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Text | Nanjing Intermediate People's Court, Jiangsu Province, Xu Xin, Shao Yan
In the context of the vigorous development of the digital economy and e-commerce, the sales and promotion of many commodities have gradually shifted from the offline field to the Internet, which has also led to frequent cases of infringement of the right of information network communication in copyright infringement cases. The author finds that in such cases, the most common defense used by the defendant is the defense of lawful source. Article 59 of the Copyright Law of the People's Republic of China (hereinafter referred to as the "Copyright Law") clearly stipulates that if the publisher or producer of a copy cannot prove that it has legal authorization to publish or produce it, or if the distributor of the copy or the lessor of the copy of an audiovisual work, computer software, or audio or video recording product cannot prove that the copy it distributes or leases has a lawful source, it shall bear legal responsibility. It follows that the lawful source defence applies to the "distributor" or "lessor" of the copy. However, in cases of infringement of the right of information network transmission, there are sometimes situations where the defendant is neither the issuer nor the lessor, and there are no clear provisions in the law and judicial interpretations on whether it has the possibility of applying the lawful source defense and the review standard.
Disputes over the applicable subject of the lawful source defense
With regard to the defense of lawful source, the Copyright Law enacted in 1990 has not yet made explicit provisions. When the Copyright Law was amended in 2001, a relevant provision was added to Article 52 for the first time, that is, if the publisher or producer of a copy cannot prove that it has legal authorization to publish or produce, or if the distributor of a copy or a film work or a work created by a method similar to that of a film, computer software, or a copy of an audio or video recording product cannot prove that the copy it distributes or leases has a legal source, it shall bear legal responsibility. When the Copyright Law was amended in 2010, the above-mentioned provisions were changed from Article 52 to Article 53, and the content remained basically unchanged. When the Copyright Law was revised again in 2020, the above-mentioned provisions were changed from Article 53 to Article 59, which amended the expression "cinematographic works or works created by methods similar to those of filming" to "audiovisual works", and added "In the course of litigation proceedings, if the accused infringer claims that it does not bear the liability for infringement, it shall provide evidence to prove that it has obtained the permission of the right holder, or that it can be used without the permission of the right holder as provided for in this Law" , the legal text of the lawful source defence remains unchanged substantially.
At present, the controversy over the interpretation of this legal provision mainly focuses on whether a legitimate source can be applied to a dispute over infringement of the right of information network transmission, except for the act of issuance and leasing.
For example, in the case of a dispute over infringement of the right of information network transmission between S Media Company, J Real Estate Development Company and B Advertising Production Company, S Media Company was authorized to enjoy the copyright property rights of the time-lapse photographic work "Nanjing 2014" and had the right to file a separate lawsuit in its own name. J Real Estate Development Company used the work "Nanjing 2014" in the promotional video published on its WeChat official account, which was produced by B advertising production company commissioned by an affiliate of J Real Estate Development Company, at a cost of more than 580,000 yuan. S Media Company filed a lawsuit with the court, demanding that J Real Estate Development Company and B Advertising Production Company cease the infringement and compensate for the damages. The court of first instance ruled that J Real Estate Development Company and B Advertising Production Company should cease infringing. After the verdict was pronounced, S Media appealed. After trial, the court of second instance held that B advertising production company infringed the right of reproduction and compilation of the work in question by editing the infringing video material for the production of the promotional film without permission, and that the real estate development company J infringed the right of information network dissemination of the work in question by publishing the promotional video containing the footage of the work in question on the WeChat public account without permission. However, the promotional video released by J Real Estate Development Company was legally obtained by its affiliate after paying a reasonable consideration from B Advertising Production Company, and the promotional video production contract between the two parties clearly stipulated that B Advertising Production Company should guarantee that it would not infringe intellectual property rights, so the legal source defense of J Real Estate Development Company was established and it was not liable for compensation. Although the advertising production company B claimed that the infringing materials in the promotional video came from a certain website, the website did not review whether the uploaded works were infringing. As a professional advertising company, it failed to fulfill its duty of reasonable care and was at fault, and its claim that the defense of lawful source could not be established. The court of second instance ruled that J Real Estate Development Company and B Advertising Production Company should stop infringing, and B Advertising Production Company should compensate more than 150,000 yuan for losses.
As for the non-distributor and non-lessor of a work, such as J Real Estate Development Company in the aforementioned case, there are two main views in the academic community as to whether it can use a legal source to defend itself:
According to the "negative theory", the first paragraph of Article 59 of the Copyright Law clearly stipulates that the scope of application of the lawful source defense is limited to the act of distribution and leasing, and does not include the act of controlling the right of information network transmission, and the previous amendments to the Copyright Law have not changed the subject of application of this article, and there are no relevant provisions in the judicial interpretations related to the right of information network communication. Therefore, from the perspective of the original legislative intent, the defendant in the dispute over infringement of the right of information network transmission is not the subject of application of Article 59. In practice, some courts have held that the alleged infringer who has carried out information network dissemination has no legal basis for applying the lawful source defense and exempting from liability for compensation, that is, adopting this viewpoint, denying the possibility of applying the lawful source defense to the infringement of the right of information network transmission.
