The Staggering Collective Management of Film Copyright---Interview with Zhu Yongde

2010/07/05,By Kevin Nie, China IP,[Copyright]

On October 23, 2009, the China Film Copyright Protection Association was officially changed from an industrial right protection organization to a copyright collective management organization and was renamed to China Film Copyright Association. The change required approval by the State Administration of Radio Film and Television (SARFT), the General Administration of Press and Publication of China, the National Copyright Administration of China (NCAC), and is subject to the authorization by and registration change at the Ministry of Civil Affairs.
Recently, China IP had an exclusive interview with Mr. Zhu Yongde, President and Legal Representative of the Association.
The time-consuming birth of the collective management organization
China IP: We know that the China Film Copyright Association was previously known as the China Film Copyright Protection Association. In what context and by what process was it established?
Mr. Zhu: Recent years have seen the constant acceleration of China’s film industrialization: More and more social investments have swarmed into this industry; domestically produced films have shown dramatic increases in quality, quantity and market share; and the reform of the film distribution system and cinema-chain system have brought many positive effects on China’s film market. However, accompanying this development has been a swarm illegally copied films, which have usurped more and more of the market share from copyrighted films and audiovisual products. Amid the development of science and technology and the progress of film media and expansion of dissemination scope, right owners of cinematographic works find more and more areas where they can’t exercise their own rights, such as Internet bars, hotels and vehicles. Especially after the network era came, cinematographic works have been disseminated by many new forms of media, which greatly darkens the traditional distribution patterns and impairs the income for traditional distributors. A number of Internet bars and websites offer film access to terminal users and benefit from them, while the right owners of these films get nothing. Some users who want to comply with the law, but are unable to afford the broadcasting fee for the large amount of films, accept the assurances of some agencies that cheat and provide them falsified authorizations. This not only impairs the rights of the films’ copyright owners and indulges piracy, but also disturbs the order of the film’s copyright trade and hinders the long-term development of the film industry. Under such rampant film piracy, film owners are eager to find a film copyright protection association to protect their rights.
At the National Film Work Conference held in December 2003, leading officials from the SARFT proposed setting up a rights-keeping organization for Chinese films in the name of the China Film Producer’s Association and several other institutions. Then the Seventh General Assembly of China Film Producer’s Association, held in April 2004, adopted the resolution of setting up the China Film Copyright Protection Association. On August 29, 2005, the China Film Copyright Protection Association was officially established. Sponsors included more than 50 major production institutions in China, including the China Film Producer’s Association, the China Film Distribution and Exhibition Association, the China City Cinema Development Association and members of the China Audio & Video Association, such as the China Film Group Corporation and the Shanghai Film Group Corporation.  
China IP: Why did it take you four years to change the association to a collective management organization?
Mr. Zhu: We originally planned to establish a film collective management organization, just like the Music Copyright Society of China. However, when we were doing the preparation, the Collective Management of Copyright Regulations had not been promulgated yet, and the NCAC could only authorize the establishment of a rights-keeping organization. Therefore, the SARFT decided to set up the rights-keeping organization first and change it to a copyright collective management association after the Regulations were promulgated. When the China Film Copyright Protection Association was formally established, the Regulations had already been promulgated and the Council of the Association decided to start the preparation of the collective management organization starting in 2006. In the following three years, the Association did a lot of research work and sought wide opinions from right owners, film users, film experts, legal experts, local film and copyright administrative departments and similar industrial associations. Based on the opinions received, it amended the articles of association as per the requirements of the Collective Management of Copyright Regulations. It then submitted it to SARFT for review and formally applied to the NCAC for the change of the association to a copyright collective management organization. The NCAC arranged for its Film Administration Bureau, Department of Laws and Regulations, Social Control Department and Planning Department to hold meetings to discuss and comment on the documents provided by the Association. The Association subsequently made amendments based on the new opinions put forward. With the consent of the members of the Association, the documents were finally submitted to SARFT in July 2008 for examination and approval, which offered the approval and sent a letter to NCAC the following month for final approval. On July 20, 2009, the General Administration of Press and Publication of China replied in writing, granting approval for the China Film Copyright Protection Association to change from a rights-keeping organization to a copyright collective management association and to be renamed to China Film Copyright Association. On October 23, 2009, the Association received approval of the renaming from the Ministry of Civil Affairs, and consequently changed the registration with the Ministry. At that point, all of the application and approval procedures were finished, and the China Film Copyright Protection Association was officially changed to the China Film Copyright Association.
China IP: Beneath the name change, what is the connotation of the change?   
Mr. Zhu: A copyright collective management organization has two more functions than an original industrial rights-keeping organization. The first is that a copyright collective management organization, with authorization of the right owners, is entitled to collectively exercise film projecting rights, broadcasting rights, leasing rights, information network dissemination rights, duplicating rights and other rights that right owners can not exercise effectively, sign licensing contracts with users in their own names, charge users for royalties and forward the royalties to right owners. This is in accordance with the Copyright Laws and the Collective Management of Copyright Regulations. The other function is the ability to participate in lawsuits and arbitration activities involving film copyrights or concerning other rights in the name of the Association.  
