Solutions to Digital Copyright Issues Under the Existing Legal Framework

Zhang Ping,[Copyright]

Digital copyright has been discussed for years. Beginning with the copyright authorization dispute during the construction of the National Digital Library, to the recent copyright dilemma faced by video sharing sites, China’s Internet service industry—especially digital content service providers, nonprofit or commercial — have been prospering or merely “subsisting” in these never-ending legal proceedings.

Unlike the past, these current lawsuits are increasing as a result of not only the heightened awareness of copyright owners, but also by a “rent-seeking” desire created by lawyers. The open Internet, with its free space and mass dissemination provide lawyers with an inexhaustible source of cases. The runaway for-profit lawsuits are beyond the ability of judicial personnel. In fact, nationwide an “explosion” of digital copyright litigation has begun. It is the hope of this author that the various parties involved will keep an open mind over the Internet’s economic model, promote reform of the copyright system within an international context, and seek a feasible authorization model under the existing legal framework.

Within the current copyright system, the authorization of digital copyright is nothing special. Authorization is still based on the copyright holder’s voluntary licensing, except as otherwise provided in the law. Therefore, different works must choose different authorization modes on the basis of voluntary licensing. The following is an analysis on the possible authorization modes under the existing legal framework:

I. Voluntary contract between the disseminator of digital works and the copyright holder.

This is the most basic way of voluntary licensing in copyright protection, by which prior consent must be sought for using a copyrighted work. Voluntary licensing is achieved when the rights holder and the user agree on the scope and mode of use.

Although this mode of reaching an agreement between the disseminator and copyright holder may be cumbersome and would increase costs, it is sometimes effective, resulting in substantive authorization, under China’s specific cultural background. In the meantime, if the works have been brought into the digital library without authorization, libraries can also avoid infringement by using copyright disclaimers. For example, the Chaoxing Digital Library says in its copyright statement: “Please inform us if you do not want your work to be used in the Digital Library. We will remove your work from the library within 24 hours and pay a reasonable fee for the previous use of your work. We also welcome our readers to offer clues of related authors.”

II. Publisher as an agent for copyright authorization.

With the publisher as the copyright agency, the author can consign the publisher to manage their digital works. All users may then negotiate with the publisher on authorization matters, which is a better way to manage “massive licensing.” It is a common international practice that copyrights are exercised by publishers, and authors merely receive royalties. Currently China has a similar practice, as well. The author believes that publishers are more experienced in copyright management and have more favorable access to the works’ dissemination rights on the Internet. If the publisher is authorized by the rights holder, the publisher can act as an escrow agent for those who wish to disseminate the material via the Internet. With regard to specific operations, fees can be charged in accordance with the click rates, which can be achieved technologically.

III. Professional copyright firm as agent for the copyright authorization of digital works.

The role of a professional copyright agent, by its nature, is much the same as that of a copyright collective management organization. If a copyright agent is designated to manage the copyright authorization of digital works, the user can contract with the copyright agent and pay fees for using these works within the agent’s managerial scope. However, this approach can only solve the authorization problem of a small number of works because most works are not consigned to copyright agents. Moreover, these agents also face massive authorization problem. At present, this authorization mode is still rare in China. Abroad, copyright agents are generally dependent upon copyright collective management organizations, and manage copyright authorization in certain specific fields or collect fees on behalf of those organizations. For example, the Copyright Clearing Center (CCC) of the United States hires some copyright agents to manage its works.

IV. Copyright pool.

Copyright pools of various types of work have a strong hint of monopoly, which, without exception, are required to be nonprofit by all countries (including the United States where copyright pools take the form of corporations). It can be said that a copyright pool is a relatively feasible approach for massive authorization under the current legal framework, and is also a common practice around the world. However, China’s copyright pool system has room for improvement.

