Case Summary

Shenzhen Shengying Network Technology Co., Ltd. (“Shengying”) was authorized by Bo Zhong Zhe Company (BZZ) to exercise exclusive management, grant of license, royalty fee collection, litigation and other rights in its own name over karaoke and other public entertainment operators in mainland China for 239 music works. Shengying sued Wuxi Qiaosheng Entertainment Co. Ltd. (“Qiaosheng”) for copying and storing 54 of the musical works from its licensed albums into the servers at Qiaosheng’s business premises and provided these works to customers as Karaoke content on demand for making a profit without seeking Shengying’s license and paying royalties, which has infringed on its copyright.

It was found during the trial that Shengying is not the copyright owner of the musical works involved in this case. According to the “audio-video copyright licensing agreement” signed between BZZ and Shengying, the rights BZZ authorized Shengying to exercise had no substantive difference from what is stipulated in Article 2 of Regulations on Collective Administration of Copyrights (“the Regulations”) in nature and content. Shengying was exercising the functions and rights of a collective administration organization for copyrights, which has violated the prohibitive stipulation of the Regulations that, except for registered collective administration organizations for copyright, any organization or individual shall not exercise copyright collective administration. Thus the court held that there is no legal basis for Shengying to conduct collective administration of music video works and to file the suit in its own name, and that the case filed by Shengying shall be dismissed.

Significance

In recent years, copyright disputes involving MTV works played in Karaoke and other entertainment places are observed with a high level of complexity. It has been a big controversy as to the legitimacy of a third party that is not a collective administration organization being authorized by some music work copyright owners to exercise licensing, fee collection, administration, and litigation in its own name. In this case, the court adopted the principle of balance of interests to examine the relationship among the interests of all parties including the Karaoke operators, Karaoke music work copyright owners, copyright collective administration organizations and individual right owners, defined the nature of Shengying’s activities, and hence found Shengying violating the prohibitive regulations in the Regulations on Collective Administration of Copyright. This case is of great significance in solving Karaoke music work dispute and promoting the development of collective administration norms.