Recently, the Xi'an Intermediate People's Court handed down a judgment on Tencent's lawsuit against Tiktok for infringing the right of information network communication of the online drama "Yunnan Insect Valley", and decided that Tiktok would compensate 2 million yuan for a single episode, totaling 32 million yuan. However, after reading more than 80 pages of the judgment, the author found that the reasons for the judgment in this case were not sufficient: the sky high compensation far beyond the industry standard was given, but the case was not special and was worth discussing. Let's talk about this today. You are welcome to comment.

The verdict has more than 80 pages, and the link is shown in the text . Here we summarize the main disputes of the case: Tencent Video has obtained the exclusive broadcasting right of the online drama "Yunnan Worm Valley". Before the play was released, Tiktok was sent a warning letter to take effective measures to avoid the spread of infringing content on the platform. However, after the play was released, Tencent still found that there were a large number of clips of "Yunnan Insect Valley" short videos on Tiktok, and entered the word "cloud" in the Tiktok search column. It was the first time to see "Yunnan Insect Valley" in the recommendation association, and the right side was marked with "hot". There were many similar input recommendations (page 10 of the verdict).

Later, Tencent sent infringement notices to Tiktok many times, requiring it to delete the infringing content. One of its agents sent infringement notice letters 64 times, involving 751 infringing links in total. Tiktok's offline rate within 5 days after receiving the above complaints was 72%; The offline rate within 7 days is 90% (Page 24).

Tiktok claims that the video situation related to "Yunnan Insect Valley" is very complicated, and it is very difficult for Tiktok to identify and clean up the suspected infringing videos, and it is impossible to ban the upload of videos containing the names of the works involved. The use of the recommended algorithm does not mean that the platform can identify infringing videos, and the platform cannot be required to assume a higher duty of care accordingly (Page 35).

After hearing, the court found that: the works involved in the case are extremely popular, and they have repeatedly appeared in the recommended locations of Tiktok related search association, and displayed the recommendation tag. Compared with other ordinary works, they are more prominent and easier to be known by Tiktok (page 80). Users of Tiktok's platform have committed a large number of acts to the information network communication right of "Yunnan Insect Valley" in an intensive manner. Under the condition that the obligee repeatedly made early warning, complaints in the event, filed a lawsuit, and applied for behavior preservation, Tiktok did not take appropriate measures to control and govern the infringing content of the platform within a reasonable period of time, so it can be concluded that Tiktok has helped the infringement (page 56).

In terms of loss calculation, the court did not accept Tencent's three calculation methods, namely, Tencent's loss, Tiktok's profit and Tiktok's less paid licensing fees due to infringement (page 77). At the same time, the court held that punitive damages were not applicable in this case (page 81).

The court found that the original work of "Yunnan Insect Valley" had a high popularity. During the shooting and production, a high popularity cast member was hired. The production cost of a single episode was 6.68 million yuan. The broadcast volume of the works involved in the case was very high after the broadcast. There were short infringing videos on the Tiktok platform, including the infringement of the works involved in the case from episode 1 to episode 16. Tencent has signed a contract for non exclusive authorization of other third-party entities, with the cost ranging from 50 million yuan to 100 million yuan.

Tiktok received three warning letters before the launch of Yunnan Insect Valley, and 108 infringement notification letters about half a year after the launch; There are 6299 infringing links, and some infringing videos have not been handled for a long time. Tiktok platform was interviewed by relevant departments for copyright infringement of short videos, and was sued in many courts across the country. After considering all the above calculation factors, the court decided at its discretion that the economic loss suffered by the copyright owner of the online drama "Yunnan Worm Valley" due to the infringement of the right of information network communication by Tiktok was 2 million yuan per episode, so the total economic loss was 32 million yuan (pages 78 and 79).

In the above summary, the court found that the reasons for the sky high compensation are as follows: the original work of Yunnan Worm Valley is well-known, the actors are well-known, the broadcast is popular, the production costs are high, the copyright external licensing costs are high, and Tiktok failed to delete all the infringing content notified in time. However, these reasons, analyzed one by one, are not special compared with similar cases.

一、 Compared with the similar cases, the compensation award in this case is abnormally high

If the long video company sued the short video platform for infringement of the second creation of a popular play, the reasons in the judgment of Yunnan Insect Valley can be found almost. Because a network play needs to be popular, the standard configuration is: high IP popularity of the original work, big name actors, high production costs, and high external licensing fees.

