Preliminary Injunctions in Copyright Cases — Auction of Qian Zhongshu Letters as an Example

By Zhou Xiaobing, Judge, Beijing Second Intermediate People’s Court,[Copyright]

I. Basic facts of the case

Applicant: Yang Jikang (pen name Yang Jiang, Yang)
Respondent: Sungari International Auction Co., Ltd. (Sungari), Li Guoqiang (Li)
Case No.: Beijing Second Intermediate People’s Court (2013) Erzhong Baozi No. 9727
Judges Panel: Zhang Jian, Yang Jing, and Liu Juan


II. Overview of the case

The Applicant Yang argued: Qian Zhongshu (deceased) and she were husband and wife and had a daughter Qian Yuan (deceased). Qian Zhongshu, Yang, Qian Yuan and Li were friends. The trio had sent more than 100 letters to Li who kept the letters. In May 2013, Sungari announced a public auction for a Collection, Letters and Manuscripts of Qian Zhongshu at 13:00 on June 21st 2013, then held relevant seminars on June 8th 2013 and pre-auction exhibitions from June 18th to 20th 2013. Yang argued that the trio each was entitled to copyright of the letters created. After the death of Qian Zhongshu, the property rights of his copyright has been inherited by Yang and the rights of authorship, alteration and integrity have been protected by Yang, and the right of publication has been exercised by Yang. After the death of Qian Yuan, the property right of her copyright has been jointly inherited by Yang and her husband Yang Weicheng, the rights of authorship, alteration and integrity have been protected by Yang and Yang Weicheng, and the right of publication has been jointly exercised by Yang and Yang Weicheng. Given that Yang Weicheng had expressly given up the aforesaid rights, Yang had been entitled to the aforesaid rights. Yang argued that the upcoming auction of the private letters by Sungari and Li, and the ongoing public exhibitions and publicity will harm the copyright owned and inherited by Yang, and that Yang’s legal rights and interests will suffer irreparably if the aforesaid conduct is not promptly inhibited. Therefore, the applicant requested the court to order Sungari and Li to immediately stop the auction, public exhibitions and publicity of the private letters which Yang is entitled to copyright.


The Respondent Sungari replied that the auction house had failed to conduct reviews on copyright of the goods and obtain authorization from copyright holders.


III. Court ruling

Beijing Second Intermediate People’s Court ruled, in accordance with the first provision of Article 10 (1), Article 19 (1), Article 21 (1) and Article 50 of Chinese Copyright Law, Article 17 of the Implementing Regulations of Copyright Law, Articles 10 and 11 of Chinese Inheritance Law, Articles 100, 101 and 108 of Chinese Civil Procedure Law and Article 30 (2) of the Interpretation of the Supreme People’s Court on Certain Issues Concerning the Application of Law in the Trial of Civil Cases Involving Copyright Disputes, that Sungari should stop any conduct that harms copyright of the letters and manuscripts at issue sent from Qian Zhongshu, Yang and Qian Yuan to Li in the auction, exhibitions and publicity by means of publication, exhibition, reproduction, distribution or network dissemination.


IV. Detailed analysis

The preliminary injunction has been the first injunction issued by a Beijing court in a copyright case, also the first of its kind in Beijing courts since the promulgation of Civil Procedure Law revised in 2012. In the meanwhile, the case relates to the well-known deceased Chinese literary scholar and writer, and his wife Yang, also a well-known Chinese scholar, writer and translator, therefore, the case has aroused wide public attention. After the issuance of the injunction, the Respondent Sungari immediately announced a “decision to cease the public auction of ‘For a Collection, Letters and Manuscripts of Qian Zhongshu’ on June 21st 2013.”


1. Brief introduction of preliminary injunctions

In face of a risk of infringement, an author may exercise the right of claim for control and file an application for a preliminary injunction. In national legislations from various countries, some explicitly state granting of “a preliminary injunction” to “prevent or restrain infringement of a copyright” (see Article 502 of the U.S. Copyright Law), other countries stipulate that the copyright holder may “request the infringer to cease and desist where the risk of infringement exists for the first time” (see Article 97 of German Act on Copyright and Related Rights), or demand “persons infringing, or presenting a risk of infringing” to take “measures necessary to effect the cessation or prevention of the infringement” (see Article 112 of Copyright Act of Japan and Article 123 of Copyright Act of Republic of Korea).


