Baidu Library is an open platform for netizens to share files on line. Registered users of this platform may choose to read on line or download virtually unimaginable resources in almost every field: from school texts, exercises, test paper banks, academic theses, professional documents, official documents, to fictions. The downloadable files are all from registered users. When one uploads a file to the platform, he will be awarded a certain number of virtual credits which can be used to “pay” for downloading files. For file downloading, one has to log on the system and pay in virtual credits to the uploaders that charge for their uploaded files.

 

Since Baidu Library was launched in November 2009, its “file-sharing model” has attracted many netizens to upload, read and download the “shared files,” although most of them are not authorized. According to Baidu statistics, Baidu Library had accumulated 20,231,055 shared files by 19:52 on March 19,2011. With the dazzlingly high speed of its expansion, Baidu Library now has millions of downloads and tens of millions of users surfing of its web pages.

 

Since it began enabling netizens to freely share files, Baidu has been frequently confronted with accusations and complaints from copyright owners and business rivals. As early as in January, 2010, China Written Works Copyright Society (CWWCS), joined by Shengda Literature Co., Ltd. (Shengda), held a news conference denouncing Baidu and Baidu Library as having become a hotbed for flagrant piracy of copyrighted works. In March that same year, Shengda filed a lawsuit to Luwan District People’s Court in Shanghai accusing Baidu of having infringed five of its novels. In December, CWWCS, Shengda and Motie Books Co., Ltd. (Motie) issued the Joint Declaration on Baidu Library’s Copyright Infringement, claiming that they “will fight against Baidu Library’s copyright infringement and piracy acts to the end.” The most recent, and most eye-catching challenge to Baidu Library’s legality is that of 50 famous Chinese writers, including Jia Pingwa and Han Han, who together published “A Letter of Denunciation of Baidu by Chinese Writers” on March 15, 2011, China’s Consumers’ Day. The writers accused Baidu of “stealing our rights and property, and turning Baidu Library into a market of bootlegs.” This denunciation was echoed by China Audio-video Association (CAVA) Phonogram Working Committee, which offered open support for the writers’ combat against the accused Baidu infringement. CAVA’s involvement worsened Baidu’s public image in the media. In defense, Baidu stated that its Library was only a file-sharing model that by itself infringed nobody’s rights or interests. It further reiterated that as all files were uploaded by netizens, but not by Baidu, no copyright infringement could be established.

 

 

Social damage refers to the damage inflicted by certain conduct to the State, society or individuals. It is a common feature of all anti-social behaviours, while therein exists a gap in their seriousness. Tortious acts also have social damages, but they can be remedied by civil restitutions.

 

Criminal law is in nature a “set of secondary rules” by which criminal penalties can be imposed on offenders only when other laws fail to protect a certain interest. In other words, when civil law is adequately applicable, criminal law should abstain. And in contrast, criminal law is to step in when civil punishment fails to curb a certain tortious act which has already had some social damage punishable under criminal law. Harsh criminal penalties are applied to deter the recurrence of such conduct. Therefore, it can be said that criminal law, as the last resort, is a guarantee for civil law protection. In conclusion, serious social damage is the most fundamental characteristic of crime. If an act brings no serious damage to the society, the actor should not be subject to criminal punishment. The deciding factors for evaluating the social damage of a certain act should be the nature and importance of the social relationship of its victim, and its seriousness.

 

Is Baidu Library’s infringement, if proven, serious enough to constitute a serious social damage? As aforementioned, Baidu Library and its operators tried to increase the website’s hits and promote web page advertisements by taking advantage of netizens uploading of unauthorized copyrighted works. This constitutes a serious disruption of the copyright management order and, what’s more, is a serious infringement of copyright owners’ rights. Copyright infringement, depicted as an internationalized “economic drug,” gives IP pirates unlawful incentives, suffocates human creativity, narcotizes people’s mentality, and blurs morals. In an era when the Internet is changing our lives, crimes trampling on IP keep paces with the Internet, constantly reemerging through new forms and carriers. Baidu Library, in this author’s eyes, is one of the newly emerging addictive economic drugs that brings serious social damage with its indisputable harm to copyright owners’ rights and interests.

