Record IV of Day Four of our U.S. Visit

(By You Yunting) In late March, the author had the opportunity to take a journey to the United States at the invitation of the U.S. government in order to better understand how the U.S. IPR system operates. On the fourth day of the journey, the author and his associate visited the International Intellectual Property Association (the “IIPA”). The following is the brief record of our visit there.

The IIPA is a copyright protection organization consisting of the Association of American Publishers (the “APP”), Business Software Alliance (the “BSA”), Entertainment Software Association (the “ESA”), Independent Film & Television Alliance (the “IFTA”), International Visual Art Association (the “INTVAA”), Motion Picture Association of America (the “MPAA”), National Music Publishers’ Association (the “NMPA”), and the Recording Industry Association of America (the “RIAA”).

The IIPA received us with a senior attorney from the association, and he first spoke highly of the Supreme People’s Court’s promulgation of the Judicial Interpretation on the Information Communication by Networks in December of last year. After that, he mentioned that according to the music industries’ incomes in various countries in 2012, as recently published in the beginning of 2013 from the International Federation of the Phonographic Industry (the “IFPI”), the total income of China’s music industry is $83 million dollars, which is roughly the same as that of Thailand, which has only 1/20 the population of China. On the other hand, in Pakistan, for the income from ringtones only, it has gained over $100 million dollars. In terms of the U.S., the annual income totaled $12 billion dollars. According to the US representative, several factors contribute to the situation:

I. China’s users are not accustomed to using genuine music products. Frankly, he stated, the copyright legislature of China is good, yet users in China are used to enjoying music without making any sort of payment.

II. Market entry in China is wrought with problems. Foreign record companies’ development is limited in China, and since 2007 the Ministry of Commerce has prohibited the admission of foreign record companies into China’s culture industries. As a result, no new singers or artists can be signed with them. (It shall hereby refer to the regulation in the Guideline of the Foreign Investment issued by the Ministry). According to the Ministry of Culture, foreign singers shall first apply for an administrative license before singing in China (it remains unknown to us whether this means a performance or the publication of an album in China). On the other hand, Chinese singers can sing first and file the license afterward.

In response to this issue, the author explained to the US representative that China is on its way to opening up its music market, and according to the latest Guidelines issued in 2013, online music services are now open to foreign companies.

After that, the U.S. representative also talked about the problems in the film industry. In 2012, China and the U.S. signed a treaty on films, pursuant to which the U.S. could export 14 more films to China each year. However, in practice, in 2012 there were more than 840 films manufactured in the U.S., and only 34 of them could be publicly shown in China. Before 2012, for the movie market in China, the US could only gain 13% of the box office, while the remaining 87% would go into China’s pocket. After 2012, the US could gained 25% of the box office and 75% was left to domestic Chinese films. But few U.S. movies are with a fixed income, and that means no matter what the domestic box office is, the U.S. could only gain a fixed proportion of income. Even so, the U.S. shows its satisfaction with the progress. The author also raised the question regarding claimed bribery by the MPAA as investigated by the U.S. government. As confessed, several Hollywood companies were investigated by the government based on the Foreign Corrupt Practices Act (the “FCPA”), but that happened in Los Angeles, not in Washington.

Chinese visitors also asked for an introduction regarding the collective management organization of copyright in the U.S. As introduced by the US representative: the collective management organization of the US is participated in voluntarily, and each copyright field has one or more copyright collective management organizations. As for the income division issue, each collective management organization has its own way in which it publishes statistics. Like music collective management organizations charge radio stations, currently Internet radio stations are difficult to charge. The US also faces the problem of reasonable division of income, but generally, the deliberate payment of fees for music use is also becoming a common sight in the United States. The U.S. representative shared with us an example of his relative. The man creates music for Sesame Street, and each time the music is used a fee would be paid afterwards. Due to the popularity of the children’s program, the author has benefited nicely. According to the U.S. representative’s opinion, the monopoly of one organization in each field can also be found in the collective management systems in China, and in that situation, the rates are decided by the monopoly organizations only, which is actually quite risky. It seems that even with the establishment of collective management systems, the inherent problems involved are still not solved. Three weeks before the discussion, the U.S. representative submitted its opinions to the Copyright Law Revision to the Copyright Office, including their opinions about the monopoly of the collective management organizations.

When he was asked his opinions on the law implementation of Internet Infringement law related to the U.S. movie industry, the US representative expressed that Hollywood believes  rights protection in China is not bad, for the companies we can see in the film market are those large-scale ones; that being said, infringement is the last thing they would like to see. Two weeks ago, they met a representative from Taobao.com in their office, and the discussion with the representative was very friendly. Finally, the U.S. representative expressed his opinions regarding IP protection of China’s software, and according to their views, the ratio of genuine copy use is not high in China; while on the other hand, in the U.S., the payment for software using on a single computer can be as high as $80 dollars, while the price is only $8 dollars for the same product in China.

In closing, when filing notes of the meetings, the author found a lot of it to be incomplete and inaccurate. He decided to put them on our website mainly to share with the readers, and any opinions or corrections are warmly welcomed. Since I’m not willing to share names or details regarding official positions of the people I’ve had discussions with without their agreement or permission, I humbly request forgiveness from the readers.

Lawyer Contacts

You Yunting：86-21-52134918  youyunting@debund.com/yytbest@gmail.com

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