Objects of IPR are immaterial and virtual “properties,” manifestations of thoughts or emotions devoid of physical existence, and feature eternity in time and infinite reproducibility in space, so regarding infringement, IP rights are significantly weaker and more vulnerable than property rights. If IPR are infringed, it will be difficult to “make restitution.” Since 2000, China has completed revisions of Chinese Copyright Law, Chinese Trademark Law and Chinese Patent Law to better IP rights protection and align with relevant rules of World Trade Organization. One noticeable move is set-up of a system of pre-trial preservation (also known as the pre-trial injunction or preliminary injunction). The revised Chinese Copyright Law, Trademark Law and Patent Law provide that if a right holder or an interested party has evidence to prove that another person is committing or is about to commit infringement, and failure to promptly inhibit the infringement will cause irreparable harm to its lawful rights and interests, the right holder or the interested party may, prior to filing a lawsuit, apply to a court for an injunction to cease the act and to adopt property preservation measures.


In the early days of the system, the right holders and courts have had great expectation. Some held that due to lengthy judicial proceedings, rapid proliferation of consequences and irreparable harm resulting from IP infringement, the system may effectively prohibit or restrain acts of infringement from continuing, particularly risks of infringement, therefore, the judicial proceedings may achieve the same prompt results as administrative protection measures. Some local courts even resorted to service of a large number of injunctions to push alleged infringers to initiate consultation with right holders to increase mediation rate. However, after a period of exploration, both right holders and courts have gradually come to a rational understanding. As a matter of fact, a preliminary injunction is not a way of assuming civil liabilities and is thus incapable of achieving the purpose of combating infringement effectively. With the continuous improvement of the judicial efficiency, an IP action may last 2 to 3 months or shorter from acceptance to conclusion. The provisional injunction may not have the obvious effect of so-called prompt crack-down. In patent infringement disputes and copyright disputes which involve large amount of comparison, the court should also be very cautious in granting preliminary injunctions because it is very difficult to determine “possibility of a favorable ruling” for the right holders.


When it comes to the nature of the preliminary injunction, the writer holds that an author may, in face of a risk of infringement, exercise the right of claim for control and apply for a preliminary injunction, but such right of claim doesn’t fall into the liability scope of personality rights in copyright. From a logical point of view, as for a risk of infringement, if the court grants a preliminary injunction, but the author fails to file a lawsuit within the prescribed period of time, the injunction will lose its binding effect. If the author files a lawsuit within the prescribed period of time, two different circumstances will likely ensue: (1) the alleged infringer obeys the injunction and does not commit infringement, then the author’s claim will be rejected and the injunction will lose its binding effect; (2) the alleged infringer disobeys the injunction and commits infringement, then the infringer will bear corresponding civil liabilities, including cease of infringement as a result of the actual acts of infringement.


However, the civil liabilities are incurred by the acts of infringement, not the risk of infringement. This case can also support such a viewpoint. If Sungari obeys the court injunction and does not commit copyright infringement, it will be unnecessary for the applicant to file a copyright infringement lawsuit within 15 days, but the injunction will be lifted due to failure to file such a lawsuit; if Sungari disobeys the court injunction and commits copyright infringement, then the applicant will file a copyright infringement lawsuit, and the claims must be civil liabilities arising out of the respondent’s acts of infringing upon her copyright, but not the risk of infringement.


2. Review criteria of preliminary injunctions

The writer holds that in reviewing a preliminary injunction, two principles should be followed: (1) activeness principle, referring specifically to active acceptance of cases, prompt review and rapid measures. In case of emergency, the court may discretionarily, without a hearing, grant a preliminary injunction on the basis of an application and evidence submitted; (2) precautionary principle, specifically referring to more stringent criteria in reviewing preliminary injunctions in a bid to avoid inappropriate measures and harm to the applicant’s rights and interests and the public interests. For cases where evidence preservation and property preservation prior to or during litigation proceedings, spot inspections and other measures can achieve nearly identical effects, the court should not grant preliminary injunctions.


