Due Diligence of Internet Live Broadcast for Copyright Infringement

Hu Huiji, Liu Peipei,[Copyright]

 Hu Huiji

Director of Legal Affairs Department, Beijing iQIYI, Inc.,

Liu Peipei

Manager of Legal Affairs, iQIYI, Inc.

In recent years, Internet live broadcast services prompted by capitals develop rapidly and live broadcast platforms mushroomed. By June 2018, the number of live broadcast users reached 425 million, a slight increase of 2.94 million over the figure by the end of 2017, with user rate of 53.0%.1 Watching Internet live broadcast has become the daily recreation of many, and is even defined as a new form of Internet social exchange. By the contents of the live broadcast, it can be further divided into sportscast, reality show, game show and live concert, etc. Internet Live broadcast ("webcast") in current Internet context refers to the method of an individual anchor, by using personal computer's internal or external audiovisual equipments, to make live recordings, or by technical means (such as screen capture function provided by webcast platforms) to capture contiguous screen shots for upload to webcast platform servers to be watched by indefinite Internet users.2 
In this process, the webcast anchors by using the technical means provided by the webcast platforms would upload TV drama or movies from his local terminal to the webcast platform servers for internet users for real time watching. Particularly, in order to attract more users, some anchors would make the shows free of charge, which has already stepped on the fringe of the property domain of right holders for such video programs.
Currently the popular views hold the webcast platform to be an Internet service provider (ISP), and the live broadcast by a anchor from its platform to be a personal act of direct infringement. Since the webcast platform does not provide contents, it will not be considered as a direct infringer, but the question remains as to whether it should be liable for contributory infringement. It has been judicially disputed from copyright perspective over the liabilities for the new type of Internet live broadcast. According to one view, because webcast is sporadic, it should not be assessed for too much liabilities, which the author would not agree.
Webcast infringement liabilities analyzed
1.webcast platforms are generally not directly liable for infringement
Internet services can be divided into two: one that directly provides contents, and one that provides storage, search, link and point-to-point services without providing directly any works, each corresponding to Internet content provider (ICP) and Internet service provider (ISP). For an ICP, since it is a content provider, it should be liable for copyright infringement if it does not obtain permission from the copyright holder, in the absence of statutory excuse, whether or not it is negligent. This is outright traditional copyright infringement extended into the Internet environment.
The webcast platform, a new type of Internet service as it is rather than traditional services of storage, search or links, does not by nature provide any work directly, but provides services for individual broadcast anchor, including screen capture and broadcast server, ect. As an ISP, since it does not provide the infringing work directly through the Internet, it does not constitute direct infringement; rather, the webcast anchor does.
2.Negligence is key to contributory infringement liabilities for webcast platform
Although webcast platform does not directly provide works, and therefore normally does not infringe, it in fact would contribute to an infringing act by objectively pushing forward the direct infringement, expanding the scope of infringement, and aggravating the result. In other words, the webcast platform itself does not infringe copyright, but it indirectly would cause the objective effect of injury to right holders. In such circumstances, how to establish the contributory liabilities of the webcast platform is the difficult point for Internet copyright infringement, and a key point for healthy and sustained development of webcast industry, and also a focal point of this article.
The factors of contributory infringement for an ISP include: (1) occurrence of a direct infringement; (2) the accused contributory infringer's knowledge or presumed knowledge of the infringing act; (3) the accused contributory infringer prompted or substantially assisted the infringing act.3 Thus, contributory infringement factors consist of subjective and objective elements, of which (1) and (3) are objective elements, and are relatively easy to determine.
The subjective element of contributory infringement considerations, i.e., actual knowledge or presumed knowledge of the infringing act, is defined under articles 22 and 23 of the Rules of Protecting Internet Dissemination Right (The Rules) as "Lack of knowledge or fair reasons for knowledge" and "knew or ought to have known", which means that the subjective factor for contributory infringement is “Knew or ought to have Known."
On this, the Supreme People's Court Provisions on Several Issues for Application of Law in Civil Disputes Involving Internet Dissemination Right Infringement (the Judicial Interpretation) provides in Article 7 for further the definition of an ISP aiding and abetting of infringement.
Therefore, contributory infringement liabilities for an ISP is determined by the subjective factor of negligence. The key to this is whether webcast platform is responsible for exercising reasonable care on direct infringement. Whether or not responsible for care would affect the baseline of contributory infringement for webcast platforms.
Greater burden presumed for webcast platform as ISP
1.webcast platform liable as ISP for reasonable care