From the point of view of "affirmative theory", the defendant in a dispute over infringement of the right of information network transmission can also become the subject of application of Article 59. If the right to disseminate information on the network is denied, the space for the defense of lawful sources may lead to some theoretical conflicts and practical difficulties. For example, even in the case of offline sales, when the seller displays the allegedly infringing copy for the purpose of sales, it may involve both the right of distribution and the right of exhibition. If it is mechanically understood that the applicable subject of the lawful source defense in Article 59 only refers to the "distributor" and "lessor", then in this scenario, even if the seller can apply the lawful source defense to exempt the liability for the act of distribution, it still needs to bear the liability for the act of exhibition. This result is tantamount to hollowing out the system of lawful source defense in the field of copyright. In the above-mentioned case, the effective judgment adopted the view of "affirmative" with respect to J Real Estate Development Company's act of publishing a promotional video containing infringing works on its WeChat official account, which supported the company's defense of lawful source. The author agrees with this view.
The right to disseminate information on the network is subject to multiple examinations of the lawful source defense
(1) Analysis based on system explanations
The defense of lawful source is not a unique rule in the field of copyright, but a common system in the entire field of intellectual property, which is involved in trademark rights, patent rights, plant variety rights and other fields. In addition, intellectual property rights are also an important part of the civil rights system. In the author's opinion, the relevant content of the lawful source defense needs to be understood in conjunction with the basic theories in the Civil Code of the People's Republic of China (hereinafter referred to as the "Civil Code"). By comparing different types of intellectual property rights, it is found that the expressions of the relevant legal texts are not completely consistent, as shown in Table 1 (see Table 1).
For acts that can apply the defense of lawful source, trademark rights, patent rights, and plant variety rights are all extended to varying degrees with the act of sales as the core. Although there is no direct provision on sales in the field of copyright, combined with the definition of "distribution right" in Article 10(6) of the Copyright Law, distribution can basically cover sales behavior. With regard to the legal consequences, although the relevant provisions of the Copyright Law are expressed as "legal liability", in light of the principle of fault attribution of liability for infringement in Article 1165 of the Civil Code, its connotation is consistent with the defense of the legal source of trademark rights, patent rights, and rights of new plant varieties, that is, this kind of "legal liability" refers to liability for compensation. Although there is no subjective fault in the constitutive elements of direct infringement of copyright, fault is the premise of liability. If the direct infringer is not subjectively at fault, he is not liable for damages.
From the perspective of the application and legal consequences of the lawful source defense rule in the intellectual property system, the author believes that the essence of the rule is to exclude the production and manufacturing acts corresponding to the sales behavior, because the producer and manufacturer, as the source of infringement, has a much higher duty of care than the seller as an intermediate link. To determine whether the lawful source defense rule can be applied to the right of information network transmission, the key is to distinguish whether the conduct under its control has the possibility of no fault. If it can be proved that the actor has fulfilled a reasonable duty of care and is not subjectively at fault, he is not liable for compensation, because the assumption of civil liability needs to be based on fault. Article 4 of the "Notice of the Supreme People's Court on Doing a Good Job in the Trial of Cases Involving Copyright Disputes Involving Internet Cafes" clearly stipulates that if an Internet café operator can prove that the film or television work involved in the case was lawfully obtained from a qualified provider of the film and television work, and does not know and has no reasonable grounds to know that the film or television work involved in the case infringes on the rights of others such as the right to disseminate information on the Internet, he shall not bear civil liability for compensating for losses. It is also a confirmation of this view.
(2) Analysis based on the interpretation of the purpose
According to the general theory, the theoretical basis and institutional purpose of the lawful source defense is to protect bona fide third parties, and while safeguarding the copyright of the right holder, it also takes into account the civil legal acts made by bona fide third parties who are unaware of the circulation of works based on the interests of trust, so as to maintain commercial order and transaction security. The terms "publisher" and "producer" in Article 59 of the Copyright Law refer to the production of the work and therefore require legal authorization, while the "distributor" and "lessor" are the circulation link of the work, so they are required to have a legal source. From the perspective of purposive interpretation, the meaning of the second half of the clause is not to create a defense rule only for "distributors" and "lessors", but to point out that the duty of care for the use of works in the circulation link is different from the production link. The lawful source defense is to distinguish between the source of infringement and the circulation link, and the actor should bear different degrees of duty of care not to infringe intellectual property rights. If the act of controlling the right to disseminate information on the network is an intermediate link, there is room for the application of the lawful source defense. Based on this, some scholars have pointed out that "from the perspective of protecting bona fide counterparts, the subject of application of the lawful source defense should be appropriately expanded when necessary".