In general, a preliminary injunction is granted on the basis of the following criteria:

(1) The applicant has stable and effective IP rights.

This criterion has two meanings: firstly, the applicant must be the holder of copyright, trademark and patent rights or an interested party, the qualifications for the applicant; secondly, the applicant should provide sufficient evidence to prove existence of legally valid and stable rights. The applicant, to prove copyright validity, may produce original works published, manuscripts and copyright registration certificates. Whether a right is stable mainly depends on a review of whether the right has been at issue. In this case, the court held that: letters, as a human tool to communicate feelings, exchange ideas and discuss issues, usually are written works independently created by the sender, and the content or form of expression is usually not or not fully a citation or transcription of published works by others, namely, not a simple imitation, reproduction, tampering of others’ works. Therefore, letters usually feature originality and replicability in line with requirements of works set forth in Copyright Law and may become works protected by Chinese Copyright Law. Therefore, the author or the sender should be entitled to the copyright. According to relevant provisions of Chinese Copyright Law, Qian Zhongshu, Yang and Qian Yuan each is entitled to the copyright of the letters created. After the death of Qian Zhongshu, Yang, the only inheritor, has the right to own the property rights of his copyright, protect his rights of authorship, alteration and integrity, and exercise his right of publication. After the death of Qian Yuan, Yang and Yang Weicheng become her inheritors and have the right to own the property rights of her copyright, protect her rights of authorship, alteration and integrity, and exercise her right of publication. Given that Yang Weicheng has expressly given up the aforesaid rights, Yang has been entitled to the aforesaid rights. Anyone, including the receiver of the letters and other recipients legally obtaining the letters, shall not harm the legal rights and interests of the copyright holder when they dispose of the legally obtained letters and manuscripts.


(2) The conduct of the respondent has been preliminarily identified as infringing.

The criterion includes four meanings: a. the respondent is the person alleged by the applicant to have committed infringement, the main eligibility requirements for the respondent; b. the applicant has evidence to prove the conduct of infringement by the respondent; c. the alleged conduct of infringement is about to take place or going on; d. the conduct may be preliminarily identified as an infringement. The so-called “preliminarily identified as infringing” should be understood as the applicant’s “likelihood of success on the merits,” rather than “inevitability of success on the merits,” in other words, evidence provided by the applicant and hearings has been sufficient to prove appropriate likelihood of success due to the conduct of infringement.


(3) The respondent’s conduct will cause “irreparable harm.”

It has been the most difficult part to determine and quantify “irreparable harm” in a preliminary injunction. Chinese courts have dismissed a number of applications on the ground of incompliance with the legal provision of “failure to promptly inhibit the conduct will cause the right holder to suffer irreparably.”

 

What kind of harm is “irreparable” lacks appropriate regulations and criteria in practice. The writer holds that the following circumstances can be identified as causing “irreparable harm”: a. infringement relating to the personality rights of copyright; b. occurrence or continuation of infringement will seriously seize market share of the right holder and gravely affect its rights and interests; c. failure to inhibit the conduct of infringement will seriously broaden the scope of infringement and consequences of harm. In the meanwhile, factors, such as whether the applicant has deliberately delayed the application, the respondent’s credit and solvency in case of infringement, may also be taken into account. Generally speaking, the mere harm caused by “continuation of infringement” can be compensated through litigation, therefore it cannot be considered to be “irreparable harm.”


