BY MATTHEW DEBLINGER –
I. A Pirate’s Life for Xi
President Xi Jinping and the People’s Republic of China have turned a blind-eye to piracy. Historically, China has always been a hub for intellectual property theft, particularly American IP that is ever so protected under the United States Copyright Act of 1976, but China’s piracy dilemma derives from dire criminal enforcement. China is labeled as a country with a high piracy rate and boasts a whopping 1,184:1 ratio of non-police enforcement to police enforcement of intellectual property theft claims.[1] To put this in perspective, the non-police enforcement to police enforcement ratio is 48:1 in the United States ratio; .5:1 in Taiwan, 4:1 in France; and only 1.2:1 in Russia—a country that shares China’s label as a high piracy rate nation.[2] “[T]he low number of criminal [intellectual property rights] cases in China reflects the unwillingness to administrative agencies to initiate the transfer of suspected criminal matters to the police . . .” and “the lack of enthusiasm among police officers to accept transfers” from civil intellectual property complaints to criminal.[3]
II. Mickey Mao
There are two cases that Hollywood can use as protection in the intellectual property right war with China. In Walt Disney Production v. Beijing Publisher & Co., Beijing Intermediary Court (18 May 1996); Beijing High Court (December 1996), Disney reached an agreement with the Hong Kong-based Maxwell Company and granted Maxwell a non-exclusive license to publish Chinese versions of Disney’s works.[4] The agreement did not allow Maxwell to transfer this license or grant sub-licenses in any form, but Maxwell eventually made an agreement with Beijing Publisher and others to reproduce and distribute the Chinese version of the Disney works.[5] The publisher was ordered to cease the infringing acts, make a public apology to the plaintiff and compensate the plaintiff’s economic losses; but the distributor was merely ordered to cease distributing the plaintiff’s copyright works.[6]
In American Twentieth Century Fox, etc. v. Beijing Xianke Market and Big World Sound and Video Recording Shop in Beijing Culture and Art Sound and Video Recording Publisher, Beijing First Intermediary Court (26 November 1996), the plaintiffs comprised of eight American film studios, including Universal and Walt Disney, and copyright owners of nineteen movies.[7] The court held that the plaintiffs, under the Chinese Copyright Law, enjoyed copyright protection when the plaintiffs’ attorneys obtained two hundred copies of the plaintiffs’ movies on VCDs published and distributed by the defendants.[8]
However, despite these two landmark cases, copyright infringement is still a major issue in China. Studios now have to worry about bootleg online video streaming despite an effort to support the online video websites. In one circumstance, Walt Disney Company invested in 56.com—a YouTube-like Chinese video site with 1.9 million daily visitors, only for a multitude of pirates to upload bootleg versions of Walt Disney’s animated film Wall-E.[9] According to one report, piracy costs the film industry over $2.7 billion dollars a year![10] So why does Hollywood continue to produce films for such a piratic nation? Quite simply: because China has emerged as the top international box office market.[11]
III. The People’s Republic of Hollywood
In 2012, Chinese box office grew 36% and grossed $2.7 billion U.S. dollars.[12] In 2013, the box office grew an additional 27% for a grand total of $3.6 billion. It was the first time an international market exceeded $3 billion in box office revenue. The second-highest box office market, Japan made $2.4 in the box office. This year, China is in pace to cross the $5 billion mark.[13]
Money talks and piracy walks. And while the legal minds of Hollywood continue to litigate against Chinese pirates[14], the major studios are sending as many films across the Pacific as possible. But what makes things complicated is that the state-run China Film Group, which limits the amount of foreign films released in China each year, controls their film industry.[15] Moreover, unlike the MPAA in the United States, the agency responsible for rating a film based on content, the China Film Group handpicks the content that it will permit to be shown in theaters. Thus, at the hands of the Chinese government, movie studios must acrobatically compete against each other for screen time while simultaneously censoring their films for the China Film Group.
Big-budget productions like Pirates of the Caribbean: Dean Man’s Chest felt the curse of Chinese Film Group’s censorship.[16] While the MPAA rated it a PG-13 in the United States, the Chinese Film Group had banned the film for its portrayal of human cannibalism.[17] And while the MPAA’s rating system is readily available, Chinese law does not require the Chinese Film Group to provide its criteria. Similarly, Paramount’s Mission: Impossible III was rated PG-13 by the MPAA, but Paramount had to cut scenes out for the Chinese version because the censors were insulted by the film’s Shanghai scenes that contained laundry hanging from washing lines and old people playing mahjong.[18] Hollywood does not survive a freedom-of-speech argument under the Communist Regime.
