On April 27, the result of the selection of the top ten influential cases in the field of cultural media 2022 organized by the Cultural Media Business Research Committee of the Shanghai Bar Association was officially announced! The cases represented by lawyers Zhang Wenjie, Qiu Zhengtan, Li Hao, Xu Xiaolin, and Fu Yaolu were selected as the “Top Ten Influential Cases in the Field of Cultural Media 2022”.

[Zhang Wenjie, Qiu Zhengtan] Case of Preservation regarding Copyright of Beijing Winter Olympics Event Program and Unfair Competition—Pre-litigation Ban on Infringement of the Copyright of Beijing Winter Olympics Event Program

[Li Hao, Fu Yaolu] Beijing Iqiyi Technology Co., Ltd. v. Beijing Kuaishou Technology Co., Ltd. and other companies regarding the dispute over copyright ownership and infringement—first case of infringement on short video platform’s “algorithm recommendation” in China

[Qiu Zhengtan, Xu Xiaolin] Anhui Daofeng Network Technology Co., Ltd. v. Youku Information Technology (Beijing) Co., Ltd. regarding the dispute over Internet Unfair Competition -The first effective Judgment of a new type of unfair competition involving VIP account leasing of a video website

Related links:
Top Ten Influential Cases in the Field of Cultural Media 2022 (Part I)
Top Ten Influential Cases in the Field of Cultural Media 2022 (Part II)

 Case of Preservation regarding Copyright of Beijing Winter Olympics Event Program and Unfair Competition—Pre-litigation Ban on Infringement of the Copyright of Beijing Winter Olympics Event Program

Brief Introduction
      The International Olympic Committee is the copyright owner of the live audio-visual programs of the opening and closing ceremonies of the 2022 Beijing Winter Olympics and various competitions. CCTV International Corporation (“CCTV”) obtained the right to disseminate, broadcast, and provide the 2022 Beijing Winter Olympics to the public through information networks after authorization.

      CCTV believed that Zhuhai Chuanghixin Network Technology Co., Ltd. (“Chuanghixin”)’s provision of online live broadcasts of the 2022 Beijing Winter Olympics to the public through operating software was obviously an infringement; at the same time, Shanghai 2345 Network Technology Co., Ltd. (“2345”), as the operating platform, knew and should know the infringement, provided the assistance in the infringement. Therefore, CCTV filed an application for pre-litigation behavior preservation, requesting a ruling that Chuanghexin shall not provide any event programs, or opening and closing ceremony content without permission during the Beijing Winter Olympics; 2345 shall immediately stop providing downloads of relevant application software on its operating platform.

      The court held that the applicant’s application for pre-litigation preservation against Chuanghaixin has factual and legal basis. If Chuanghaixin’s behavior was not stopped in time, it would cause irreparable harm to CCTV, and the pre-litigation preservation itself is a reasonable measure to prevent the continuous harm of interests or the expansion of the harm. The normal operation of the software would not be materially affected. If CCTV has provided a guarantee, it would not cause a significant imbalance in the interests of the parties or harm the public interest. Therefore, it ruled in support of CCTV’s application for pre-litigation preservation against Chuanghaixin. However, as to the application for behavior preservation against 2345, the court held that such requests did not have sufficient legal basis and did not meet the conditions for the people’s court to take pre-litigation behavior preservation measures.

Brief Review
      The ruling in this case is not only aimed at the act of pirating the programs of the Beijing Winter Olympics that have been and are being broadcast, but also at the possible future pirating of the live programs of the Beijing Winter Olympics, that is, the pre-litigation ban is made on instant infringement.

  “Instant infringement” refers to an infringement of intellectual property rights that has not yet occurred but is about to occur. In response to immediate infringement, the Copyright Law of 2001 stipulates that if the copyright owner or the copyright-related right holder has evidence that others are committing or about to commit an act that infringes their rights, and if it is not stopped in time, it will cause irreparable harm to their legitimate rights and interests, they can apply to the people’s court for measures before suing, so as to order the stop of relevant acts.