In a preliminary injunction application filed before Beijing Second Intermediate People’s Court, the applicant argued that the respondent had plagiarized its written works in a movie produced and released by the respondent; therefore, the applicant requested the court to suspend the premiere of the movie. The application was dismissed on the basis of “difficulty to make a preliminary judgment of infringement,” but the case fell into the circumstance of “failure to inhibit the conduct will seriously broaden the scope of infringement and consequences of harm,” according with the requirement of “irreparable harm.” In a pre-litigation application for suspension of copyright infringement filed by Beijing New Run Entertainment Co., Ltd. (Beijing New Run) against Beijing Huaxia Hongyang International Arts and Culture Co., Ltd. (Beijing Huaxia) and Tang Chaojun, the court ruled that Beijing Huaxia and Tang should not perform 13 songs, including Wolves Love Sheep, in Tang’s concert themed the World of Wolves in Beijing Exhibition Center Theater on May 15th 2010. In this case, the court held that according to provisions of Chinese Copyright Law, if an author does not have express intention to publish, then his/her right of publication may be exercised by his/her heir or inheritor within 50 years after the author’s death. Yang, as a copyright owner or an heir of the copyright owner, enjoys the right to publish letters at issue, namely the right to decide whether to make the works public. If someone publishes the letters and manuscripts at issue without authorization, the Applicant’s right of publication will suffer irreparable harm. In addition, the right of publication is the initial step for the copyright holder to exercise and protect other rights. Once the works have been illegally published, it would be difficult to control reproduction and distribution thereof. In this case, Yang has expressly disagreed to publish the works at issue, but Sungari’s upcoming exhibitions, auction and ongoing or future reproduction of the letters and manuscripts at issue through newspapers, CDs, brochures and computer networks would cause the Applicant to suffer irreparable harm.


(4) The applicant provides security.

In determining the amount of guarantee provided by the applicant, the following factors should be considered: the respondent’s production scale, sales, sales revenue and profit, actual losses incurred by the preliminary injunction, and the duration thereof. The above actual losses include direct and indirect losses, taking full account of reasonable expenses in warehousing, storage and staffing. The court may organize a hearing for the parties to negotiate the exact amount of security; if the negotiation fails to come to an agreement, the court may make a decision on the basis of statements of the parties. The writer holds that the guarantee should be in the form of cash or fixed assets, generally not credit of individuals and businesses. In this case, the applicant has provided legal and effective guarantee.


3. Granting of preliminary injunctions against infringement upon personality rights of copyright

As a matter of fact, the preliminary injunction against Wolves Love Sheep has been determined to meet requirements of “failure to promptly inhibit the conduct will cause the right holder to suffer irreparable harm,” but the injunction only forbids the conduct of infringement upon the property rights, not the personality rights, of copyright.


The writer holds that it is generally difficult to completely eliminate consequences of infringement upon the personality rights through compensation in cash and by nonmonetary means. Therefore, it would be easier for infringement upon the personality rights of copyright to meet the requirements of “failure to promptly inhibit the conduct will cause the right holder to suffer irreparable harm.”


The writer holds that the following four conducts of infringement upon the personality rights of copyright meet the requirements of “failure to promptly inhibit the conduct will cause the rights holder to suffer irreparable harm”:

(1) If the conducts of infringing the author’s right of authorship or integrity is not inhibited, the infringement scope and harm will be gravely broadened.

(2) If the conduct of infringement upon the author’s right of alteration is not inhibited, the infringement scope and harm will be gravely broadened and the right holder’s substantial rights and interests will be affected.

(3) Occurrence and continuation of the conduct of infringement will derogate from the author’s works, reduce the author’s social evaluation, infringe upon the author’s right of respect for works and/or the right of integrity. For example, Article 103 of Copyright, Designs and Patents Act of the United Kingdom provides that in proceedings for infringement of the right to object to derogatory treatment of work, the court may, if it thinks it is an adequate remedy in the circumstances, grant an injunction on terms prohibiting the doing of any act.

(4) The conduct of infringement upon the author’s right of publication is about to take place, and the work, in the eyes of the author, is not yet mature and temporarily unsuitable for publication. If the work comes out, it is likely that the infringement scope and harm will be gravely broadened, or the author’s reputation will be dented. The circumstances of this case may be considered to meet this criterion.


(Translated by Wang Hongjun)

 

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