Unauthorized Derivative Work Still Receives Protection Under China’s Copyright Law

By Luo Yanjie

The copyright holder of Pleasant Goat (喜羊羊), a popular Chinese cartoon figure, recently brought actions against the unauthorized use of the character in Flash games on several game websites. According to Chinese copyright law, the copyright holder must give permission to use art in a game, otherwise it will result in infringement. This is easily understood. But, if such an unauthorized game is then used on another website without the original developer’s consent, does this infringe the interests of the game developer? Today’s post will discuss this problem. In my opinion, even if the game developer used the cartoon character to create software without authorization from the copyright holder, the software still receives protection under the Copyright Law, but its protection has definite limits.

To describe it in legal terms: the essence of the problem is the conflict between the rights enjoyed by author of the derivative work and the author of the original work According to the Copyright Law:

Derivative work refers to work based on existing works after adaptation, translation, annotation, or compilation.

With the diversity of work forms, derivative works have been a kind of efficient double-output way of creation. Like in the aforementioned case of Pleasant Goat, the software developers took advantage of the cartoon figure’s reputation. The following will discuss the ownership of derivative works with or without authorization:

I. The ownership of an authorized derivative work

Article 21 of Copyright law provides that:

Copyright in a work derived from adaptation, translation, annotation, or arrangement of a preexisting work shall vest in the adapter, translator, annotator, or arranger, the exercise of which, however, may not infringe the copyright in the preexisting work.” From the preceding article, we can see that, under usual circumstances, the issue of rights for original and derivative works has the two following aspects:

1. Derivative works must receive permission from the rights holder of the original work

Derivative works are based on the original work, and the intellectual achievements of others will necessarily be involved in their creation. Therefore, anyone creating a derivative work must receive permission from the original creator or others who hold the right to the original work.

2. Copyright of the derivative work belongs to the derivative work’s creator

Although a derivative work is developed from the original work, it is not just a simple copy but rather a new creative work of the derivative work’s creator. Therefore, the derivative work’s copyright shall belong to its creator.

II. Unauthorized derivative work should be protected by the Copyright Law

Despite the rules in principle listed above, we have found no regulation in the law on whether or not unauthorized derivative works shall be legally protected. In this case, will the derivative work’s copyright be invalid due to infringement? The author holds a negative outlook towards this question and believes that derivative works should be protected by copyright law, even if they have not received authorization. The reasons are as follows:

1. A derivative work contains the author’s “intellectual achievement”

According to Article 2 of the Implementing Regulations of The Copyright Law:

“The term “works” used in the Law shall mean original intellectual creations in the literary, artistic, and scientific domain, insofar as they are capable of being reproduced in a certain tangible form.”

A derivative work undoubtedly contains the author’s “intellectual achievement.” As in the above case, although the game company was not authorized to turn Pleasant Goat into a game, the game developers undoubtedly added a lot of their own intellectual achievement into it—namely software source code. Additionally, the Copyright Law and related regulations contain no rules stating that intellectual achievements based on infringement shall not be legally protected. Therefore, by the text of the above provisions, unauthorized derivative works should be protected by the Copyright Law.

2. Copyright is a private right, and infringing behavior can be retroactively recognized as legitimate

The creation of derivative works without permission is a definite violation of the original work’s copyright. But, as a private right, the original right owner can either claim infringement or can abandon its claim and subsequently ratify the actions of the derivative work creator. In other words, the so-called infringement of the derivative work creator exists in an unstable state, for it can become non-infringing legitimate behavior at any time. Therefore, whether or not the derivative work violates the right of the original owner is a private dispute that can be settled by the two parties themselves. The law should not determine whether the derivative work receives protection solely based on whether it infringed the original work. For example, in the above case, no matter whether there was a license from the right holder of Pleasant Goat or not, the game company should have the right to prohibit others from using their source code. At the same time, this does not affect the ability of the right holder of Pleasant Goat to hold the game company liable for infringement.

3. Granting legal protection may encourage creative work and protect the order of the copyright market.

When unauthorized derivative work cannot be protected by the Copyright Law, its creator has no way to stop others from using the derivative work. This will undoubtedly not encourage creative work. In addition, even if the creator of derivative works has gained interest by infringement, the right holder of the original work still has the right to request compensation through legal procedure for the derivative work creator’s ill-gotten gains. For this reason, granting legal protection to unauthorized derivative works will not destroy market order but will instead encourage creative work, which meets the intention of the Copyright Law.

In conclusion, the author believes that the unauthorized creation of derivative works should enjoy protection under the Copyright Law. This view has been confirmed in practice, and you may check the discussion of this issue in Gong Kaijie vs. Wang Bei (note: the link is in Chinese).

III. The restriction on the right of unauthorized derivative works

As previously discussed, although unauthorized derivative works can receive copyright law protection, this protection has limits, which are mainly reflected in the following two conditions:

1. If a derivative work is actually used, its author must accept liability for infringement

As noted by the regulation in the Copyright Law, derivative works right holders “may not infringe the copyright in the preexisting work.” So, it does not matter whether the derivative work is being used for copying, publication, or network communication, it still will infringe the rights of the original work. For this reason, although unauthorized derivative works can be protected by copyright law, they cannot be legally exercised.

2. The derivate work author can only hold others liable for infringement of newly added intellectual achievement

The essence of the protection over the unauthorized derivative work by the Copyright Law is to have the right to pursue liability of other unauthorized uses of derivative works, mainly liability for compensation. But, it should be noted that the creator of derivative works can only get compensation for its newly added intellectual achievement, not the entire work. Compensation for parts of the original work can only be held by the original right holder.

Lawyer Contacts

You Yunting86-21-52134918  youyunting@debund.com/yytbest@gmail.com

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