The Rules and the Judicial Interpretation have defined the obligations of reasonable care for ISP. A webcast platform, though not providing contents, should exercise reasonable care as an ISP. This is also to avoid turning "Notice-and-Takedown" rule into a "Safe Harbor" for ISP, or even a shield for some websites to escape infringement liabilities.
The Rules gives preliminary definition on the "Red Flag Standard" which was specified by the Judicial Interpretation. By “Red Flag Standard,” when an infringing act is so obvious as a conspicuous red flag, any reasonable person is supposed to know that the content is infringing, an ISP may not turn a blind eye to it, and instead, should be responsible to delete or eliminate it, or should be acknowledged as negligent, and therefore liable for infringement.4 A webcast platform, because of the "principle of neutrality of technologies", is generally not responsible for prior approval of copyright infringement by an anchor using its platform technologies.5 But the platform has the due diligence of "ought to have known." The core of the "Red Flag Standard" is the “Duty to Notice” for ISP.
In reality, quite a few webcast platforms have in their websites a live sector that broadcast television shows and movies, and call upon users by conspicuous fonts to sign up as anchors, with training services to teach the users how to do live broadcast. Obviously, an individual webcast anchor is extremely unlikly to obtain a license for Internet dissemination rights for television shows or movies. The webcast platforms, by following the "Ostrich Policy," pretend to have no knowledge where they should know the individual anchors are broadcasting infringing works. The platforms even provide facilities of special sectors and training services, call and induce such behaviors. Objectively, webcast platforms have aided and abetted the anchors for infringement, and encouraged infringement; subjectively, the platforms are presumed to know this. Under such circumstances, the platforms have the duty of care, and the "Notice-and-Takedown" rule should not be applied on this issue; otherwise a platform would easily get away by issuing a "copyright notice" and then relying on "Notice-and-Takedown" rule to avoid liabilities. This is in contradiction to the fundamental principles of the Copyright Law.
2.webcast platforms carry heightened duty of care for receiving direct economic benefit
Article 11 of the Judicial Interpretation provides that the people's courts should find for heightened duty of care for infringement of Internet dissemination rights where an ISP directly benefits from the works, performances or audiovisual recordings of the Internet users.
webcast platforms are significantly different from the traditional service providers of links and storage in terms of making benefit. Traditional service providers collect advertising fees or services charges for providing Internet services. A webcast platform rather gets its benefit by taking a share directly from anchors' income.
Statistics show that an anchor may get only 35% of the rewards. When an anchor receives 1314 Yuan, e.g., from a gift, he or she could only get about 400 Yuan for his or her share.6 The rest of it goes to the webcast platform by an substantial share. Under this business mode, the webcast platform and the individual anchor are highly consistent for the joint economic benefit, and correspondingly, a webcast platform ought to carry a heightened duty of care.
3.Factors for consideration and failure to exercise due care for webcast platforms
According to Article 9 of the Judicial Interpretation, consideration factors for webcast platform's duty of care include: nature, method and likelihood to result in infringement by providing services; presumed ability to manage information; types, reputation and obviousness of infringement information of the work disseminated; whether or not actively selecting, editing, refining or recommending the work; whether actively engaging in reasonable steps to avoid infringement; whether facilitating convenient programs to receive infringement notice and making appropriate reaction to infringement notice; and whether taking reasonable steps against repetitive infringing acts of the same Internet user.
According to Articles 10 and 12 of the Judicial Interpretation, evidence of webcast platform's failure to care with presumptive knowledge includes: making recommendations of hot movie programs by setting up ranking lists, catalogues, indices, description sections, brief introductions, etc.; putting hot movies to the homepage or other noticable webpages; making selection, edition, compilation, recommendation or other ranking lists for hot movies.
According to Beijing High People's Court Guidelines for Handling Copyright Infringement Cases, 9.13, that "determination of information storage service provider 'ought to have known'" in the following circumstances where the webcast platform fails the duty of care: the work that an anchor broadcasts is a professionally made and contentcomplete audiovisual work, musical work or a work that is currently on air; the work that an anchor broadcasts is an audiovisual work or musical work that is being made and under normal circumstances the producers would not allow it to be disseminated.
Determination of duty to care by webcast platform takes priority over application of "Notice-and- Takedown" rule
The outer bound of webcast anchors' broadcasting audiovisual works has actually stepped into the copyright domain. In this sense, judicial practice should carefully distinguish the rights of various parties rather than giving a "clear-cut" application of the "Noticeand- Takedown" rule for webcast platforms. Instead, priority should be given to determination of heightened duty of care for webcast platforms, so as to balance the interest of various parties and to promote the beneficial Internet dissemination mechanism of copyright.