 

 

This author, through the above analysis, believes that Baidu Library’s conducts obviously constitute the crime of copyright infringement. This article analyzes the possibility of subjecting Baidu to criminal penalty by expounding on the subjective and objective components of copyright infringement crime, targeting Baidu Library’s copyright infringement.

 

 

The subjective components of a crime, also called the subjective aspects, refer to the psychological status of the party committing a crime; it addresses his offences and consequential results. The subjective aspects of a crime are comprised of bad intent (including intentional and negligent actions), purpose and motive. An offender’s wrong indicates his state of mind, which can be intentional or negligent. It is a required subjective component of any crime and the subjective basis of criminal liability. The intent of an offence, also named as a selective subjective component, is just the subjective component of some crimes, which is not a required subjective component of a crime and has impact on the sentence instead of incrimination. China’s criminal law stipulates the crime of copyright infringement as a crime of purpose, which means in this case the purpose of economic gains, like intent, is a must for committing the crime of copyright infringement. This author hereinafter analyzes, mainly from the perspectives of wrong and intent, the subjective components of copyright infringement crime in the Baidu case.

 

1.The “Knowledge” Factor in the Crime of Copyright Infringement

 

The subjective aspect of crime of copyright infringement refers to a direct criminal intent, which means the offender, knowing well his offences seriously infringe others’ copyright, intentionally commits the crime for economic gains. As “knowledge” belongs in the subjective aspects, the infringer knows that he is not authorized to reproduce and disseminate others’ copyrighted works. The infringer’s knowledge is a key factor for deciding the unlawfulness of his offences. The key for deciding an offender’s knowledge lies in how to determine whether an offender knows it was wrong to fail to obtain the copyright owners’ authorization for reproducing and disseminating copyrighted works. In the case of Baidu, deciding whether the company is guilty of the crime of copyright infringement is premised on its knowledge about the unlawfulness in the uploaded copyrighted works in its Library. Two concepts herein can be discussed: the safe harbour rule and red flag standard.

 

The safe harbour rule, also called the “notice and remove” rule, was provided for on-line copyright issues by the Americans in their judiciary practices. This term was first established in the Digital Millennium Copyright Act (DMCA) of 1998 for application to copyright issues, and then expanded to the fields of search engines, network storage, on-line library, etc. When copyright infringement arises, the Internet service provider (ISP) has the obligation to remove infringing contents upon notice if it provides space alone but not contents, or it may be deemed as copyright infringer. If the infringing contents are not stored on the Internet medium of a provider and no notice is duly delivered on removal of the contents, the ISP is not subject to any tortious liability.

 

The red flag standard applies to circumstances where an ISP is deemed as having knowledge of infringement if it adopts an “ostrich-like” policy by burying its head in the sand and pretending not to know about infringement. This rule applies when the facts and circumstances of infringement are flagrantly open, like a waving red flag that any reasonable person could see. The red flag standard, originated also from the DMCA, has a major role to play in helping determine whether an ISP shall be held as knowing of an infringement. Under the red flag standard, if an ISP “should have known” about the infringement and fails to remove the related infringing contents, the safe harbour rule no longer applies.

 

An accurate understanding of the red flag standard has bearing on subjective cognition. A standard for judging whether one “should have known” depends on whether a reasonable party, under similar circumstances and settings, would be aware of the offence. Chinese scholars have a systematic expounding on the red flag standard. “If an ISP ever did publicity, promotion, recommendation, or editing of any work, and the infringed contents enjoy a high volume of reading or downloading, it can be deemed as knowing or having reasons to know of the offence.”