China IP: Regarding the commonly concerned copyright royalties of cinematographic works, what preparations have you made?
Mr. Zhu: When we were preparing for the establishment of the Association, we formulated, after repeated discussions and revisions, the Charging Standard of Royalties for Copyright Collective Management of Cinematographic Works (Draft) and the Forwarding Method of Royalties for Copyright Collective Management of Cinematographic Works (Draft), and distributed them to all member institutions for opinion solicitations. After several amendments, we submitted them to the Council for review and to proper authorities for approval. Last year we carried out a great deal of preparatory work to implement the charging. Firstly, we asked for instructions and support from relevant governmental organizations and judicial departments. Secondly, we consulted with other collective management organizations or invited them to our association to share their instructions and experiences in conducting collective management work, and to discuss with them and find out solutions to problems existing in copyright collective management. Thirdly, we communicated with users, and conducted deeper investigations into network companies which supplied cinematographic works to Internet bars. In addition we invited Netmovie, VALE, Veegoo and some Internet bar theaters to the association to talk about the payment of royalties. Fourthly, we discussed the initiation of charges with the administrative departments, industrial societies and user groups in charge of copyright, film, culture and transportation for Shanxi, Shanghai, Guangdong, Beijing and Hebei. We have reached cooperation agreements regarding charges for film royalties with the relevant administrative departments in Shanxi.
China IP: How will you start charging this year?
Mr. Zhu: After the Chinese New Year, our Association will hold a General Assembly, at which point a new leadership will be elected and the Articles of Association, Charging Method and Forwarding Method will be adopted in accordance with the Copyright Collective Management Regulations. We have also made several work plans on charging royalties, including: (1) reporting to the NCAC the charging standard and forwarding method of copyright royalties of cinematographic works and applying for a public notification; (2) signing mandatory administration licensing agreements with right owners at the General Assembly; (3) carrying out targeted charging works focused on Internet bars and transportation vehicles; (4) negotiating with local qualified charging institutions on cooperation issues and trying to fulfill the implementation of charges by signing contracts with local charging institutions in more than 20 provinces and cities within this year; and (5) strengthening financial management and forwarding the royalties to right owners in time and in the full amount, as stipulated by the Forwarding Method.
The uneven rights-keeping road
China IP: What are the major campaigns you have launched to safeguard the rights of film owners?
Mr. Zhu: Over the past five years, since the establishment of our association, we have been actively involved in safeguarding the rights of film owners. From 2005 to 2008, we assisted several member units in proceedings against infringing TV stations, Internet bars and network companies concerning such films as On the Mountain of Tai Hang, Charging out Amazon, Clay Fear, Dreams May Come, Eyes of Heaven, Flying Sword and Love Battlefield. All the disputes ended up with us defeating or reconciliation with the other parties, and the compensation amount for each film varied from 20,000 Yuan to 300,000 Yuan. In 2006, we cooperated completely with film right owners and sent a total of twenty-one letters to users suspected of infringing or broadcasting piracy, requesting them to safeguard the legal rights of film owners. To date, six cases have been resolved and more than 2 million Yuan in claims have been paid. In the following years, we sent a total of thirty-five letters demanding infringers stop their activities; we sent twenty-six lawyers’ letters, and handled twelve copyright controversy cases, and were paid more than one million Yuan in compensation. In 2008, fifty-two letters were sent to infringers demanding they cease their activities; we sent three lawyers’ letters, and three TV stations and two Internet bars were prosecuted. Then, last year, we sent a total of eighteen right-safeguarding letters, most of which ended up with reconciliation. Though these right-safeguarding activities did not bring us too much compensation, they provided an excellent deterrent effect upon film infringement and broadcasting piracy, especially by national TV stations. According to the statistics from the sixty-eight TV channels we monitored, the film infringing and piracy rate in 2009 dropped 42% compared to 2008 In 2009, there were thirty channels with no traces of piracy broadcasts of domestically produced films.
China IP: What kind of obstructions or problems have you encountered in the process of defending film owners’ rights?
Mr. Zhu: There are many problems. Firstly, right owners have weak right-safeguarding awareness. High costs and time consumption cause them to back off from lawsuits. Even if they win the lawsuits and either put infringers in prison or impose a fine on them, they will be paid nothing. They lose more than they gain; this is why so many right owners in China waive their legal rights.
Another problem is that we don’t have a well-developed legal system. A court is always faced with difficulties and obstacles in determining the amount of compensation. The biggest difficulty is evidence. In most cases, plaintiffs fail to save proof of their costs. In other cases they adopt ineffective litigation strategies, do not put forward sufficient evidence to prove their loss, and cannot provide reliable accounting records, which makes profits and damages hard to calculate. There are even cases where neither party can provide any evidence. Under such circumstances, the court has to apply to the “statutory damage” principle, and at their own discretion can impose penalties of less than 500,000 Yuan upon infringers. This brings a great deal of discretion in judicial determinations.