In the early years of video websites, there were numerous copyright disputes. By the Copyright Law provisions, Internet dissemination of copyright works must be done with permission from copyright owners with payment of royalties. After the development of video websites by now, a healthy Internet dissemination mechanism has been established, and before disseminating a work, the website would first seek permission, and bear the cost of royalties. It is practically proven that the mechanism is healthy, and most users have consented to paying for membership fees to view videos, or contribute to commercial traffic for free viewing.
The emergence of webcast platforms disturbed the current copyright dissemination landscape because an anchor may provide "free" content to users of what is supposed to be paid programs, and the webcast platforms will benefit by sharing directly from the income or traffic. The "Notice-and- Takedown" rule does not effectively preclude the infringing act by webcast anchors. Instead, it even encourages intentional infringement. The setup of "Notice-and-Takedown-Exoneration" program rule makes the "Notice-and- Takedown" rule a safe harbor for ISPs and even a shied for infringement liabilities.7 
For example, a popular movie has a very strong time element, the popularity lasting no more than one or two weeks. A video website pays a large fee for first publication for which the first few days would be key to catch traffic and rewards. But if an individual anchor broadcasts it for free at the very first day of publication, and even if the website issues an emergent notice to the webcast platforms the next day, it would be too late, as the Internet dissemination increases exponentially resulting in hundreds of thousands of viewings, causing the "borrowed" popularity dissipated rapidly, at the cost of irreparable injury to the video websites while the webcast platform is reaping tremendous gains from huge traffic. When the video websites try to enforce their rights through civil litigation, the webcast platforms may assert "Notice-and-Takedown" rule to evade any liabilities.
Obviously, applying "Noticeand- Takedown" rule on webcast platforms alone is inconsistent with the equitable rule for balancing of interests. The "Red Flag Standard" is to avoid abuse of the "Noticeand- Takedown" rule. Therefore determination of duty of care should have priority over the application of "Notice-and-Takedown" rule.
Prompted by "low cost and high gains", bad faith infringement could be induced from webcast platforms, as after all, many anchors in fact have contracts with webcast platforms. If this continues, it will be adverse for the entire Internet dissemination mechanism of copyrighted works or even the copyright holders. Therefore, by imposing heightened duty of care and by placing priority on determination of duty of care over "Notice-and-Takedown", it will be beneficial for the balance of the interests for both copyright holders and webcast platforms, and for maintaining the existing healthy Internet dissemination mechanism of copyright.
Reasonable duty of prior management by webcast platforms is a practical solution
Although webcast platforms do not bear the prior approval responsibilities over copyright infringement for the anchors' broadcast based on the current provisions of the law, they should carry heightened duty of care. On this basis of heightened duty of care, a practical solution for balancing of interests between the copyright holders and webcast platforms would be to impose obligations of prior management on webcast platforms.
Reasonable prior management duties for webcast platforms is also an economically viable path for solving infringement issues in Internet dissemination of copyright. The webcast platforms and the anchors are the most familiar with the live broadcast. It would be much more efficient to let them take preventive measures than requiring right holders to check it up from the massive number of videos. Meanwhile, as previously mentioned, since webcast platforms take direct share from the anchors’ gains and generate huge traffic, i.e., benefit directly from the broadcast of the video, they should be obligated to take a per se responsibility for prior management, which is by definition an equitable principle.
To sum up, in order to set for webcast platfroms a stardard of live broadcast, to effectively protect the legitimate rights of copyright owners, and effectively resolve the copyright infringement issues by webcast platforms, three approaches are suggested: first, no infringement by webcast platforms through anchors should be tolerated; second, obligations of reasonable prior management should be imposed on webcast platforms, which is well grounded in law and simply viable in technology, without imposing too much of a burden on the platforms; third, even though the platforms are ISPs, the determination of theirs duties to care should be prioritized over the application of the "Noticeand- Takedown" rule, and due to their direct economic gains from the anchors’ broadcasts, a heightened duty of care should be imposed.
(Translated by Zheng Xiaojun)
1 See, CNNIC, The 42nd Statistics Report on the Status of Internet Development, July 2018.
2 See, “webcast” on Baidu.com (https://baike.baidu.com/item/网络直播/10950068?fr=aladdin, last visited February 20, 2019).
3 Xu Chunming, Establishment of Infringement Liabilities of Internet Service Provider, Shanghai Law Journal, at B07, May 9, 2012.
4 Wang Qian, Study of Copyright Protection in Internet Environment, Law Press, 2011, at 289-296.
5 Article 8 of The Supreme People’s Court Provisions on Several Issues for Application of Law in Civil Disputes Involving Internet Dissemination Right Infringement.
6 See Zhao Li, Revealing the Inside Story of Benefit Sharing for webcast: Only 35% for Host (http://www.xinhuanet.com//fortune/2017-03/21/c_1120663440.htm), last visited February 20, 2019.
7 Xu Chunming, Establishment of Infringement Liabilities of Internet Service Provider, Shanghai Law Journal, at B07, May 9, 2012.

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