China's Highest Court Clarifies Copyright Liability of Network Service Providers
These Provisions are significant because:
(a) litigation relating to online or mobile platform infringement of copyright has increased in the last two years;
(b) courts must follow the Provisions when determining the liability of Network Service Providers ("NSP") for online copyright infringement;
(c) they are the first national judiciary document the SPC has issued providing specific rules on assessment of the NSPs' liability.
The term "Network Service Provider" includes Internet service providers and Internet content providers.
The safe-harbour exemption is not applicable if the NSP knows or should have known of the alleged infringement. The NSP has the burden of proving that it had no actual or constructive knowledge of the infringement. A substantial part of the Provisions is dedicated to a discussion on how the courts should assess the NSP's actual and/or constructive knowledge.
Actual knowledge of the alleged infringement should be found if, after receipt of a notice of infringement, an NSP fails to take necessary measures to stop the infringement. The necessary measures include, but are not limited to, deleting, blocking or de-linking the infringing content.
The Provisions require the court to assess constructive knowledge by taking into consideration all of the following factors:
(a) the degree of obviousness or specific circumstances of the alleged infringing acts;
(b) the nature and mode of the services provided by the NSP, the possibility that such services may facilitate infringement, and the information management capability the NSP should possess;
(c) the type and popularity of the disputed works, performance or audio-video products;
(d) the involvement of the NSP in selecting, editing, modifying or recommending the disputed works, performance or audio-video products;
(e) any positive and/or reasonable measures taken by the NSP to prevent the infringement;
(f) any procedures set up by the NSP to receive notices of infringement and provide timely and reasonable responses to such notices;
(g) whether the NSP has taken reasonable measures against repeated acts of infringement;
(h) other relevant factors.
Revised Provisions Where a Direct Economic Interest Is Obtained
The State Council's Regulations on Protection of the Right of Dissemination through Information Networks (the "Regulations"), provide that if the NSP derives direct economic benefit from the infringing content provided by a web user, the NSP may then be held liable for the web user's infringement, even where the NSP does not know and/or has no reason to know of such infringement.
The Provisions change the position to a certain extent as now liability where a direct economic benefit is derived will not be automatic, a NSP will be able to argue that no liability should be imposed if they can prove that they had no knowledge or had no reason to know of the disputed infringement. This approach takes the Provisions one step closer to the United States's DMCA under which the NSP's vicarious liability is triggered by both direct financial benefit and the NSP's "right and ability to control the infringing activities".
Websites collecting fees from website users for downloading or online viewing of audio-video products in China will have to review their fee-collection model and assess their risk levels.
Balancing of Interests
The Provisions require the courts to balance the interests of right holders, NSPs and the public when deciding online copyright infringement cases. Foreign e-commerce operators or website operators should be aware that this could disfavour them in cases where Chinese copyright works are disseminated through their websites without authorization, and that Chinese courts are likely to have less sympathy for foreign defendants. Under Chinese copyright law, foreign platforms or website operators can be subject to copyright lawsuits in China if the infringing content can be accessed from a computer located in China.
 According to nation-wide statistics provided by Supreme People's Court ("SPC") , half of the IP litigations filed in 2010-2011 concerns copyright matters and over a half of such copyright litigation related to the right of dissemination through information networks. See articles (http://www.sipo.gov.cn/mtjj/2012/201206/t20120614_708736.html and http://www.chinaiprlaw.cn/show_News.asp?id=13496&key=网络著作权 )
 See Article 6 and 8 of the Provisions.
 See Article 13 of the Provisions.
 See Article 13 of the Provisions.
 See Article 9 of the Provisions.
 See 17 §512(c)(1)(B)
 See Article 1 of the Provisions.