◎ Written by Li Liao, all-media reporter of "Legal Person" magazine
In 2022, a case closely related to the copyright of China's karaoke hits, after 4 years, was finally settled. This contract dispute case involving the China Audiovisual Copyright Collective Management Association (hereinafter referred to as the "Audio Collection Association") and Beijing Tianhe Culture Co., Ltd. (later renamed Tianhe Group) covers the entire karaoke industry in China, and the conflicts between the parties are complicated. , the first-instance court trial lasted three years, and the verdict was more than 60,000 words long. The second-instance trial was the final one, and the original judgment was upheld, and the case ended in Yinji Xie’s victory.
If you want to sort out the case, you must first go back to 17 years ago. In 2006, the country gradually paid more attention to music copyright. The National Copyright Administration intensified copyright enforcement and announced the "Karaoke Business Industry Copyright Royalty Fee Standards" in November of that year. The era of karaoke copyright charging officially began. At first, the karaoke copyright royalty collection activity was only carried out as a pilot project in first-tier cities such as Beijing, Shanghai, and Guangzhou, and was later gradually expanded.
But in reality, there is a problem of difficulty in implementation. The number of music works and music video works used by a karaoke operator ranges from hundreds of thousands to hundreds of thousands. China has tens of thousands of karaoke operators distributed across the country. One rights holder cannot face tens of thousands of users, and one user cannot face hundreds of thousands to hundreds of thousands of rights holders. In order to solve the problems of rights holders' difficulty in safeguarding their rights and users' difficulty in obtaining authorization, the Audio Collection Association came into being in May 2008 to implement collective management of the copyright of audio and video programs and copyright-related rights in accordance with the law.
In short, after record companies, studios or singers join the Music Collection Association, they license their works to the Music Collection Association, and the Music Collection Association obtains these works and then authorizes them to be used by karaoke operators. After the Audio Collection Association obtains the royalties paid by karaoke operators, it will return them to the right holders in a certain proportion.
Before the Music Collection Association was established, at the end of 2007, its predecessor, the China Audiovisual Collective Management Association (preparatory), together with the China Audiovisual Association and the China Audiovisual Association Karaoke Copyright Operation Center, as Party A, signed an agreement with Party B Tianhe Group "Service Agreement". The agreement stipulates that Party A entrusts Party B to set up a karaoke copyright trading service agency nationwide, and collect karaoke program copyright royalties on behalf of Party A from karaoke operators across the country. This was the beginning of the contractual relationship between the Audio Collection Association and Tianhe Group to "collect royalties on behalf of others." Since then, the two parties have signed a series of supplementary agreements. To this end, Tianhe Group has established subsidiaries in various provinces to jointly implement the collection and transfer of copyright licensing fees.
However, during the performance of the contract between the two parties, the Audio Collection Association successively discovered that Tianhe Group and its subsidiaries had committed various breaches of contract. Many karaoke operators have reported that Tianhe Group has problems such as disguised charges. If a karaoke operator opens its business, it will have to pay an additional "tea fee" of about 30,000 yuan to Tianhe Group. If this red envelope is not given, the signing of the copyright contract will be delayed. At the same time, Tianhe Group and its subsidiaries repeatedly delayed the payment of license royalties to the Audio Collection Association without justifiable reasons. At the same time, they also failed to fulfill their "three unifications" commitments in the supplementary agreement, and some subsidiaries had inaccuracies in licensing royalties. Acts such as entering into jointly managed accounts and misappropriating license royalties. This has led to industry users and rights holders questioning the normative nature of collective copyright management activities conducted by the Music Collection Association. Many karaoke operators have complained to the National Copyright Administration, and some rights holders have withdrawn from membership due to lack of copyright fees, including some well-known celebrities. Record company.
In 2017, the Music Collection Association began to solve many problems in karaoke copyright licensing. In 2018, after repeated urgings to no avail, the Audio Collection Association sued Tianhe Group and its 20 subsidiaries to the court, requesting to terminate the "Service Agreement" between it and Tianhe Group and other nine agreements involved in the case. The group and its subsidiaries paid more than 95.3 million yuan in copyright licensing fees and corresponding interest. Tianhe Group and its subsidiaries paid more than 3.36 million yuan in copyright licensing fees and losses to the Audio Collection Association for the infringement. Tianhe Group countersued and demanded that the Audio Collection Association continue to perform the nine agreements involved in the case, claiming that the Audio Collection Association should compensate it for losses of 30 million yuan due to breach of contract and 70 million yuan for losses caused by stopping performance of the contract.
