① A Guide to Chinese and Foreign Occupational Qualification Certificates and Language Examinations: Planning Your Professional Career;② The Time of Occupational Qualification Certificate -- An Introduction to 40 Occupational Qualification Examinations; ③A Guide to Internationally-Accepted Occupational Qualification Examination.
2. Codes of laws and regulations:① Copyright Law of the People’s Republic of China; ② Implementing Rules of the Copyright Law of the People’s Republic of China; ③The Interpretation of the Supreme People’s Court on a Few Issues in the Trial of Copyright-related Civil Disputes; ④ Regulations on Protection of the Right to Network Dissemination of Information; ⑤ the Interpretation of the Supreme People’s Court on a Few Issues in the Trial of Computer Network-related Copyright Disputes

Case review

Li is the author of A Guide to Chinese and Foreign Occupational Qualification Certificates and Language Examinations: Planning Your Professional Career, and The Time of Occupational Qualification Certificate -- An Introduction to 40 Occupational Qualification Examinations and other works. In 2007, Li found that these works, to which Li owns the copyright, were illegally distributed on the LANs of a radio and television university and a few other higher educational institutions in Province A. Li brought 20 actions in various areas of China against these colleges and universities and Beijing Superfan Digital Map Information Technology Co., Ltd. (hereinafter “Superfan”). This has caused a strong reaction in China.

These actions were resolved either by the parties accepting the court’s mediation, by the plaintiff withdrawing the suit, or by the court giving a judgment after full litigation. Though each case had identical fact patterns regarding the allegations of copyright infringement, the various courts rendered inconsistent judgments as to whether the defendants should be liable for the damages. This is because different courts used different interpretations of the relevant provisions of law and hence distributed the burden of proof differently. A study of these judgments will be significant for effective protection of the lawful rights of the right holder, to correctly know and understand the relevant provisions of the Regulations on Protection of the Right to Network Dissemination of Information, to correctly determine the relationship between these colleges and universities and Superfan, and to appropriately deal with varying infringement activities which are similar in nature.

Case analysis

According to the facts, as determined by the courts, Superfan had either finalized a data purchase and sale agreement with the related colleges and universities, or provided these colleges and universities with a copyright commitment. For example, on December 3, 2003, Superfan produced for the commercial university of City B a copyright commitment letter. It states mainly as follows: “With regard to the cooperation between this unit and your unit on establishing a digital library, this unit is committed to your unit as follows: the content of Superfan Electronic Digital Database has already been authorized by the proper right holders; and if your unit should incur any infringement liability based upon the copyright or personal right of any other party as a result of using the Superfan Electronic Digital Database, this unit shall be committed to bearing any and all liabilities in law from the occurrence of such infringement.”

Superfan entered into an agreement with the technical university of City C. A provision of the agreement says that Superfan shall provide the digital data of 60,000 books, for which Superfan will provide the Superfan reader (SSReader 3.8 or as updated), be responsible for paying the copyright royalties to the State Copyright Agency Center, and providing a guarantee for any and all copyright liabilities as a result of or in connection with the provision of such digital data; the parties agree that the expenses and costs of the project total 72,000 Yuan.

The Comprehensive Service Agreement on the Campus Network of Superfan Digital Library Database between Superfan and the library of the university of Province D provides that Superfan shall be responsible for installing, debugging and maintaining the Superfan Digital Library Database Campus Network Service System and the related searching databases; providing the Superfan library browser which will be updated and maintained by Superfan; obtaining the permissions from the relevant copyright holders and paying the royalties to the State Copyright Agency Center; and assuming all copyright liabilities, that is, to be liable for any and all liabilities resulting from the provision of such databases. The university of Province D paid 200,000 Yuan for the above services.

The evidence shows that the relationship between Superfan and the colleges and universities was a relationship of database purchase and sale. According to the relativity doctrine of contract, the above contracts could not be used to defend against any third party other than the parties relative to the contracts. The courts' judgment in these cases was regrettable and deficient in that they did not acknowledge this inability to defend against third parties as basic to the nature of such relationships.

