I.                    The case for discussion

Case No.: (2011) DongMinChuZi No.04558 (first instance)

Case No.: (2011) ErZhongMinZhongZi No. 16561 (second instance)

Case brief: In this case, Beijing Forbidden City Film Co., Ltd. (Forbidden City) holds the exclusive right of network dissemination of information in three films including Be There or Be Square ; The Forestry Service Southwest Aerial Center under the State Forestry Administration (Forestry Service) offered for online viewing, without permission, said films in question in its video system of its official website; therefore Forbidden City filed the suit, alleging infringement by the Forestry Service of its lawful right to network dissemination of information. However, The Forestry Service denied the allegation, for the reason, it contended, that its website was not open to the public, and merely for non-profit purposes without commercial gains.

The determination: The court of first instance found infringement of Forbidden City’s right of network dissemination of information by the Forestry Service who, being the webhost of the offending website, offered the films in question for public viewing on its website, whereby internet users were able to view the films at a time and a computer terminal of their choice.

The court of second instance concluded further that any act of dissemination of another’s copyrighted work, so long as the act is unauthorized, would constitute infringement under the copyright law, even if the website in question was non-profit, for which the actor must be held liable for injunction and damages.

II.                 Some thoughts derived from the case

The “type” of network has never been defined, either in international conventions or in domestic laws of China, such as the Copyright Law, or the Regulation on Protection of the Right to Network Dissemination of Information (Regulation), which, according to some scholars, indicates that it is applicable to any network. The authors believe otherwise, for following reasons:

1. The right to network dissemination of information is developed as a result of the needs of the time. One of the most important things in our time is the emergence and rapid popularization of the Internet, which makes it very easy for any person to copy and disseminate works, which is a serious threat to the interests of the right holders. The accessibility and general popularization of the Internet have made it a hot arena between right holders and users for interests. That is to say, the right to network dissemination of information was originally designed for the regulation of the use and dissemination of works on Internet. Thus the local area network (LAN) was not necessarily targeted in the in the original category.

2. It has been especially stressed in the Advisory Opinion (I) On The Several Issues Concerning Cyberspace Copyright Cases (Provisional) issued by the Beijing Higher People’s Court that “it shall be an act of network dissemination of information to place a work, by uploading or otherwise, onto a local area network accessible to the public.” Judged by the language itself, isn’t it redundant, had it been necessarily included in the definitional category of the right of dissemination of information, that the concept of local area network is redefined? Or perhaps, this provision is singled out for clarification precisely because of the uncertainty of the nature of the local area network.

3. It can be seen from the judicial practice in recent years that many courts have heard a class of cases involving commercial Internet cafes and others which were related to the distribution of works on LAN. These cases have been cited as references for discussion in this regard. However, there has been a gradually neglect of the possible important influence of the concept of LAN technology and its extensiveness on the judgment. LAN is a group of computers interconnected in a particular region. It may include hundreds or even thousands of computers for a large enterprise, or just several computers in a small office. It is obviously that there are huge differences between them in terms of the impact and consequences resulting from their dissemination of works. Thus, when identifying the nature of such distribution, it should take into account the usage, scale, number of terminals of the LAN and other factors.

III. The boundary for the right to network dissemination of information on LAN

The limitations on and exceptions of copyright are not coincidental with the emergence of the rights; nor are they static. On the contrary, they have been changed with the technological development and the time. In the opinion of the authors, there has been a gradual expansion of such limitations and exceptions in general. In terms of the right to network dissemination of information for example, the right shall be extended to the LAN where there is a regulation on the dissemination of works on LAN.

1.       The outer boundary of copyright in digital environment

The earliest limitations and exceptions were recognized under the Berne Convention (Convention). The rule of exception was introduced to match the concept of the generalized exclusive right to reproduction in the formulation of Stockholm text of the Convention. Later on, the content of the Convention was included in TRIPs. It has not only served as the minimum standards of copyright protection to be abided by all contracting parties, but also broadens the scope of the right of reproduction of which the three-step test applies only, extending the limitations and exceptions to the exclusive rights enjoyed by the copyright owner.

The WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty are the most representative international convention for the protection of copyright in the era of digital technology or the Internet. In addition to the basic protection under the Convention, the two conventions clearly stipulate that the limitations and exceptions shall be maintained in the era of digital technology. As far as the digital network is concerned, the Internet treaties leave it for contracting parties to make provisions, a larger room to have more and new limitations and exceptions in comparison with the Convention and TRIPs.