The third big problem is corporate crime. A few years ago, several TV stations were so defiant that they broadcast one to two hundred pirated films a year. They turned a blind eye to civil actions against them and we could do nothing to them. Actually, according to Civil Law and Criminal Law, the legal representatives should be directly answerable for corporate crimes. But in practice, especially when the offending corporations have certain backgrounds or are big monopolistic businesses, the “officialdom standard system” usually predominates. It seems that high administrative ranks can shield them from legal sanctions. There is one TV station broadcasting more than 100 pirated films a year, which already constitutes a crime, but no court is willing to hear the case and no public security organ is willing to investigate it. If the legal representative of the TV station was sentenced to prison for several months, even with a suspension, he would serve as a good deterrent to similar crimes. But for now, in the name of “state-owned” and “doing for the public,” he is still trampling down the law.
About Mr. Zhu Yongde
China IP: Being a world famous cineaste, could you talk about your personal experiences?
Mr. Zhu: It was a sort of coincidence for me to be the president of Shanghai Film Studio (SFS). I was formerly a cameraman in SFS and even shot Love of the Sea, Spring and Autumn in a Small Town, Herdsman, Our Niu Baisui, Sunrise and Wreaths at the Foot of the Mountain. Later, I was appointed head of the First Studio of SFS. But in the late 1980s the Studio suffered a serious economic loss and the annual deficit reached as high as 9.6 million Yuan. Under those circumstances, I put forward the “producer’s leadership system”. I dared not openly air the “producer-centric system” because at that time the “script-based” and “director-centric” operation system prevailed. I proposed that we should learn from the experience of the U.S. and implement the “producer’s leadership system,” as well as fully consider the input-output ratio and control the production cost at its sources. Luckily, SFS accepted my idea and set up the producer’s office, appointing me as the head. From 1990, I was successively appointed the vice president in charge of production, the president, and finally the general manager of Shanghai Film Corporation Group. After I took charge, SFS gradually went from loss-incurring to profit-making. We tried out film copyright financing in the early 1990s, but for a variety of reasons, it died on the vine.  
China IP: Can you describe your thoughts and feelings about making the change from the president of a film corporation to the president of an association, and from film production to film protection?
Mr. Zhu: “Protecting the legal rights of film owners” has always been my great concern. When I was working in SFS, I organized and participated in several rights-safeguarding activities, and filed several lawsuits, although they all turned to be “money-losing.” Crash Landing was one of our films which found many illegal copies in market - a common scene for popular films. Later, we produced a film called Final Decision, to which former President Jiang Zemin made an important directive. Taking advantage of this, we asked the Shanghai Public Security Bureau to investigate into piracy of this film. Being right owners, we were responsible for the burden of proof. The case took us two years and cost us nearly 50,000 Yuan, but the court only gave the infringer one year and eight months imprisonment. But anyway, it exerted a strong deterrent effect, and no such things happened any more.
Later, when I was the president of China Film Producer’s Association, I was entrusted by ten production studios, including Beijing Film Studio, Shanghai Film Studio and Changchun Film Studio, to take the Beijing Tiandu Film Copyright Agency and the Tianjin Taida Audio-video Distribution Center to court. It was a big and influential case, and the ruling was broadcasted live by CCTV. “Much cry and little wool,” however, as the court only imposed a fine of 1.2 million Yuan on the infringers; 50,000 Yuan per film. Calculating the evidence collecting fee, lawyer’s fee and court cost, we, the winning party, received compensation falling short of expenses.
The first proceeding I initiated after my presidency of the China Film Copyright Protection Association was about piracy broadcasting of August First Film Studio’s film On the Mountain of Tai Hang by a TV station from Hunan Province. Although we won the case, we found that private settlement would bring us more after counting the evidence collecting fee, lawyer’s fee, traveling cost and accommodation fee. This is why right owners shrink from maintaining their own rights. According to my experience, such “rights-safeguarding” cases usually ended up with “earning fame but losing money.” And this experience enhanced my understanding of the importance of film copyright protection. During my presidency of the China Film Producer’s Association, I was also asked by superior departments to take charge of the establishment of the China Film Overseas Promotion Center. But, out of my fever for film copyright protection, I declined the invitation and the original position. My friends always told me that what I did was a “hard but thankless job,” because right owners always felt that I charged too little, but users felt the contrary. Actually, I am no worshiper of Mammon. I think that the most important thing for a man in his life is to achieve a sense of achievement. But, in my life, I haven’t done anything that fills me with a pure sense of achievement. I am now 67, and possibly I’ll carry on for no more than three years. As long as I successfully lead China’s film copyright collective management to the right track, I will feel that my 50 years’ film work will have been worthwhile.

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