 

Baidu defended itself by stating that it had no knowledge about the piracy of the uploaded content and no reasons to know the content was infringing. Net surfers, however, could easily see the weekly and monthly readings of the content on the site suspected of being an infringement. The material was ranked by specific surfing times, which had accounts made by Baidu editors. In these channels the titles and even photos of printed works were provided, with some books even having the cover pages. Since these contents were on the homepage of Baidu Library, its managers can be presumed to have seen them.

 

A reasonable person, using his own judgment, could have concluded that infringement existed. Some of the material available was created by very famous writers. It is not tenable to argue that the works had been uploaded both anonymously and with the writers’ authorization and therefore Baidu was licensed under electronic copyright. The personnel of Baidu Library, including technicians and editors, who should be presumed to be highly reasonable and competent persons, can not defend themselves on account of having “no knowledge” about the infringing contents on their website homepage. Baidu obviously knows of the existence of infringement, but it ignores the waving red flags and pretends not to have seen them.

 

The red flag standard is thus applicable and the safe harbour rule is not available as a defense. The red flag standard helps explain the element of knowledge in a suspect’s act. Inability to prove actual knowledge does immunize the offender. The offender’s knowledge of the infringing fact, a flying red flag, constitutes constructive knowledge based on what a reasonable party under similar circumstances would know. The negligence itself can be determined as the component of knowledge of the crime of copyright infringement.

 

2.Determination of “Purpose of Economic Gains”

 

In criminal law, copyright infringement is an intentional offense premised on the purpose of obtaining economic gains. Economic gains, as purpose, refer to the profits an offender wishes to obtain from infringing on others’ copyrighted material. When the purpose is not economic gains but defamation or slander, the crime of copyright infringement does not result, even if reproduction and dissemination occurs. A specific definition is given for copyright infringement in networks in Article 10 of the Opinions on Several Questions in the Application of Law to the Resolution of Criminal Cases Involving Intellectual Property (Opinions), which was issued by the Supreme People’s Court, the Supreme People’s Procuratorate and the Ministry of Public Security in January, 2011. For determining the “purpose of economic gains” in the crime of copyright infringement, the Opinions stipulates, besides gains from sale, the following elements must be present:

 

(1). Collect fees directly or indirectly for providing advertisement in another’s work or tying a third party’s work to his own;

 

(2). Collect fees directly or indirectly by offering another charging advertisement services on one’s own website or web pages through disseminating the others’ works in an information network, or taking advantage of others’ uploaded infringing works;

 

(3). Collect membership fee or other fees by disseminating others’ works in an information network in the form of membership;

 

3.Other circumstances of benefiting from unlawfully exploiting others’ works.

 

In its defense, Baidu stated that its Library was a free on-line interactive platform whereby it users register, upload, read, and download files free of charge, and Baidu did not profit from the service. Superficially speaking, the statement is accurate. But the opposite conclusion is easily reached when the Library is analyzed from the true nature of the Internet.

 

First of all, we can see on the right side of the bottom line of Baidu Library homepage there is an advertisement for an electronic book brand and its website. The advertisement, evidently, brings Baidu profits. This falls under section (2) in the above text.

 

Secondly, the Internet brings up an “eyeball economy” wherein clicks on web pages create the value of users’ stay, which helps Baidu project its profile. It is true that Baidu did not profit directly from the user’s free upload and download of files, but the user’s millions of clicks helped it attract venture capital and advertisement clients. It is the clicks, not the cash rewards, that have elevated Baidu to the position of “the most valuable listed company" among all Chinese companies listed on NASDAQ. Advertisers lay emphasis on the reputation of the advertising website, while the users’ clicks stand for the website’ popularity. Baidu provides its users with free, infringing works, and in consequence indirectly benefits from users’ clicks. This falls under section (4) of the Opinions.