      In traditional judicial practice, the behavior that are about to be committed is not inevitable. Since “order the stop of the relevant behaviors” contains the meaning of “order the stop of behaviors that have already occurred”, it is obvious that an act that has not yet occurred cannot constitute an infringement. Therefore, the court is very cautious about taking measures to order the stop of relevant behaviors, which makes the courts believe for a long time that the applicant needs to submit evidence to prove that the respondent's behavior has constituted an infringement in judicial practice. 

      However, the Copyright Law was revised in 2020 to stipulate that rights holders can apply for measures such as ordering certain acts or prohibiting certain acts. Compared with previous provision, the meaning of “prohibiting certain acts” is more inclusive, and it can also include “prohibiting the acts that have not yet occurred”, which removes obstacles to the interpretation of legal rules for the pre-litigation ban. This case is based on this pre-litigation ban on instant infringement, which clarifies the confusion that has long existed in practice and is of guiding significance.

     In addition, the ruling was made during the holding of the Beijing Winter Olympics, which also timely and effectively protected the order of the dissemination of events at the Beijing Winter Olympics and maintained the intellectual property protection environment of the Beijing Winter Olympics.

Beijing Iqiyi Technology Co., Ltd. v. Beijing Kuaishou Technology Co., Ltd. and other companies regarding the dispute over copyright ownership and infringement

—first case of infringement on short video platform’s “algorithm recommendation” in China

Brief Introduction
      Iqiyi is one of the production units of the TV series “Old Nine Gates”, exclusively enjoys the right to disseminate the information of “Old Nine Gates” on the Internet, and operates the Iqiyi APP. Kuaishou is the operator of Kuaishou APP. Dajia Company provides network services for information transmission and storage to Kuaishou Company, and Unicom Wuxi Branch provides basic network access, automatic transmission, automatic storage and other services for video content in Kuaishou APP. Iqiyi submitted evidence that there were a large number of “Old Nine Gates” clips in the Kuaishou APP. It believed that the third defendant knew and should know the infringement but still provided users with online playback and download services for the underlying infringing videos, and that it diverted users from watching on the Iqiyi Platform. Therefore, it requested the court to order the three defendants to jointly bear the liabilities for copyright infringement. The court of the first instance found that the videos of Kuaishou APP were stored on a server whose domain name was registered under the name of Dajia Company; Kuaishou has set up a “Old Nine Gates” topic on the platform, with stills, synopsis, cast members and other content. Under this topic, there are a large number of videos, including the underlying infringing videos; At the same time, Kuaishou also divided the corresponding sections according to the video content. Among them, the “Suspense Drama” sub-section in the “Episodes” section listed “Old Nine Gates”. A click on the play will skip to the “Old Nine Gates” search page with related recommended videos. The court of first instance found that Kuaishou was subjectively at fault and shall bear the civil tort liability. At the same time, the court held that the civil tort liability that may arise from the short video of Kuaishou APP was only borne by the actual operator Kuaishou. Therefore, it ordered Kuaishou Company to stop the infringement and compensate for the loss. After Kuaishou filed an appeal, the Court of second instance, the Intermediate People’s Court of Wuxi, Jiangsu, held that the judgment of the first instance was correct, and after trial, the original judgment was upheld.

Brief review
      This is first case of infringement on short video platform’s “algorithm recommendation” in China. With the development of new media platforms, users’ cutting, editing, and handling of film and television works on short video platforms have caused extensive infringement disputes. As a short video platform that only provides network services, whether the “safe haven” rule can be applied to exempt liabilities is a matter of concern in practice.

      In this case, the short video platform also used “technical neutrality” as the defense. However, the court broke through the safe haven principle, and focused on examining whether the short video platform infringed the right of network users to disseminate information on the Internet and whether the behavior constituted knowledge or supposed knowledge. From the perspective of the court, the short video platform provides technical services recommended by algorithms. Itself aim to recommend of the series. The short video platform selected and classified the underlying infringing videos and sets up a special topic and related content section. This recommendation model constituted the recommendation behavior stipulated in Article 10 of the Provisions of the Supreme People’s Court on Hearing Several Issues of the Applicable Law in Civil Disputes Involving the Right to Online Dissemination of Information. On this basis, the court determined that the operator of the short video platform constituted a knowledge, and it is order to be liable for infringement.

