Establish the Authentication Mechanism of Digital Copyright

2010/11/22,By Kevin Nie, China IP,[Copyright]

After years of market practices the once confused e-book industry has gradually cleared. The fight for hardware has evolved into one for content. The belief that, “To e-book, content is the core while copyright is the key” has been widely accepted by insiders.
“Presently, most Chinese e-book producers lack content because of the copyright bottleneck. They tried to obtain digital copyrights through various channels, but even copyrights granted by e-libraries can be flawed and some producers have paid a heavy price for that,” Zhang Hongbo, deputy director-general of China Written Works Copyright Society, told China IP in an interview.
Sort out entangled copyright relations
The e-book industry involves various types of copyright, including the traditional rights of publication and duplication, and also the right of communication through information networks, which frequently caused disputes in recent years. Non-professionals can hardly tell one right from another and e-book makers have been perplexed by copyright purchase, right appraisal and anti-piracy efforts.
In the eyes of Zhang, e-books should be understood under the wider background of digital publishing. For both traditional and digital publications, their copyrights should be protected within the framework of Chinese laws and international conventions, and any user should follow the basic principle of, “permission first, use second.”
Zhang believes that under current digital network environments, written works are used and disseminated in three ways: The Internet, such as e-library and magazine sites; mobile communications, such as mobile libraries and mobile newspapers; and mobile storage devices, such as e-readers. Firms using the first two channels should purchase the right of communication through information networks, while e-reader makers can pre-install or download content. For pre-installation, they only need to purchase the right of duplication from the right holder, while for downloads, wire or wireless, they need to purchase the right of communication through information networks.
“Pre-installed content is only a guide and more content needs to be downloaded, because e-readers have limited capacity,” said Zhang, “but downloaded content requires permission from right holders.”
“For a long time, e-reader makers directly signed contracts with publishers for the digital copy and the so-called digital copyright for works. But in fact, nearly 80% of the digital copyrights for books, particularly e-books, are in the hands of the authors, while publishers only have the publication rights of printed books. When signing publication contracts with authors, publishers should try every means to obtain the whole package of rights, including digital copyrights, and some of them publishers impose terms on authors so that the agreement is consistent with the standard form contract issued by the National Copyright Administration,” said Zhang. “Since the right of communication through information networks is owned by the author, the publisher has no right to grant use or transfer. Under such circumstances, the right of communication through information networks from the publisher would be flawed and e-reader makers purchasing the right would face the risk of being sued by the author.”
Related firms should also fulfill the legislative duty to take necessary technical means to protect digital copyright to prevent illegal use or free dissemination of downloaded content, Zhang stressed.
Apparently, e-readers will be reduced to a new tool for piracy if copyright is not properly handled.
Zhang also reminded right holders that they should be fully aware of copyright problems and their rights in hand. They should realize that their copyright might generate more financial value and they can negotiate more interest when signing contracts with publishers.
Build a digital copyright authorization channel
On the payment of copyright fees, most Chinese e-reader makers directly pay the publishers or right holders when purchasing the copyright of a large number of books. But after the payment they may be approached by related publishers or right holders also asking for the fee. Determining who has the legal right to payment has been a trouble for e-reader makers.
“Regular e-reader makers should seek authorization from publishers, but such authorization is often flawed. Surveys showed that only 20% of publishers own digital copyrights. Many publishers not in possession of digital copyright sign authorization contracts with firms and thus cause disputes,” said Zhang, “many firms and authors are suing publishers through professional lawyers. The fundamental reason is the absence of a smooth channel in digital copyright authorization, therefore we need to build up such a channel as quickly as possible and gradually reduce lawsuits into a supporting means of dispute resolution.”
Under the current network environment, we need collective management organizations to protect authors’ interest and at the same time reduce copyright negotiation costs; China Written Works Copyright Society (Society) can play such a role, many insiders say.
Though in possession of the copyrights of a large number of works, some content suppliers lack experience and energy regarding the objectives, process and scale of obtaining authorization. They also not have an up to date understanding of industry trends and new business modes. These problems, however, are precisely the advantages of the Society. So, in the field of e-books, organizations managing collective copyrights have a big role to play. “As China’s only non-profit society engaged in the collective management, service and protection of written work copyrights, the Society is seizing the opportunity by expanding membership and exploring package solutions with firms,” said Zhang.  
