China’s rapidly evolving creative industries and digital landscape constantly test the boundaries of copyright law. While creators deserve robust protection for their works, society also benefits from reasonable access to information, education, and cultural development. Resolving the inevitable conflicts between these competing interests falls heavily on China’s judiciary. Increasingly, courts are applying a proportionality principle – a nuanced balancing test – to determine whether specific uses of copyrighted material constitute permissible “fair use” (or “fair dealing” in some systems) or infringement. Understanding how this principle operates is crucial for anyone engaging with copyrighted content in China.
What is the Proportionality Principle?
The proportionality principle isn’t explicitly codified as a single article in China’s Copyright Law (2020 Amendment). Instead, it’s a judicial doctrine derived from legal theory and practice, used to interpret and apply the existing statutory limitations and exceptions (Article 24, formerly Article 22). Its core idea is simple: the scope and enforcement of copyright should not extend further than necessary to achieve the law’s legitimate aims (incentivizing creation) when such enforcement would disproportionately harm other vital societal interests.
Courts consider several factors when applying proportionality:
- Purpose and Character of the Use: Is the use commercial or non-commercial? Transformative (adding new meaning, message, or purpose) or merely duplicative? Educational, news reporting, commentary, parody, or personal research weigh heavily towards fairness.
- Nature of the Copyrighted Work: Is the work published or unpublished? Factual or highly creative? Uses of factual or published works are often viewed more leniently.
- Amount and Substantiality of the Portion Used: How much of the work was used? Was it the qualitative “heart” of the work, even if quantitatively small? Using small, non-central portions favors fair use.
- Effect of the Use on the Potential Market or Value: Does the use act as a market substitute, depriving the copyright holder of significant revenue or potential licensing opportunities? This is often the most critical factor. If the use causes no demonstrable market harm or even operates in a distinct market, proportionality leans towards permitting it.
Landmark Cases Illustrating Proportionality
Several key rulings demonstrate how Chinese courts employ this balancing act:
- Beijing Film Producers vs. Baidu (2013 – Online Literature): Baidu’s library service allowed users to upload and access literary works. The court found Baidu liable for infringement. Crucially, it ruled that Baidu’s profit motive and the scale of unauthorized access created a direct market substitute, causing disproportionate harm to copyright holders’ interests that outweighed any public benefit of the platform’s accessibility. The sheer volume and commercial nature tipped the scales against proportionality.
- Tencent vs. Yinxun (2019 – Sports Broadcast Snippets): Yinxun Technology used short clips (2-10 seconds) from Tencent’s exclusive NBA broadcasts within its own news app. The Beijing Higher People’s Court applied proportionality:
- Purpose: News reporting (a statutory exception).
- Nature: Published broadcast footage.
- Amount/Substantiality: Very short clips, not the core highlights or most valuable moments.
- Market Effect: The clips served a different purpose (news illustration) than the full broadcasts (entertainment/viewing experience). They didn’t act as a substitute and were unlikely to harm Tencent’s market or licensing potential significantly.
The court found Yinxun’s use proportional and permissible under the news reporting exception. This case highlighted that even commercial entities can benefit from fair use if the use is truly transformative and limited.
- Fan Art and Parody Cases: Chinese courts have generally shown increasing tolerance for transformative works like parody, especially in online cultural contexts (egao culture), provided they don’t cause market confusion or significant harm to the original’s commercial value. Using copyrighted characters or settings for social commentary or humor, without directly competing with the original market, has often been deemed proportional. The key is whether the new work creates distinct value and doesn’t merely free-ride.
- Educational Use Boundaries: While Article 24 allows limited use for classroom teaching or scientific research, courts scrutinize the scale and commercial implications. A university providing vast digital libraries of copyrighted textbooks to all students without license, under the guise of “teaching,” would likely fail the proportionality test due to the significant market harm. Limited photocopying of excerpts for a specific class, however, is more likely to be proportional.
The Impact of Proportionality
The application of the proportionality principle has significant consequences:
- Greater Predictability (for some): It provides a more flexible framework than rigidly applying statutory exceptions. Businesses and users can (with legal counsel) better assess the risk of certain activities by analyzing the four factors.
- Support for Innovation and Culture: It allows space for transformative uses, commentary, news reporting, education, and online creativity that enrich society without automatically being stifled by copyright claims.
- Focus on Actual Harm: It directs attention to the core economic rationale of copyright – preventing market substitution and revenue loss – rather than asserting absolute control over all uses.
- Judicial Discretion: It places significant responsibility on judges to weigh complex factors, leading to some uncertainty and the need for case-specific analysis. Outcomes can be harder to predict with absolute certainty than with bright-line rules.
Challenges and Nuances
Applying proportionality isn’t always straightforward:
- Defining “Market Harm”: How much harm is “significant”? Predicting potential future markets is difficult.
- “Transformative” Use: How much alteration is needed for a use to be truly transformative and not just derivative? Chinese courts are still developing this concept.
- Bias Concerns: Could the principle potentially favor large platforms or established interests over individual creators in some interpretations?
- Lack of Explicit Codification: Relying on judicial interpretation means the doctrine evolves through case law, requiring constant attention to new rulings.
Conclusion: A Framework for Balance
The proportionality principle represents a sophisticated tool in the Chinese judiciary’s approach to modern copyright challenges. It moves beyond a simplistic “all or nothing” view of infringement, acknowledging that copyright exists within a broader social and economic context. By carefully weighing the purpose of the use, the nature of the work, the amount taken, and crucially, the impact on the market, courts strive to achieve a fair balance between:
- The legitimate rights of creators and copyright holders to benefit from their work and control its exploitation; and
- The public’s interest in accessing information, fostering education, enabling criticism and commentary, encouraging innovation through transformative use, and participating in cultural development.
For businesses and individuals operating in China – whether creating content, using existing works, or advising clients on IP strategy – understanding how courts apply this balancing test is essential for navigating copyright compliance and managing legal risk effectively. It underscores that copyright protection, while vital, is not an absolute monopoly but is subject to reasonable boundaries defined by societal needs and fundamental fairness. When assessing potential copyright issues related to Chinese entities, such as verifying ownership or licensing status during due diligence, professional intellectual property verification services can provide crucial clarity and mitigate risk.