      The court made it clear that the operator of the short video platform had the responsibility to actively manage the infringement on the platform, and shall not fail to take any effective measures to stop the infringement after receiving the requirement of deletion of infringing short video from the subject of right. This case reminds short video platforms that the application of platform technology and algorithm technology should be reasonable and appropriate, and that algorithm technology that may lead to infringement should be used with caution.

Anhui Daofeng Network Technology Co., Ltd. v. Youku Information Technology (Beijing) Co., Ltd. regarding the dispute over Internet Unfair Competition

—The first effective Judgment of a new type of unfair competition involving VIP account leasing of a video website

Brief Introduction
      The plaintiff, Youku Information Technology (Beijing) Co., Ltd. (hereinafter referred to as “Youku Company”), is a platform party that provides online video services. It obtains income video business mainly through the member management model and the paid membership model. The defendant Anhui Daofeng Network Technology Co., Ltd. (hereinafter referred to as “Daofeng Company”) is the operator of the “Daofeng Platform” and “Rent to Play” platform. By setting up a film and television rental area for Youku in the underlying platform and providing a number of paid services to promote the success of the transaction, Daofeng Company provides its users with a large number of rental services for leasing and renting Youku member accounts in a centralized manner, and collects fees and profits from the business. Youku iled an anti-unfair competition lawsuit in the court on the ground that Daofeng Company seriously damaged its platform membership management system and commercial interests and business model and caused huge losses to the plaintiff’s economic interests.

      The court of first instance held that the sued company set up a film and television zone in the sued platform it developed, operated to provide users with leasing services for Youku member accounts, and cooperated with the lessor to share the income. The sued behavior was improper in the sense of the Anti-unfair competition law, and the behavior harmed Youku’s legal rights and interests protected by law and constituted unfair competition. Therefore, it ordered Daofeng Company to compensate Youku Company for economic losses of 1.2 million yuan and reasonable expenses of 30,000 yuan. Both parties appealed against the judgment of the first instance. The court of second instance rejected both parties’ request for appeal, holding that the original judgment be upheld since the facts of the judgment of the first instance were basically clear and the applicable law was correct.

Brief review
      For most commercial application platforms developed based on Internet technology, whether they are entertainment or tool-based, “charging membership fees from registered users and providing member-exclusive products or services” are their core and more sustainable profit-making model. Can registered users of the platform who have become paid members provide their usage rights to third parties for use? This is an underlying transaction rule that needs to be clarified in the Internet business ecosystem, as well as a basic legal issue in the field of Internet civil conduct. This case made a negative evaluation regarding the rental platform’s provision of membership accounts, which vigorously cracked down on the typical behavior of such parasitic profits under the business model of others in the video field, safeguards the legitimate rights and interests of practitioners in the video industry based on their legitimate business model and the normal competitive order of the industry and ensures the long-term development of the video industry.

      The courts of first and second instance in this case answered the above questions through judgments: Given the high investment in all aspects of video website operation and the limited profit-making model, it can be determined that the user account of the video website is specific for one person and that it is a basic business rule of the video industry at this stage to prohibit subletting or borrowing of membership accounts. Therefore, it is necessary to restrict the users’ use scope through network user agreements or membership agreements, which is reasonable and does not unreasonably affect users’ use of various member services. The account rental platform operated by Daofeng Company destroys Youku’s restrictions on member accounts based on business autonomy, resulting in non-member users’ access to member services without payment of membership fees to Youku or watching the advertisements. This destroyed Youku’s operating model and profitability, caused substantial influence to Youku’s trading opportunities, membership revenue and user traffic, harmed Youku’s operating income, and was unfair to other paid member users. Therefore, the court determined that the business activities of Daofeng Company constituted the acts of unfair competition under Article 2 of the Anti-Unfair Competition Law.