The higher educational institutions are content providers on the LANs

The colleges and universities and Superfan argued that what these colleges and universities provided was a storage space on the servers. Now, did the higher educational institutions act as a content service provider or a provider of information storage space?

Articles 14 and 22 of the Regulations on Protection of the Right to Network Dissemination of Information provides that for any provision of information storage space service, the notification deletion procedure and the liability exemption conditions shall be applicable. This is a Safe Harbor set for the provider of information storage space services. However, the term information storage space is not clearly defined in the Regulations.

According to officials with the Department of Education, Science, Technology, Culture, Health and Legal System, Legal Affairs Office of the State Council, who participated in drafting the Regulations on Protection of the Right to Network Dissemination of Information, the term information storage space actually means the capacity of any external computer storage device to permanently store any information. Because the information storage space noted here is related to the network, the word “computer” here actually means a network server which is connected to the Internet. A network service provider provides the service receiver with information storage services mostly in the following three forms: 1) the network service provider leases or provides free disk spaces to an organization or individual which is unable to independently develop a website, so that such an organization or individual can, through the network so provided, provide the general public with information and create his or its own virtual website; 2) the network service provider uses these disk spaces to develop a platform for public exchanges, such as a network-based chat room and public forum; or 3) the network service provider uses these disk spaces to provide the service receiver with storage services on a paid or free basis, to store any works or performances of the latter.

The information storage space that the network service provider provides to the service receiver can be free or charged. With respect to the market rules, the provided services must be free, as a service provider is never allowed to both provide free services and simultaneously pay or otherwise compensate the service receiver. Take the technical university of City C as an example. This university not only provided Superfan with an information storage space without charge for the data of 60,000 books, but provided the hardware and network environment as required for the project, undertook the daily management and paid 72,000 Yuan for the expenses of the project.

In these cases, superficially these colleges and universities provided free storage space and compensation to Superfan. But, actually this is not the case. By arguing that they were providers of information storage spaces, they intended to use the safe harbor allowed the providers of information storage spaces to escape their compensatory liabilities. By acknowledging that these colleges and universities were storage space providers, Superfan intended to help these colleges and universities escape from the compensatory liabilities. By protecting these customers, Superfan benefited in that it was able to maintain and expand its market shares.

Based on the above analysis and according to Articles 14, 15, 16 and 17 of the Regulations on Protection of the Right to Network Dissemination of Information, this author believes that an information storage space service provider is a network service provider which provides the service receiver with the disk spaces on a paid or free basis and is able to precisely locate, delete or restore any work, performance or audio/visual work that the service receiver has stored on the disk spaces it provides. In the cases at hand, the disk spaces of these colleges and universities did not meet the requirements for immediate deletion or restoration of any information stored therein. Also, during the court hearings, they argued they could not delete or add any information by themselves. Therefore, they are not qualified as information storage space service providers enjoying the right to network dissemination of information.

With respect to the network dissemination of information, these colleges and universities were content service providers. They should exercise due care over the related works. Article 7 of the Regulations on Protection of the Right to the Network Dissemination of Information provides for fair use by a library of works in a network environment. This article deems the library as a user of the works or a content service provider. This is because the fair use system is designed so that under it, a user (which can be any traditional medium or a related user) or a content service provider (which is a network medium) may use a work without permission or paying royalty.

Superfan is a technical support service provider on the LANs

As the judgments show, the three intermediate people’s courts universally found that Superfan was an Internet content service provider. However, in the opinion of this author, it invites discussion as to the role of Superfan.

The role of an Internet service provider cannot be determined without looking at the actual role of this provider at a specific website. Superfan has the rights to copy, distribute and disseminate through network any works duly authorized, as contained in the databases that Superfan makes. Superfan does not have any right to any work without due authorization. Here lies the origin of Superfans infringement. On the campus LANs, the owners of the LANs purchased from Superfan the user right to the digital resources of Superfan by entering into an agreement of purchase and sale with Superfan. This purchaser-seller relationship can be proven on almost all the LANs concerned. Upon conclusion of the agreements of purchase and sale, the owners of the LANs obtained the user’s right to the digital resources purchased by such owners. This purchaser-seller relationship was consummated by a campus mirror (which is a local mirror) built up by Superfan using a copy of the part of the database that Superfan provided to the owners of the LANs. Such mirrors were all installed or built into the servers that are owned by the owners of the LANs. As a result, the contractual relationship between the owners of the LANs and Superfan was actually about Superfan’s legal ability to copy and provide a piece of data to the owners of the LANs. This is not about the dissemination of information through the network. Therefore, Superfan could not assume the role of an Internet content service provider. For the owners of the LANs, Superfan is only a source of content. This is a defense in infringement litigation that the owners of the LANs might use as to the legal source of the contents of their LANs.