The Beijing Intellectual Property Court held in the first instance that the Service Agreement and related supplementary agreements stipulated that both parties implement a rapid distribution mechanism for license royalties with a settlement cycle of three months, but Tianhe Group and its subsidiaries delayed payment of license royalties without justifiable reasons. , there were a series of breaches of contract at the same time, and Tianhe Group's claim that the Audio Collection Association breached the contract lacked factual basis, so the judgment was made to terminate the nine agreements involved in the case. Tianhe Group paid more than 95.3 million yuan in license fees and corresponding interest to the Audio Collection Association, and it also had to pay Its delayed payment of license fees resulted in interest of more than 4.1 million yuan. Tianhe Group and some of its subsidiaries compensated the Audio Collection Association for losses of more than 330,000 yuan, and at the same time rejected Tianhe Group's counterclaim. Tianhe Group refused to accept the appeal. In 2022, the second-instance judgment of the Beijing Higher People's Court rejected the appeal and upheld the original verdict.
This case involves nearly 100 million yuan and covers more than 20 provinces across the country. The impact is not insignificant. The most critical significance of this case to my country's copyright collective management system is that it terminated the "collection of royalties" contract relationship between the Music Collection Association and Tianhe Group that had lasted for more than 10 years. Since then, the Music Collection Association has been able to independently implement the collection of royalties. Work. In September 2021, the Central Committee of the Communist Party of China and the State Council issued the "Outline for Building a Powerful Country on Intellectual Property (2021-2035)", which will improve the copyright collective management system as an important part of building an intellectual property protection system that supports a world-class business environment. Because
has promoted the development of my country's copyright collective management system, this case has positive significance for copyright collective management organizations to fully exert their functions and further improve the collective management system. It was selected as the Beijing Court's top ten intellectual property judicial protection cases in 2022.
[ expert comments on ]
"External brain" should not only be used but also managed
Several major dispute points
This is a mutual lawsuit case, so there are many disputes, mainly including whether Tianhe Group's subsidiaries are qualified defendants; Whether Tianhe Group, its subsidiaries and the Audio Collection Association have committed breach of contract, and if so, what liability they should bear for breach of contract; whether the contract involved should be terminated and whether it has been terminated; the specific consequences of contract termination, etc.
It can be seen from the "Service Agreement" signed by the Audio Collection Association and Tianhe Group that the subsidiaries of Tianhe Group are the joint executors of the contract between the group and the Audio Collection Association, and jointly act with the Tianhe Group on matters entrusted by the Audio Collection Association. Sign external copyright licensing contracts. Therefore, the subsidiary of Tianhe Group inherited the contractual obligations assumed by the local institutions and subordinate institutions of Tianhe Group. It is a counterparty to the contract, not a performance assistant, and therefore should be regarded as a qualified defendant.
According to Article 563 of the Civil Code, if a party to a contract "delays in the performance of its major obligations and fails to perform within a reasonable period of time after being urged" or "delays in the performance of its obligations or engages in other breaches of contract such that the purpose of the contract cannot be achieved", in addition One party can terminate the contract. In this case, during the performance of the contract, Tianhe Group and its subsidiaries failed to honor the "three unifications" commitments, continuously deliberately delayed settlement, took advantage of the convenience of the exclusive executor of collecting copyright fees to withhold copyright fees, collected cash privately, and failed to complete their commitments. There are various persistent breaches of contract and violations such as the amount of charges received, and the Music Collection Association still refuses to correct it after sending letters to urge the Music Collection Association many times. Therefore, the Music Collection Association has the right to terminate the "Service Agreement".