For example, in the two similar cases of iQIYI v. Fasthand reported by the media recently , the works involved in the case are the same well-known hit TV series Langya Bang and Jiumen, and there are also famous actors. Fasthand is a well-known short video platform, just like Tiao Yin, and the broadcast content is mainly the clips of Erchuang. The court decided that the company compensated iQIYI for the economic losses and reasonable expenses of more than 2.18 million yuan. Although according to the author's experience, this is a high compensation case in the industry, but the two cases together are less than 10% of the compensation amount of the Yunnan Worm Valley case. A few days ago, some media made statistics . Last year, for most online video infringement cases in China, the court awarded less than 50000, and the highest award for TV series was 2 million. Moreover, the case was a long video collection of on-demand works , which is different from the case of short video based on second creation in this case.

The author also retrieved several long video infringement judgments of Xi'an Intermediate People's Court in recent two years: 1. (2020) Shaanxi 01 Early Republic of China No. 780 First Instance Civil Judgment . The film work Crazy Bull involved in the case was awarded a compensation of 20000 yuan; 2. (2021) Shaanxi Minzhong No. 141 Civil Judgment of Second Instance , involving the work Hard Bones (43 episodes in total), awarded a compensation of 30000 yuan; 3. (2021) Shaanxi 01 Zhi Min Chu No. 1808 First Instance Civil Judgment , involving the work "History Forever Remembers" (30 episodes in total), awarded a compensation of 15000 yuan. As far as the above judgment is concerned, the court has heard cases with low popularity and lower compensation, so the compensation amount of this case has increased hundreds of times, which is a bit unexpected.

二、 Erchuang video is not so harmful to long video copyright holders

The court may award high compensation for long video companies' rights protection and second creation of short videos, but generally there will be no sky high compensation such as the Yunnan Worm Valley case. The core reason is that short videos are not so strong as substitutes for long videos, and cannot completely replace long videos, so objectively they are not so harmful.

Article 24 of the Copyright Law of the People's Republic of China stipulates that, in order to introduce or comment on a work or explain a problem, appropriate references to other people's published works in a work constitute fair use. However, the problem of Erchuang Short Video is that it includes all the core content of the film and television drama in its creation, which leads to its replacement of the original work to a certain extent, so it constitutes infringement. However, watching the short video of second creation only in a 5-minute summary is definitely different from the appreciation experience brought by watching the whole episode with determination. Therefore, the substitution here is at the cost of sacrificing the overall appreciation of the works. It is only a substitution to a certain extent, not a complete substitution.

In addition, the second innovation video in the Yunnan Insect Valley case was uploaded by users, which is an indirect infringement. The court at most found that the platform was negligent in performing its management responsibilities, which is different from the direct infringement of the content produced and released by the platform itself.

三、 Punitive compensation is not applicable, and the rationality of sky high compensation is insufficient

Needless to say, the short video platform has advantages over the long video platform in terms of business model, lower cost and faster transmission, so we can't rule out the possibility of taking advantage of the second innovation video uploaded by users to collect the wool of the long video platform. In the case of Yunnan Insect Valley, from the perspective of the subjective malice of infringement, whether Tencent submitted evidence or the court's determination, it shows that most of the infringing content has been deleted. Therefore, although Douyin was judged as infringing by the court, the judgment also made it clear that punitive damages were not applicable to this case.

However, the short video platform's management of the second creative works of popular movies and TV plays is not as simple as it seems. For example, even if the name of a popular movie or TV play is used in the title of the work, the platform cannot simply delete the video by blocking keywords. Yunnan Worm Valley is adapted from a well-known online novel, and there are also movies of the same name. The play volume of works in the tags of works on the search engine and short video platform not only includes the content of second creation online dramas, but also about novels and movies. Even if the short videos contain fragments of movies and TV dramas, there is a possibility that they are included in the "appropriate reference" for commenting on the plot, forming a reasonable use. In addition, the trailers, introductions, and sidelights of films and TV plays are non infringing. This is one of the reasons why the court did not apply punitive damages.

Because the content and broadcast under the heat label are not all infringement, as far as the Yunnan Insect Valley case is concerned, since there is no punitive compensation, the support for the sky high compensation in this case is even less.

Finally, as an intellectual property lawyer, the author certainly hopes that the compensation standard for infringement cases can be higher, but such a high standard should be reasonable and stable. In the Yunnan Worm Valley case, the sky high compensation judgment made by Xi'an Intermediate Court is inconsistent with the general compensation standards of most courts for second innovation videos and the standards of previous judgments of the court, and the rationality is obviously flawed. Such a decision makes the implementation of the law more uncertain, and is not conducive to fair competition between long and short video companies. Fortunately, the first instance decision has not yet taken effect. I hope the court of second instance can correct this.