At present, the Music Copyright Society of China (MCSC) is able to deal with basic authorization issues. In recent years, MCSC has instituted a number of copyright infringement proceedings, and also adopted relevant provisions and fee standards for a cellphone ringtone download, online music, and other network authorizations.  This demonstrates that the market operation of musical work is on the right track. With regard to literary works, the China Copyright Society of Written Works has just begun operations. In accordance with its rules, the Society will exercise the rights of collective management over the reproduction, network dissemination, broadcast, performance and other rights that are difficult for a separate author to exercise or control. The Society is also responsible for collecting and handling the fees for the works repackaged by textbooks and newspapers within the scope of a “statutory license.”

Copyright pools, in the opinion of this author, are the cheapest way of obtaining collective copyright authorizations if the copyright holder so intends. It should be noted, however, that it has a limited effect upon libraries when they obtain copyright authorizations. The main purpose of a copyright pool is to facilitate the authorization of copyright use, collection of royalties, and distribution of the copy written material. Therefore, the author’s consent is the very essence of the copyright pool. Without the author’s consent, the copyright cannot be pooled. It is all dependent on the author’s “self interest” to determine whether to enter the pool or not. If authors do not want to do so, or do not give such authorization for one reason or another, the copyright pool still would face difficulties obtaining authorization, which is similar to libraries, which also need to obtain prior approval from authors. It is believed, in the opinion of this author, that a copyright pool is good at protecting copyrights and to ensure legitimate use of the works, but the current system has many limitations in digital copyright management. If the statutory scope of the license could be expanded to address the prior authorization problem, it would be more efficient for copyright pools to collect and distribute royalties.

V. Service providers of network platforms collect and pay the royalties.

Service providers of network platforms collect fees from users of the network platform on behalf of authors. However, such charges must be based on the permission of the authors. That is to say, the service provider may also be faced with the problem of massive authorization under this model. Therefore, service providers can never bypass the copyright authorization problem or bypass copyright collective management organizations and publishers unless the network is highly professional and deals with a very limited number of authors. Moreover, like the other models, the charge standard will be the key point of controversy. Suppose that the rights holder does not care much about prior authorization.  If so there will still be a substantial number of disputes if the charge standard is too low.

VI. Implied license and copyright disclaimers to minimize risk

Implied or presumptive license refers to situations when the copyright holder does not expressly permit the use of his works, but his conduct is sufficient to presume authorization because he has not objected to the use of his works. Implied license was originally a determination based on civil laws. Article 66 of the Several Opinions Regarding the Implementation of General Principles of Civil Law issued by the Supreme People’s Court stipulates: “It can be identified as implied permission where one party claims civil rights against another party, and the other party does not explicitly express its views with words or letters while its actions show its will to accept.”

In the Internet context, high-speed use and the convenience of information transmission would be lost if everything must be authorized. Therefore, when authors upload and disseminate their works in this public platform, it should be presumed that they have authorized the use of their works with implied consent. For example, when an author publishes his article in a BBS or blog, he is presumed to be willing to release and disseminate his work via Internet.

Considering the characteristics of digital information dissemination, “execution before reporting” is quite common in the use of digital works. Generally, as long as their expected interests are protected, authors will not lodge infringement claims against goodwill disseminators. Even if there were an infringement dispute, in view of this friendly attitude and proper use, the court will issue a compensation judgment based on the “principle of indemnity” and order the related disseminator and user to pay reasonable fees. Thus, the so-called copyright statements (not the author’s statement, but the user’s statement) can be found everywhere nowadays. However, it is noteworthy that China’s current law has no explicit provision on implied licenses, and it is still controversial whether it can be used as a restriction of copyrights. This Author believes that the network operators can use copyright statements, notices, and other kinds of form contracts, which are not contrary to the principles of honesty and credit, to request implied licenses for the works posted on their servers.

VII. Feasibility of limited expansion of fair use

The Copyright Law enumerates five kinds of fair use, each with the same exception: except with the express claim by the copyright owner. This is in fact not truly a fair use provision, which some scholars instead call “quasi-fair use.”