In view of the fact that Tianhe Group and its subsidiaries made subjective mistakes in the performance of the "Service Agreement" and objectively caused the Audio Collection Association to fail to achieve the purpose of the contract, according to Article 584 of the Civil Code, in addition to In addition to paying corresponding copyright fees, you should also bear liability for breach of contract including misappropriation fees and interest losses. Although Tianhe Group claims that the Music Collection Association has multiple licensing issues and refuses to perform the "genuine music library" and "miniktv" agreements, its claims have no factual basis, and the "genuine music library" and "miniktv" agreements are only frameworks. The sexual agreement lacks the conditions and necessity for continued performance. Therefore, there is no breach of contract by the Audio Collection Association, and Tianhe Group’s claim for compensation from the Audio Collection Association cannot be supported.
There are advantages and disadvantages to introducing cooperative institutions
The effective judgment in this case not only terminated the contractual relationship between the Music Collection Association and Tianhe Group that had lasted for more than 10 years, but also meant that the copyright collective management business of the Music Collection Association was controlled by Tianhe Group. Being completely terminated in a legal sense gave the Audio Collection Association the right to independently collect royalties, making it possible to independently exercise the rights of a collective management organization.
While we are pleased that the legitimate rights and interests of the Music Collection Association have been protected by this case, we should also see that a copyright collective management organization is established in accordance with the law for the benefit of the right holder. According to the authorization of the right holder, the copyright of the right holder or the copyright Social groups that collectively manage relevant rights have the right to obtain authorization, collect fees, and defend rights in their own name, as well as the obligation to transfer fees. But in reality, corresponding to the massive amount of work authorization and sublicensing business as well as rights protection, there are realistic situations such as the small number of copyright collective management organizations in my country and insufficient branch coverage. At this time, seeking cooperative institutions becomes an important way to solve the problem.
Although the introduction of cooperative institutions may help collective management organizations solve the above problems to a certain extent, it can also easily lead to various contradictions: First, there is a natural conflict between the profit-seeking nature of cooperative institutions and the non-profit nature of collective management organizations. The former is often too excessive. Paying attention to the short-term fee growth, there are contradictions in the collective management organization's requirements that the operation must be standardized, the license fee standard must be reasonable, and the member rights holders and users must have the right to speak; secondly, the collective management organization must establish co-management accounts and timely allocate Funding and other requirements are inconsistent with the possible opaque fund management and delayed payment of funds by cooperative institutions. The existence of these contradictions is not only related to the industry evaluation and social image of copyright collective management organizations, but also to the formation of good order in the copyright field and the management of litigation sources. Therefore, the contract dispute between the Audio Collection Association and Tianhe Group is both accidental and inevitable.
should try its best to perform its duties through its own efforts.
The judgment in this case disclosed some behaviors of Tianhe Group and its subsidiaries, such as directly accepting cash and withholding copyright fees through companies outside the case, etc., which not only seriously damaged the image of the Audio Collection Concorde Collective Management Organization, but also It also causes indirect damage to the interests of member rights holders, and is contrary to the original intention of the non-profit and public welfare of copyright collective management activities.
In order to prevent similar behaviors and cases from happening again, collective management organizations should move their focus forward, fully understand their own position as a non-profit legal person, implement the copyright administrative department’s requirements to “prevent commercial institutions from intervening in copyright collective management”, and try their best to pass When you need to choose an external cooperative agency to perform your duties on your own, it should not be for profit, and it should not detract from the interests of the rights holder. It is necessary to select those with suitable conditions from non-profit legal persons to participate. In the specific cooperation process, the establishment of a jointly managed account should be regarded as a prerequisite for contract performance, the settlement process should be detailed, the settlement cycle should be clarified, and the authorization period should be appropriately shortened, and circumstances that can be terminated should be stipulated in the agreement, so that the cooperative institution can clearly understand the boundaries of cooperation, Also aware of the consequences of breach of contract.
Copyright administrative departments should also strictly regulate the business activities of copyright collective management organizations, strengthen supervision, and through daily supervision and special inspections, promptly interview problems and carry out responsible rectification, correct and investigate violations, and prevent copyright collective management organizations from abusing their rights. , while unblocking reporting channels, promoting the establishment of a standardized and efficient collective copyright management order, and protecting the legitimate interests of copyright owners and users. In this way, the work of the collective management organization can be open and transparent, and the behavior of Tianhe Group and similar lawsuits can be avoided from happening again.
Editor and review | Qu Yang
Editor | Hui Ningning
Proofreading | Zhang Bo Zhang Xuehui
Source | "Legal Person" magazine December 2023 Issue 238
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