Collective Management Organizations in China: Practice, Problems and Possible Solutions

• Published date: 01 May 2012
• Date: 01 May 2012
• Author: Daniel Gervais,Fuxiao Jiang
• DOI: http://doi.org/10.1111/j.1747-1796.2012.00439.x

The Journal of World Intellectual Property (2012) Vol. 15, no. 3, pp. 221–237

doi: 10.1111/j.1747-1796.2012.00439.x

Collective Management Organizations in China:

Practice, Problems and Possible Solutions

Fuxiao Jiang

University of International Business and Economics, Beijing

Daniel Gervais

Vanderbilt Law School

Collective management organizations (CMOs) in China have been in a rapid development and made a great

progress in the past 20 years.Yet, there remain a number of issues that should be addressed. This note surveys

the current practice of Chinese CMOs and, a number of important issues, and suggests possible solutions to

ameliorate the situation. The first issue, namely, the relation betweenCMOs and their members, is particularly

visible in the issue of CMO’s standing to sue. The second issue, namely relations with nonmembers, has caused

a recent litigation explosion against users of collective managedworks. The third issue, the abuse of monopoly

position, is mainly a sign of the need for an appropriate regulatory regime for CMOs. It is important for China

to draw on the successful experience and learn lessons from the best CMOs and regulatory models in other

countries. Because of the relatively short history of collective management in China, the improvementof CMOs

will likely be a gradual institutional processcharacteristic by bold experiments, as when making one’sway across

a deep river.

Keywords CMOs in China; standing to sue; litigationby nonmembers; monopoly

A collective management organization (CMO) is a body created by law or private agreement, which

engages in the collective management of copyright and related rights. It is a mechanism allowing

a pooling of rights (thus constituting a repertoire) to license the use of such repertoire to users.

Basically, it is the middle of an hourglass: it connects a large number of right holders with a large

number of users, making licensing transactions easier. In some cases, such as mass uses of works, it

is the only practicable method to license use of copyright works.

The history of collective management began in France more than 230 years ago.1At the end

of the nineteenth century and the beginning of the twentieth century, several authors’ organizations

came into being in Europe, and other countries followed suit, including the United States (Ficsor,

2002a). By contrast, the history of CMOs in China began only about 20 years ago.2This is a short

history though not necessarily when compared to most developing and emerging countries.

The first issue that Chinese CMOs confronted was the choice of an optimal model because of

the external nature of the origins of the Chinese CMO system and the different sizes and shapes

of CMOs, due to the civil law roots of the Chinese legal system, Chinese CMOs initially followed

the model of their counterparts in Europe (Xu, 2005). Although CMOs in China have been in a

rapid development3in recent years, there are a number of local and global problems that still need

attention. Among them, we would mention the relation between CMOs and their members, the

relation between CMOs and nonmember copyright holders and the abuse of monopoly positions of

CMOs, which are the most outstanding and urgent ones. The first problem is particularly visible in

the issue of CMO’s standing to sue users. The second problem (relation with nonmembers) is the

cause of a recent litigation explosion against users of collective managed works. The third problem

C2012 Blackwell PublishingLtd 221

Fuxiao Jiang and Daniel Gervais Collective Management Organizations in China

(abuse of monopoly position) is mainly about the need for an appropriate regulatory regime for

CMOs. This note reflects a macrolevel research on the CMOs in China, in that it focuses on the three

above problems, which we consider the most urgent. We also suggest possible solutions. Parts I and

II of this note focus on the current practice of CMOs in China, especially their development and

operating mechanisms.Then the three problems referred to above are discussed, respectively,in parts

III, IV and V. Possible solutions are proposed at the end of each part.

The Development of CMOs in China

The Relevant Regulations

Collective management of copyright was not mentioned in theCopyright Law 1990, the first modern

copyright law of China.4However,there were two provisions about collective managementin Imple-

menting Regulations of the Copyright Law 1991 (IRCL).5Article 7 of the IRCL provided that one

of the main functions of the National Copyright Administration of the People’s Republic of China

(NCAC) was approving the establishment of new CMOs,6and article 54 specifically provided that

copyright holders could exercise their copyright rights by way of collective administration.7

Article 8 was added to the Copyright Law in the first comprehensive series of amendments in

2001.8This new article provided that

Copyright holders or owners of the rights relatedto the copyright may authorize collective

copyright administration organizations to exercise their copyright or rights related to

the copyright. Upon authorization, a collective copyright administration organization

may exercise the copyright or the rights related to the copyright in its own name for the

copyright holder or the owner of the rights related to the copyright and participate as a

party in legal or arbitration proceedings concerning the copyright or the rights related to

the copyright.

Collective copyright administration organizations are non-profit organizations, and reg-

ulations concerning the way of their establishment, their rights and obligations, their

collection and distribution of copyright licensing fees, and their supervision and admin-

istration shall be formulated separately by the State Council.

There was no provisionabout collective management in IRCL2002.9This can be explained by the

fact that the Copyright Law provided that the related provisions would be formulated separately by

the State Council (separate regulationson collective management). The Copyright Law was amended

again in February 2010 butthe amendment did not address the regulation of copyright management.

In parallel to those legislative developments, many people considered that a more specific regu-

latory regime was required to strengthen the protection of copyright and to meet the requirement of

efficient collective management of copyright.Consequently, Regulations on the CopyrightCollective

Administration of (RCCA)10 were prepared by the NCACon the basis of article 811 of the Copyright

Law.12 The RCCA were adopted by the State Council at the 74th Session of its Standing Committee

on 22 December 2004.13 They contain 7 chapters and 48 articles regulatingthe collective management

of copyright and as such are the first specific and by far the most important form of regulation of

collective management in China.

The Current Situation of CMOs in China

On March 31, 2012, the NCAC published a preliminaryamendment draft to revise China’s copyright

law. According to articles 46 and 48 of the amendment draft, a producer of sound recordingscan use

a musical work of which a lawful sound recording has been published for three months or longer,

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The Journal of World IntellectualProperty (2012) Vol. 15, no. 3