Wednesday, March 21, 2007
LAWSUITS FAIL TO DENT FAKE DVD SALES IN CHINA
By Geoff Dyer in Shanghai
Wednesday, March 21, 2007, FT
When foreigners move to Shanghai, they receive tips on the popular places to buy things – Carrefour for food and vegetables, Ikea for basic furniture and Ka de Club for fake DVDs.
Pirated copies of Hollywood blockbusters are big business in the city, and Ka de Club has been the popular haunt for expatriates and tourists.
But its notoriety has made it a target. Backed by the Motion Picture Association, several Hollywood studios are trying to sue the shop in a lawsuit which highlights both the rapid changes in China's legal system and the considerable limitations of trying to achieve decisive action through the courts.
In a judgment handed down this month, the studios won a ruling that the shop was guilty of copyright infringement for selling pirated DVDs of Lord of the Rings and The Incredibles. Yet the court also awarded damages and costs of just Rmb25,000 – a little more than $3,200. The studios had sought damages of Rmb1.6m. “We are disappointed at the paltry amounts of the awards, which amount to only a negligible cost of doing business for these criminals,” said Frank Rittman, the MPA's legal counsel in Asia.
Under pressure from the US over its huge trade in fake goods, China has set up a framework for prosecuting intellectual property violations, which foreign and local companies are increasingly trying to use. According to the Supreme People's Court of China, 13,424 cases were filed in 2005 concerning intellectual property protection.
The film industry has increasingly pursued DVD retailers through the courts, filing 16 complaints last year, including four outstanding ones against Ka de Club.
But companies and lawyers say that while the courts often uphold their cases, the penalties do little to change the situation. Fines are only modest and prison sentences often suspended.
“There has been a lot of effort to establish a framework for intellectual property law in China,” says Michael Moser, co-chairman of the China practice of O'Melveny & Myers. “But remedies are still a big issue.”
Yang Jun, at the Shanghai law firm that represented the studios, says the lawsuits are worthwhile despite the low damages because they make the public aware that fake DVDs are illegal.
A case she was involved in three years ago established it was possible to sue the landlords of DVD shops. Before that many small shops operated without a formal lease in the hope that the property owner was immune from prosecution. “It is a gradual process of making it harder for them to operate and raising public awareness,” she says.
There are some signs that the authorities are cracking down on DVD sales, with police raids on the most visible shops. Ka de Club has been forced to change location three times in two years and now operates under a different name. Foreign films are on sale only in a back room.
But there is huge demand for fake DVDs, in part because China's censors prevent most new films appearing in the cinema. And lawsuits do not appear to have slowed business at Ka de Club's new location. On a recent Friday afternoon a big consignment of DVDs arrived in time for weekend customers ¶ 7:58 AM
Wednesday, March 21, 2007, FT
When foreigners move to Shanghai, they receive tips on the popular places to buy things – Carrefour for food and vegetables, Ikea for basic furniture and Ka de Club for fake DVDs.
Pirated copies of Hollywood blockbusters are big business in the city, and Ka de Club has been the popular haunt for expatriates and tourists.
But its notoriety has made it a target. Backed by the Motion Picture Association, several Hollywood studios are trying to sue the shop in a lawsuit which highlights both the rapid changes in China's legal system and the considerable limitations of trying to achieve decisive action through the courts.
In a judgment handed down this month, the studios won a ruling that the shop was guilty of copyright infringement for selling pirated DVDs of Lord of the Rings and The Incredibles. Yet the court also awarded damages and costs of just Rmb25,000 – a little more than $3,200. The studios had sought damages of Rmb1.6m. “We are disappointed at the paltry amounts of the awards, which amount to only a negligible cost of doing business for these criminals,” said Frank Rittman, the MPA's legal counsel in Asia.
Under pressure from the US over its huge trade in fake goods, China has set up a framework for prosecuting intellectual property violations, which foreign and local companies are increasingly trying to use. According to the Supreme People's Court of China, 13,424 cases were filed in 2005 concerning intellectual property protection.
The film industry has increasingly pursued DVD retailers through the courts, filing 16 complaints last year, including four outstanding ones against Ka de Club.
But companies and lawyers say that while the courts often uphold their cases, the penalties do little to change the situation. Fines are only modest and prison sentences often suspended.
“There has been a lot of effort to establish a framework for intellectual property law in China,” says Michael Moser, co-chairman of the China practice of O'Melveny & Myers. “But remedies are still a big issue.”
Yang Jun, at the Shanghai law firm that represented the studios, says the lawsuits are worthwhile despite the low damages because they make the public aware that fake DVDs are illegal.
A case she was involved in three years ago established it was possible to sue the landlords of DVD shops. Before that many small shops operated without a formal lease in the hope that the property owner was immune from prosecution. “It is a gradual process of making it harder for them to operate and raising public awareness,” she says.
There are some signs that the authorities are cracking down on DVD sales, with police raids on the most visible shops. Ka de Club has been forced to change location three times in two years and now operates under a different name. Foreign films are on sale only in a back room.
But there is huge demand for fake DVDs, in part because China's censors prevent most new films appearing in the cinema. And lawsuits do not appear to have slowed business at Ka de Club's new location. On a recent Friday afternoon a big consignment of DVDs arrived in time for weekend customers ¶ 7:58 AM