2.       The right to network dissemination of information on LAN

China’s Copyright Law introduced the right to network dissemination of information in 2001 amendment. However, it has no corresponding limitations and exceptions. Though there are 12 kinds of exceptions to copyright and neighboring right according to Article 22 under China’s Copyright Law, there is no special stipulation concerning the limitations on and exceptions of the right involving network, and leaves it to be specified in the Regulation. Several problems have resulted from the practice.

a. Article 6 and 7 of the Regulation provide for fair use in network environment. If Article 22 of Copyright Law was transformed into Article 6 of the Regulation and extended to cover information network, then Article 7 of the Regulation related to the LAN of digital library cannot be traced to the Copyright Law.

b. Article 6 of the Regulation enumerates 8 kinds of limitations on and exceptions of the right to network dissemination of information. However, they are enumerated without a generalization despite that they followed the suit with the Copyright Law. The closed legislative method will not only limit the court’s interpretation of rational use, but also run contrary to development of copyright Law.

3. The application of the three-step test

Under the LAN, we should not rigidly adhere to the existing framework, but make explanation to suit the times in the face of the increasingly complex environment of digital technology development. As far as judicial practice is concerned, it is in these authors’ opinion that the classic criteria— three-step test should be the most important basis to judge the rational use when indentifying the nature of dissemination of works on LAN.

a.       The application of three-step test

Article 21 of Implementing Regulations of the Copyright Law of the People’s Republic of China stipulates that “the use of published works with no need permission from copyright owner by provisions concerned of the Copyright Law shall not harm the normal exploitation of the work concerned and shall not unreasonably prejudice the legitimate interests of the copyright owner.”

b.       The meaning of “certain special circumstances”

We think that the act of disseminating works on LAN may fall within the fair use under “certain special circumstances” in judicial practice. Some scholars argue that this step has no significance, that it is unnecessary to spend too much time on specifying its meaning, and that the three-step test has two steps in essence.

According to this logic, it is the two latter criteria of the three-step test that have a substantial role to play in the determination of whether an act constitutes rational use or not. Where a certain act satisfies the two latter criteria, it shall be under “certain special circumstances” and there is no need to take into account a separate provision for special circumstances. When it comes to LAN cases, we may not focus on the environment of dissemination, namely, the type of network. We should reach a conclusion that such act does not fall within rational use where the dissemination of work on LAN is contrary to the legal use, and irrationally impair the legal interest of the obligee. Otherwise, there should be no infringement.

Firstly, there is a discussion about whether the right to network dissemination of information can be extended to the LAN. The main dispute is that the different understanding of the place and time the individual choose to have access to the work. The dominant position is that the place and time the public choose to have access to the work can not be explained that the individual may freely choose any corner at any time. As long as he can choose a time and place at his will, the act of network dissemination of information should be ascertained.

LAN is different from Internet in its closeness and limitation and controllability of the number of its terminal users and coverage. Therefore, the same network dissemination of information has different consequence on LAN and internet and so does their nature. The different type of LANs has different influence on the nature of such dissemination. The top factors should be the nature of the unit, the number of terminal computers of the LAN involved, the nature of the film, and other factors. It should be born in mind that there should be no indiscriminative exclusion of all types of LANs to the rational use of works in practice.

Secondly is the introduction of the De Minis Doctrine. De Minis is a Latin proverb which means “of minimum importance” or “trifling.” Essentially, it refers to something or a difference that is so little, small, minuscule, or tiny that the law does not refer to it and will not consider it. There is no clear stipulation under China’s laws. However, it is in conformity with China’s laws and regulations in legislative purposes.

In fact, it is easier to have a right included in the law than to safeguard it according to law. The right holders shall benefit more from pretty rights and shy limits than users and consumers. An example was cited by a scholar in this regard. It shall be undoubtedly an unfair system design where a poor and weak sale of sugar-coated haws shall pay for his play of music work for peddling. Similarly, a non-governmental organization (NGO) sets up a LAN at a poor village in a small mountain and upload literary works and films for villagers to learn through several terminals provided by the NGO for free charge. If such act can not be exempted from the law for rational use, it shall obviously be contrary to the purpose of copyright’s dissemination of social and cultural wealth. Therefore, where the legislation lags behind the development and need of times, our judges should take full advantage of an instructive and flexible tool, and hold meaningful trial.

IV.               Conclusion

We have enjoyed much convenience from the rapid progress of digital technology, which has influenced our copyright law system. It has added more fluctuation to the originally fragile and sensitive balance of interest between obligee and the public under copyright law. All these factors and the lag of legislation in have forced the courts to be cautious and focus more on the balance of interest between parties. In judicial practice, court have made some judgments that the act of disseminating of work on LAN may be ascertained as network dissemination of information and that there should be rational limitations and exceptions where the right to network dissemination of information be extended to LAN.

(Translated by Yuan Renhui)