Now, what is the position or role of Superfan on the LANs?  The answer can be found in the Agreement of Digital Library Construction between the technical university of City C (as Party A) and Superfan (as Party B) on January 17, 2005. According to the agreement, Party B shall provide the SSReader and add the data of 60,000 books for Party A to construct a digital library, and shall also be responsible for installing, debugging, upgrading, maintaining, repairing and configuring otherwise technically the software and providing technical support. That is, Superfan was just a provider of technical support services in the LAN construction. Generally, a technical support service provider is neither liable nor should be held liable for damages for infringement upon the network dissemination right.   

Liabilities of the colleges and universities and Superfan

If the owners of the LANs, as content service providers, have disseminated infringing works on the Internet and infringed the right of the holders of such works, such owners of the LANs should be liable for damages accordingly.

First, the owners of the LANs disseminated the infringing works through the network without permission of the authors and paid no compensation to such authors. Superfan was not qualified as the owner of the related works and did not have the right to permit others to disseminate such works. The owners of the LANs breached Article 2 of the Regulations on Protection of the Right to Network Dissemination of Information, which says that any organization or individual shall not disseminate through network any work, performance, audio/visual product of any other person, unless with permission from and by paying compensation to such other person. This breach constitutes an infringement in law.

Second, the use of the works by the owners of the LANs did not comply with the legal circumstances where under a library may use the works without permission of or payment to the owners of such works. Article 7 of the Regulations on Protection of the Right to Network Dissemination of Information says that a library may, within it, provide the user with any relevant digital works that have been legally published and housed by it, or with any work that is reproduced in a digital form legally for displaying or preserving purposes, without the permission from or paying compensation to the copyright holders of such works, provided that such library shall not benefit directly or indirectly from such provision, unless otherwise agreed to by the parties.

In the light of this article, at a minimum the following non-complying points can be found from the use of the works by the owners of the LANs: 1) the readers of the works provided by the owners of the LANs are not limited to the service receivers in the libraries; 2) the works provided by the owners of the LANs are not the copies legally published and housed by the libraries; 3) the owners of the LANs breached the prohibitive provision of this article, that is, the owners of the LANs purchased the digital resources at a per-book price which was much lower than the price for a paper-based book and were suspected of obtaining indirect financial interests; and 4) the works concerned in the cases were not reproduced legally in a digital form for displaying or preserving purposes.

Third, the owners of the LANs should have reasonably known that the databases provided by Superfan contained a large number of infringing works. 1) A library is obligated to exercise due care when housing and providing the readers with legal publications, to ensure the legal source of the works it provides under law, and to only provide digital works which are legally published and housed by such library. The owners of the LANs violated the duty to exercise due care and were consequently at fault.

The Intermediate People’s Court of Jinan found that considering the huge number of books housed by Superfan Digital Library, the university of Province D was not capable of carrying out any prior examination, technically or legally, on the content provided by Superfan and hence did not have any infringment intention, and consequently was not held liable for damages. This finding was based on a finding that the owner of the LANs was a provider of information storage space service. It inappropriately released the obligation of due care that a library should exercise in housing legally published digital works. Such a finding is worth discussing. As an information service provider, the owner of the LANs could not be exempted from due care on account of the large number of works. As long as it uses due care and checks to see if the works are legally published, it could have totally prevented the infringing act from occurring and the consequence of infringement from expanding. In this case, the owner of the LANs failed to exercise due care, since Superfan was not a legal publisher and the databases of Superfan were not digital works that had been legally published. In a contrary finding on this point, the intermediate people’s court of City C specifically stressed the obligation of due care, by holding that the technical university of City C failed to produce evidence and prove that the digital works of the plaintiff as contained in the Superfan Electronic Library Database were the digital works that had been legally published. Therefore, the plea of the defendant was not sustained. 2) It is well known to the general public that digital libraries or other databases that are provided by database service providers often contain a large number of infringing works. A higher educational institution, which is closely in connection with copyright, should not be permitted to rely on ignorance as a justification for overlooking a large number of infringements by its database service provider.