In other jurisdictions, statutory fair use does not require the author’s consent, whether express or implied, in order to reproduce or adapt the work. If we hope to further relieve the restrictions of fair use, we can also consider removing the precondition that allows fair use “except when the copyright owner otherwise states that the work cannot be reproduced or excerpted” in future legislation. This proposal is based on the interests of Internet service provider (ISP), newspaper, and periodicals. Similarly, Paragraph 3 of Article 39 should also be removed, i.e., “where the copyright owner has stated that such exploitation is not permitted.” Otherwise, fair use will amount to nothing, and record companies would make use of the “statement” and use it as a tool for them (rather than authors) to control the musical works exclusively.

Still, it will be very difficult to further expand the scope of fair use. The industry should note that this kind of fair use involves basic principles and systems found in international conventions. The national treatment principle of the Berne Convention, which China has joined, requires that all the provisions of China’s Copyright Law, except the reservations, are equally applicable to foreign works. Therefore, any fair use or compulsory license will result in serious international disputes, except where differential treatment is passed through legislation to expand the scope of the fair use only for domestic nationals. However, there is little chance of this kind of differential treatment in the current legislative environment. More importantly, even if we extend the scope of fair use to further national interests, the results of its implementation may not necessarily be conducive to related industries.

VIII. Open license

In the past decade, the software sector has developed a new copyright authorization method that aims to disseminate software freely and allow the public to use and change the code. This authorization method is achieved by means of a contract, or license, within the copyright law framework. Free Software Foundation’s GNU General Public License - GPL is an example of this kind of authorization. Its core elements include open source, free interpretation of software works, and integrity of source code and free redistribution of software.

Open source license, as evidenced by GPL, has a profound impact on the production and dissemination of software works. Now this influence has gone beyond the software industry and become accessible for traditional works. Free Documentation License (FDL) and Wikipedia have created a precedent for this. In the Internet environment, interactive creation happens from time to time. With the aim of avoiding the trouble of copyright authorization, other licenses similar to FDL have appeared. These licenses generally allow free dissemination, copying, operation, modification and the creation of derivative works.  However, the original author’s personal rights must still be respected. For example, the original author should be indicated and the works should not used for commercial purposes. The Creative Commons (CC) license is an example of this category of licenses.

Generally speaking, right holders are more likely to accept an open license if the works are for non-profit use. However, we should make it clear that the new license model arises on condition that the right holders give up their economic interests in their copyrights. Therefore, we must also respect right holders’ choice if they are unwilling to give up the rights to their copyright works.

Because there is no direct benefit involved, open licenses like CC may not become the mainstream approach. The market still demands paid licenses.

IX. Self-service license

The most prominent problem involving digital copyrights focuses on two aspects: one is the feasibility and efficiency of prior authorization and the other is the standard, payment, and distribution of the license fee. The CC license solves the first problem because the right holders give up their economic interests in their copyright. However, with no direct returns, it is difficult to popularize this license among right holders. Inspired by the CC license, this author proposes a new model that can respect the right holders, provide fast and efficient authorization, and provide right holders with copyright royalties. This is a paid, voluntary and “self-licensing” model: according to the nature of copyright work, the right holder marks the optional authorization conditions. Then, users get the authorization conditions at a glance and sign the form licensing agreement online if the conditions are acceptable to them. With the help of a good e-commerce platform, this will be a convenient method for users to pay royalties. Given that access to the Internet is cheap, or even free, a reasonable price will make this business model widely accepted and will greatly reduce digital copyright disputes.

Digital copyright is essential for the survival and development of cultural and creative industries and the Internet services industry. Under the existing legal framework, we can only simplify the authorization procedures and reduce the licensing costs by various means, and then seek a reasonable fee standard. From this perspective, users and copyright holders, as well as traditional cultural industries and the Internet industry are consistent with each other. The ultimate purpose of copyright protection is the joint development of the interested parties.

About the author:

Zhang Ping is a professor and PhD supervisor of the Peking University Law School and Intellectual Property Institute.

(Translated by Li Yu)

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