The news came from media that police of Shanghai recently resolved an infringement case involving the website of “YYeTs.com”, in which fourteen suspects were captured and three companies were punished, in a total of RMB 16 million. Read the news more carefully and you will find the case was first discovered by police themselves, not reported by an innocent person as usual.  

In September 2020 police found someone provide allegedly infringing screen works on “YYeTs.com” and users’ server for people to watch online and download offline and were told by copyright owners not to have granted a license for the works. 

I thought of YYeTs as an amenable pirating website, which didn’t pirate videos Youku, Tencent or iQIYI had exclusive copyright to or put online movies that were on at cinemas and agreed to almost all demand to remove pirating videos. Why the website with a strong desire to survive was closed? I’d like to discuss with you why YYeTs staff members were seized and what they should have done to avoid being seized.    

My answer is: the reason why YYeTs YYT was not censored before was that it did not excessively damage the interests of copyright owners, but the basis of their business model was not permitted by criminal law. So, the government would regulate them when they grew up even if they were unreported. To avoid being seized, they’d better only provide downloadable subtitles and stay away from video files, let alone online broadcasting services.

1.Why YYeTs had such a strong desire to survive?

They acted in a way that is basically appropriate considering major features of actions taken by online cinemas and had a good knowledge of rules on claiming rights in the video industry at home. Without a strong desire to survive, the website would have been closed long ago. 

Rule A: Youku, Tencent and iQIYI are in a strong position and exclusive rights are critical.

After years’ competition, the Chinese films and television market is currently dominated by Youku, Tencent and iQIYI (apart from CCTV and Mango TV, state-owned businesses which have a fairly big market share and are not as active in claiming rights as private businesses). They all have a strong and active legal department with various skills and experts at civil, administrative and criminal proceedings and complaints with app stores. Core resources of the screen business of these companies are exclusively owned videos, which YYeTs stayed away from. Nevertheless, the giants might initiate a fight against them.   

Rule B: Qualified websites will lose money if they provide pirate copies and unqualified websites will be seized if they provide pirate copies.

As a lawyer concentrated on films and television market, finding a pirating video on a website, I will first consider the ability to pay of the person representing the website. If the person is a qualified company, I will collect and notarize evidence in a prompt manner and bring an action. If where the website comes from is unknown, I will file a criminal report or do nothing about it, depending on its data flow. It usually results in no further actions towards an unqualified website if they remove pirating contents as required by notice. As criminal reporting procedures are complicated and tiring, they can only be used in a limited number of cases. YYeTs is an amenable unqualified website and everyone in the films and television industry knows they are willing to remove pirate copies.      

Rule C: Film and TV companies abroad are not active in claiming their rights in China

Films and television works from foreign countries are popular in China, but only a small number of them are imported to China every year. There is a big demand for such works that are illegally introduced, which are the main source of data flow of YYeTs. You may ask why few foreign companies come here to claim their rights. In a word, procedures are complicated, damages awarded are not small and the benefit of doing this is not satisfactory considering its cost.     

Evidence obtained in a foreign country must be notarized in this country and certified by the Chinese embassy or consulate in this country before being admitted by Chinese courts. The whole process takes approximately three months. Chinese courts don’t award much for this kind of infringement. The benefit of claiming rights is not satisfactory considering its cost. The obstacles that prevent foreigners from claiming their rights in China make it possible for its business model to work. Nevertheless, YYeTs is a “decent thief” that does not usually put online movies that are on at cinemas in a foreign country. My understanding is that cinemas are where earnings of the film industry mainly come from and YYeTs doesn’t broadcast pirating copies of movies that are on to avoid offending owners of original ones.  

2.Legal Issues Connected with the Business Model of Subtitle Groups

Why YYeTs was regulated despite its carefulness? The core of the problem is its business model. It is depressing that the model of subtitle groups that Chinese users are familiar with is born with big legal risks.

Issue A: License for the translation right is required. 

According to the Copyright Law, the translation right belongs to the copyright owner of films and television works. Translating and transmitting translations of works constitute an infringement. Translating subtitles for your own private interest could be a reasonable use. Putting translated subtitles online is in principle an infringement of the translation right of the copyright owner of the screen work.

Issue B: Making and transmitting screen works with subtitles is an infringement

I can hardly remember a translation right infringement action brought for transmitting subtitles in China. Big subtitle groups like YYeTs do more than transmitting subtitles. They directly make and transmit online videos with subtitles and provide P2P downloads and online broadcasting services. All the activities directly infringe the right to transmit screen works through information networks.    

Issue C: Putting ads and receiving membership fees may be found as copyright infringement crime

It is safe for subtitle groups to do small business if they are ready to pay for civil infringement. As their business develops further, criminal risks may arise because more expenses, website operators, managers, translators and bandwidth are needed. All of them cost money, for which subtitle groups have to put more ads or even receive membership fees like YYeTs. In law these activities are accounted as ones for profits.     

They fall into the scope of the copyright infringement crime in the Criminal Law. For the purpose of making profit, without the permission of the copyright owner, copying and distributing to the public through the information network of its textual works, music, art, audiovisual works, computer software and other works prescribed by laws, administrative regulations, and other works constitute a copyright infringement crime. According to the legal interpretation, copying five hundred works for profits could be decided as a crime.    

Finally, YYeTs was regulated mainly because they expanded their business with the serious defect innate in their business model. If they hadn’t expanded, criminal risks would have been much smaller, at least. There was a website that expanded by and gave good reasons for putting non-licensed Japanese animations on the website to increase data flow. Fans gave likes for them. The “window period” expired. Protection of intellectual property rights is strengthened. Sticking to old knowledge is like making a sword from a wooden boat. This can be learned from significant lessons concerning Diyidan and YYeTs.