Last but not the least, Article 18 of the Regulations on Protection of the Right to Network Dissemination of Information provides for the circumstances where under the owner of a LAN should be liable for damages and other civil liabilities. It says that anyone who breaches the provisions of this regulation and commits any of the following acts of infringement shall, depending on the circumstances, be liable for civil liabilities, such as to cease the infringement, eliminate the effects of the infringing acts, and make a public apology or pay for the damages: Providing the general public with any work, performance, or audio-visual recordings through the information network without permission. When the owners of the LANs do not comply with the legal conditions for fair use, fail to obtain the permission, or pay no compensation to the owner of the works, they should be required to stop the infringement and compensate for the losses of the owner of the works under Articles 2, 7 and 18 of the Regulations on Protection of the Right to Network Dissemination of Information.

Superfan infringed the copying right, distribution right and the right to compensation of the owner of the works, as it did not obtain legal permission or pay compensation to such owner. Superfan should be held liable for the civil liabilities to stop the infringement and provide compensation for the financial losses of the owner of the works, in accordance with Articles 10.5, 10.6 and 47.1 of the Copyright Law of the People’s Republic of China. But, it should be stressed here that Superfan, by itself, should not be held liable for the damages, as it worked as a technical support service provider with respect to the actions.

Conclusion

The copyright infringement dispute cases filed by Li shows that the plaintiff used its litigious right in three basic ways: 1) Li Listed Superfan and the universities or colleges as codefendants, as in (2007) Ha Zhi Chu Zi No. 140; 2) Li listed only the universities or colleges as defendant, as in (2007) Ji Min San Chu Zi No. 284; and 3) The court listed Superfan as a third party, as in the case of Li vs. the technical university of City C.

Remedies and protections are needed for each right that the copyright law grants the right holder. With respect to the cases here, the rights of the right holder to network dissemination of information needed to be remedied, as these rights were infringed by the owners of the LANs. Also, the rights of the right holder to copy and distribute the works concerned needed to be remedied and protected, as these rights were infringed by Superfan. But, the most sacred and fundamental right of the right holder is to litigate. In the copyright infringement litigations, the right holder claimed for the copying right, distribution right and the right to network dissemination of information by listing Superfan and the owners of the LANs as codefendants. Plaintiff alternately sued for the right to network dissemination of information solely against the owners of the LANs. In addition, for the copying right, distribution right and the right to network dissemination of information Li sued solely against Superfan. The litigation strategy of the right holder should be respected.

In the cases where the Li listed Superfan and the owners of the LANs as codefendants (where Superfan was included as a third party, it is deemed as a codefendant here), there were three differing results from the courts. The Intermediate People’s Court of Harbin judged that the owners of the LANs should be jointly and severally be held liable for the damages, and Superfan is liable for the damages. In contrast, the Intermediate People’s Court of Jinan judged that the owners of the LANs were not liable for the damages and Superfan was liable for the damages. Finally, The Intermediate People’s Court of Changchun judged that the owners of the LANs and Superfan must jointly compensate Plaintiff for the damages and be jointly and severally liable. On the basis of our prior comments on these cases, we believe that the judgment of the Intermediate People’s Court of Changchun best represents the relevant provisions of the Copyright Law and the Regulations on Protection of the Right to Network Dissemination of Information, as it is consistent with the fundamental legal spirit of right holder protection.

About the authors:
Li Xiaoyu is a judge at the Intermediate People’s Court of Zhengzhou.
Zhu Mei is a judge at the Intermediate People’s Court of Zhengzhou.

(Translated by Ren Qingtao)