However, some studios have figured out the formula to ensure a Chinese release date: (1) cast Chinese celebrities; (2) film in China; (3) flood the flick with Chinese product placements; and (4) recruit a Chinese production company to co-produce.[19] Transformers: Age of Extinction went as far as plugging in the praised Communist Party by having a character proclaim, “We’ve got to call the central government for help.”[20] Similarly, the Chinese version of Iron Man 3 contained an additional four minutes of footage that was shot exclusively for the Chinese cut of the film.
While unconventional, the formula worked. Both Age of Extinction and Iron Man 3 shattered box office records upon their release. In just ten days, Age of Extinction grossed $46 million more than in the United States.[21]
And so, is this the death of pure American cinema? Will every summer blockbuster star Chinese actors? Will masterful screenplays go unproduced because they do not have international appeal?
With thirteen screens being built a day and 23,000 screens projected to be in operation by the end of 2014, it appears that China’s loosely governed piracy laws are trivial at best.[22] Perhaps Age of Extinction was correct after all; studios should continue calling the central government for help. All the pirates in the world could not stop Hollywood from sailing west. The lawless goldmine awaits.
[1]Martin K. Dimitrov, Piracy and the State 148. (2009).
[2]Id.
[3]Id.
[4]Prof. Xue Hong & Prof. Zheng Chengsi, Chinese Intellectual Property Law In the 21stCentury97 (2002).
[5]Id.
[6]Id.
[7]Id. at 94.
[8]Id.
[9] Sarah McBride & Loretta Chao, Disney Affiliate Is Besieged By Pirates, Wall St. J. (Nov. 21, 2008, 12:01 AM), http://online.wsj.com/articles/SB122722555475645951.
[10] Jeremy Blum, China is still a notorious market for movie and TV show piracy, report says, South China Morning Post (Oct. 29, 2013 7:24 PM), http://www.scmp.com/article/553472/piracy-costs-film-industry-us27b.
[11] Theatrical Market Statistics 2013, Motion Picture Association of America, Inc. (2013), http://www.mpaa.org/wp-content/uploads/2014/03/MPAA-Theatrical-Market-Statistics-2013_032514-v2.pdf.
[12] Theatrical Market Statistics 2012, Motion Picture Association of America, Inc. (2012), http://www.mpaa.org/wp-content/uploads/2014/03/2012-Theatrical-Market-Statistics-Report.pdf.
[13] Clifford Coonan, China Box Office on Track for $5 Billion Year, Hollywood Reporter (Sept. 4, 2012 10:53 AM), http://www.hollywoodreporter.com/news/china-box-office-track-5-730194.
[14] See Clifford Coonan & Patrick Brzeski, Chinese Film, Internet Video Companies Sue Search Giant Baidu in Anti-Piracy Push, Hollywood Reporter (Nov. 13, 2013 3:46 AM), http://www.hollywoodreporter.com/news/chinese-film-internet-video-companies-655605.
[15] Julie Makinen, China box office grows 22% in first half of 2014, LA Times (July 1, 2014 9:16 AM), http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-china-box-office-20140701-story.html.
[16] China sinks Dead Man’s Chest, Guardian (July 10, 2006 6:35 AM), http://www.theguardian.com/film/2006/jul/10/news1.
[17] Id.
[18] Id.
[19] Frank Langfitt, Autobot$ Rule: Why Transformers 4 is China’s Box Office Champ, Nat’l Public Radio (Aug. 11, 2014 5:06 AM), http://www.npr.org/blogs/parallels/2014/08/11/339485807/autobot-rule-why-transformers-4-is-chinas-box-office-champ
[20] Id.
[21] Jeff Labrecque,‘Transformers’ sets all-time box-office record in China, Entertainment Weekly (July 8, 2014 12:08 PM), http://insidemovies.ew.com/2014/07/08/transformers-china-box-office-record/.
[22] 4th MPA-China Film Screenings Underscores Expansive Partnership Between U.S. & Chinese Motion Pictures Industries, Motion Picture Association of America, Inc. (Nov. 3, 2014), http://www.mpaa.org/wp-content/uploads/2014/11/4th-MPA-CHINA-FILM-SCREENINGS-UNDERSCORES-EXPANSIVE-PARTNERSHIP-BETWEEN-U.S.-CHINESE-MOTION-PICTURE-INDUSTRIES.pdf.