 

Lastly, Baidu Library allows netizens to surf, download and upload files only upon registration. At its peak, Baidu Library had a total of approximately twenty million files uploaded by more than one million registered users. The users are ranked according to their “contribution.” If a registered user wants the credits for a higher rank, he has to upload his or others’ works, with most of the uploaded material being unauthorized. A higher-ranking registered user gains more access to the files stored in Baidu Library, including those that infringe others’ copyright. Baidu has the authority to manage the users’ credits and rankings, and in some situations allows users to exchange credits for gifts. Baidu credits may be deemed as virtual currency for its circulation in a certain scope. In some lawsuits in China, virtual credits were found to be a kind of property. Baidu did not collect registration fee from users, but any registered netizen will have to pay if they want a higher ranking. This falls under section (3) of the above mentioned part of the Opinions. Therefore, Baidu should be found as holding the purpose of economic gains.

 

 

The objective aspects of a crime are the basis for deciding an offender’s actions constitute a crime and related criminal liabilities. They cover all the external factual characteristics provided in the Criminal Law, which help explain the detriment an act does to the legal rights and interests protected by the Criminal Law, and act as the basis for the establishment of a crime. Among the four elements of crime, the objective aspect is at the core as it marks an objective outer expression of the criminal actions committed by the subject upon the object of crime. Without the objective aspect, the subjective aspect of crime alone cannot be used to prove the existence of damage to the rights and interests protected by the Criminal Law, and the offender’s acts will not constitute a crime. For deciding whether acts constitute the crime of copyright infringement, the accurate definition of criminal acts and circumstances has a key role to play.

 

1.Baidu’s Omission in Copyright Infringement

 

An important element of the objective aspect of a crime is that the offender has committed a certain criminal act. For he crime of copyright infringement, Article 271 of the Criminal Law stipulates, “The crime is established when an actor, for the purpose of economic gains, violates copyright law and regulations, infringes the owner’s copyright without his permission, and has obtained a relatively large volume of unlawful gains or involved himself in other serious circumstances.” Article 1-4 of the same law define the copyright-infringing conducts. Article 4 therein prescribes, “... Conducts of reproducing and publishing, without the copyright owner’s license, the latter’s written works, music, movies, television programs, video products, computer software and other works.”

 

Baidu Library was involved in the reproduction of infringed works, but questions arise on whether on-line reproduction is subject to the above Article 4. The best answer lies in Article 11.3 of the Interpretation of the Supreme People’s Court and Supreme People’s Procuratorate on Several Questions in the Application of Law to the Resolution of Criminal Cases Involving Intellectual Property. This Interpretation provides that, “... The behaviours of disseminating others’ works through the information networks shall be deemed as reproduction and publication under Article 217 of the Criminal Law.” On-line reproduction is thus one of the behavioural modes for the crime of copyright infringement.

 

Offences may be divided into acts and omissions in law. If Baidu itself uploads the infringed works to its own Library, its conducts undoubtedly constitute a crime of act; if it provides a network platform alone without uploading the accused infringed works, a question arises about whether its omission on the infringed works in its Library constitutes crime or not. Another term, the safe harbour rule, is involved herein.

 

As aforementioned, the safe harbour rule is the “notice and remove” rule, whereby a website operator shall, upon notice, or if there is a reasonable cause to know of the infringed contents on its site, remove the infringing contents involved. Should it fail to do so, it is subject to tortious liability, as this is a typical omission in civil law. Does this omission, if proven, have bearing on the crime of omission in the Criminal Law? This can be explained from two perspectives. Firstly, a crime of omission in the Criminal Law, as a term in opposition to act, refers to a person, under the legal obligation of acting while having the capacity, fails to do so. The premise for deciding one’s omission is that a person is under the legal obligation to act. Usually, three conditions must be met before an omission is established,

 

Firstly, the premise for establishing omission is that a person is under a certain legal obligation to act. Legal obligation herein means: a) the law has stipulations for one’s obligation to act; b) the occupation or job requires a certain action as obligation; c. a legal act gives rise to the obligation to act; d) a previous act leads to the obligation to act.

 

Secondly, a person has the ability to carry out his legal obligation. This is a major condition for establishing omission. When a legally obligated person has no capacity for performing his duty, his omission cannot be established.

 

Lastly, a legally obligated person’s failure to do his job is a key condition for establishing his omission.