If an excessively high duty of care is placed on the users of the circulation of works, it is not conducive to promoting the dissemination of works, but also violates the basic spirit of the theory of protecting bona fide third parties, and may undermine the stability and predictability of the transaction process. In the aforesaid case, B Advertising Production Company was the producer of the infringing promotional video, and J Real Estate Development Company, as a non-professional advertising design and production company, obtained the promotional video from B advertising production company in a legal manner and at a reasonable price, and had fulfilled the corresponding duty of care. In fact, as an intermediate link, whether it is sales or information network dissemination, its essence is that the infringing work shifts from the production link to the circulation and dissemination link, and there may be multi-level and multi-subject situations in this process, if all subjects involved in the process are required to strictly review the legal authorization of the work, otherwise they will bear the infringement liability, which is tantamount to imposing an excessive duty of care on the subject of the circulation link, which is obviously not in line with the actual situation of commercial transactions.
(3) Analysis based on the interpretation of international treaties
The legal source defence clause, which was included in the Copyright Act in 2001, derives from the relevant provisions of Articles 43 and 45 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (hereinafter referred to as the "TRIPS Agreement"). Article 43 of the TRIPS Agreement provides for the reversal of the burden of proof, and Article 45 sets out the principle of fault attribution of liability. Combined with the analysis method of systematic interpretation, the author believes that Article 59 of the current Copyright Law has two meanings: first, the liability for copyright infringement is premised on fault, and no liability is borne if there is no subjective fault; This is in line with the spirit of the TRIPS Agreement. Article 45 of the TRIPS Agreement provides that the liability for compensation shall be subject to "infringing activities", and there is no restriction on the types of entities engaged in infringing activities, which also leaves room for interpretation of the applicable subject of the lawful source defense under Article 59 of the Copyright Law. As e-commerce and online communication have become important forms of circulation, the provision that only "issuers" and "lessors" can apply the lawful source defense can no longer meet the needs of judicial practice. In the author's opinion, Article 59 of the Copyright Law does not essentially change the basic provisions of the principle of attribution of fault for copyright infringement liability, and that the entities in the copyright circulation link, including the "distributor" and the "lessor", should not be liable for compensation if they have fulfilled their reasonable duty of care and are subjectively not at fault. According to this understanding, if the defendant who carried out the act of disseminating information on the network meets this requirement, it should not be mechanically limited to the "issuer" and "lessor", but should be more flexibly applied to the scope of the lawful source defense.
The right to disseminate information on the network is subject to judicial review of the lawful source defense
Based on the above analysis, the author believes that from the perspectives of system interpretation, purpose interpretation and international treaty interpretation, the right of information network dissemination has room for the application of the lawful source defense. Paragraph 1 of Article 4 of the Several Provisions of the Supreme People's Court on Evidence in Civil Litigation of Intellectual Property Rights clearly stipulates that if the defendant asserts a lawful source defense in accordance with the law, it shall provide evidence to prove the fact that the alleged infringing product or copy was lawfully obtained, including the lawful purchase channel, reasonable price and direct supplier. Based on this, to determine whether the lawful source defense in the act of information network transmission can be established, the judicial organs should conduct a review from two aspects: objective and subjective elements. For the objective element, the actor should prove that the allegedly infringing copy has a lawful source, that is, it was obtained through legal channels and ordinary transaction contracts in a normal commercial manner. For the subjective element, the actor should prove that he is not subjectively at fault, that is, he did not actually know (in good faith) and should not have known (subjective no fault) that the alleged infringing copy was manufactured and sold by the manufacturer without the permission of the copyright owner.
In the aforesaid case, the promotional film involved in the case was produced by B advertising production company, and there was a clear agreement in the production contract between J Real Estate Development Company and B advertising production company that B advertising production company assumed the guarantee liability of non-infringement of intellectual property rights, and J real estate development company paid more than 580,000 yuan for the production costs. Objectively, J Real Estate Development Company obtained the allegedly infringing promotional video through normal commercial channels and methods, and subjectively, as a real estate company, it was not subjectively at fault for obtaining the promotional video from the advertising company at a reasonable price. Correspondingly, as a professional advertising design and production company, it is difficult to determine that B Advertising Production Company has fulfilled its reasonable duty of care and is subjectively at fault if it purchases materials from a website to produce a promotional video of more than 580,000 yuan at a price of 15 yuan. Therefore, J Real Estate Development Company's lawful source defense is established, and it only needs to bear the responsibility to stop the infringement, while the legal source defense of B Advertising Production Company cannot be established, and it needs to stop the infringement and compensate.
Cover and table of contents of this issue
China Trial, Issue 1, 2024
China Trial News Semi-Monthly No. 335
Editor/Xu Chang