In April 2009, the Society signed a contract with Hanwang Technology to create a strategic partnership for digital copyright procurement. Under the cooperation agreement, Hanwang’s electronic paper books (epbooks for short) will serve as a central channel and terminal for the digital content managed by the Society, so that users can use epbooks to access a large volume of copyrighted written works.
If there are disputes, the Society will act on behalf of Hanwang. According to the Regulations on the Collective Management of Copyright, the Society has the right to take lawful actions against any copyright violations and apply for administrative punishment from related departments or lodge lawsuits.
The copyright transaction between the Society and Hanwang, in which a package of rights was transferred to the user directly, opened the B2C mode and accelerated the pace of digital publishing by offering a new idea, some media reports said.
The Society will soon establish a brand-new “digital copyright authentication mechanism,” said Zhang. Detailed rules will be made in channel and rules of authorization, interest distribution and contract implementation and supervision will be created. A standard contract text will be formulated. E-reader makers will be guided in obtaining complete digital copyright and professional authentication will be set up to create a convenient and orderly authorization channel.
Loopholes in law and policy
The General Administration of Press and Publication will streamline publication resources and remove institutional barriers between traditional and digital publishing so as to create better conditions for integrating traditional and modern forms of reading, said director Liu Binjie. The state’s Outline of the Eleventh Five-year Plan for National Culture Development (2006-2010) also spelt out efforts to develop digital content, digital production and network dissemination as well as new reading forms, such as e-books and mobile newspapers. But loopholes exist in practice.
Since China’s publishing is at a critical stage of corporate reform and transition from traditional to digital books, concepts of mobile publication, digital publication and Internet publication are not yet so clear-cut in government administration, said Zhang. Related laws, though temporarily applicable to digital publishing, are full of loopholes.
Related laws and regulations need prompt revisions to catch up with the needs of modern information technology and the copyright industry, said Zhang, and the connotation and extension of the right of communication through information networks should be further clarified. The Regulation on the Protection of the Right of Communication through Information Networks, which became effective in March 1, 2005, has proven to be problematic in market practices and has held back the industry. It permits irregular authorization and some experts say the regulation is at a dysfunctional state.  
“Improvement in the industrial environment requires continuous government efforts in law-making and corporate credit. Authorities should standardize publishing market orders, and improve market entry standards and supervision. The National Copyright Administration can create a fair competition environment to facilitate industry growth and the creation of adequate market entities through market supervision and administrative punishment,” said Zhang.
“I hope authorities can study and analyze the entire industrial chain of digital publishing and sort out issues affecting right holder’s interest and industry growth, and solve a series of problems including author authorization, authorization channels, technical standards for digital publishing, redundant construction and waste of resources, a nationwide digital resource platform, improved business modes, payment and third-party supervision. The current confusion seen in Internet publishing should be a good reference for regulating digital publishing,” said Zhang.
Authorities are reportedly pushing forward a standard formulation for the reading industry. At the “2010 China Mobile Reading Industry Forum” on January 21, an official from the science and technology department of the Ministry of Industry and Information Technology said the department is actively working to establish standards. Vice Director Sun Shoushan of the General Administration of Press and Publication said at the recent “Digital Publishing Industrial Chain Win-win Summit” that the Administration will push forward e-readers with industry, product, standard and technology.

“Now it’s the best time for government authorities to start regulating digital publishing and copyright is a good point to cut in,” said Zhang. “We expect real government actions in standardizing digital publishing and copyright management, creating a fair market competition order at home, defending right holder’s interest and fighting digital piracy. Meanwhile, authors should try their best to reserve the right of communication through information networks when signing contracts with publishers and exercise caution when giving permission to e-reader makers. The Society is ready to assist authors in this regard,” said Zhang.

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