 

Referring to the above analysis, we can say, in the case of Baidu Library, that Baidu’s conducts constitute a crime of omission. The claim is based on three grounds. The first is that Baidu is, under law, obligated to delete all infringed works in its Library. Article 36 of China’s Tort Law provides, “Any Internet user or ISP, which, taking advantage of the Internet, damages another’s civil rights and interests, shall take consequential tortious liabilities. When a net user commits tortious acts by using the Internet service facilities, the infringed is entitled to demand, through notice the ISP involved, to take such counter measures as deletion, screening off or delinking. Should the ISP involved therein fail to take timely necessary counter measures after being noticed, it is liable, together with the Internet user, to joint and several liabilities for the expanded part of the tort. The ISP, when knowing the net user’s infringement of another’s rights and interests through its Internet service while failing to take necessary counter measures, is to take joint and several liabilities with the infringer.” From this provision we can see that Baidu Library is legally obligated to delete all the infringed works upon notice of the accused infringement.

 

The second ground is that Baidu has the ability to perform its legal duty after being informed of the suspected infringement. As Baidu has been performing its duty of comprehensively managing its Library, by offering users space, ranking users by their uploads, or granting users credits or delivering punishment, it is absolutely capable of deleting the accused infringed works.

 

The third ground is that Baidu failed to perform its legal obligation after it had received the copyright owners’ notice while it had full capacity of deleting the accused infringed works.

 

In conclusion, Baidu has committed the crime of omission.

 

2.Determination of offence of circumstance.

 

The crime of copyright infringement, belonging in the crime of circumstance, must be established with the presence of “a relatively large amount of unlawful gains or other serious circumstances.” Given the instant nature of network flow and the difficulty in its calculation, no specific standard had ever been available for measuring Baidu’s unlawful gains or other serious circumstances until the Opinions was promulgated this year. Article 13 of the Opinions provides the standard for incriminating and punishing infringers of copyrighted works through information networks. It says, “Disseminating to the public through information networks another’s written works, music, movies, television programs, fine arts, video recordings, audio-video products, computer software as well as other works, for the purpose of economic gains while failing to obtain the copyright owner’s permission, falls under the ’other serious circumstances’ prescribed in Article 217 of the Criminal Law, when the following circumstances are present:

 

A. The unlawful business volume reaches 50,000 Yuan and above;

 

B. Disseminate others’ works totaling 500 or more;

 

C. Clicks on the disseminated works reach 50,000 or more;

 

D. Disseminate others’ works in the form of membership and the registered members have reached 1,000 and above;

 

E. The volume or number of relevant offences has met two or more of the above standards if not all;

 

F. Other serious circumstances.

 

Offences under the above clauses, when the related volume or number amounts to five times or more of the A-E standards, fall under the ’other especially serious circumstances’ provided in Article 217 of the Criminal Law.”

 

Obviously this Article has a clarifying provision on the dissemination of infringed works through information networks. As far as Baidu Library is concerned, it spreads to the public, through its information network, infringing works, and the number of works, clicks and registered members all surpass the standard for the “other serious circumstances,” and fall under the “other especially serious circumstances.” When the components of crime of copyright infringement, as provided in Article 217 of the Criminal Law, are present, unit crime is established. Baidu and its management are reasonably subject to criminal liabilities under the related existing laws.

 

 

Through the above analysis, we can conclude that Baidu acts, if proven as alleged, may constitute the crime of copyright infringement. Given the fact that disputes still exist over the necessity of imposing criminal punishment on Baidu, and the judicial concern about policy changes in the criminal law, compounded by the difficulty in collecting evidence to prove Baidu’s “unlawful gains,” it is not yet a right time to subject Baidu to criminal liabilities. This author believes that discussion of criminal liability is of significance when civil remedies fail to deter flagrant infringers and duly protect victims. It is badly needed to rectify a chaotic copyright protection order that at present fails to offer copyright owners a protective habitat.