Bohyoung Kim and Piao Wenxiang Corporate and Commerical Group King & Wood Mallesons
China and the Republic of Korea (Korea) enjoy a long history of cultural exchange, dating back to the Sui and Tang dynasties in China, or even earlier. In modern history, since the establishment of diplomatic relations between China and Korea on 24 August 1992, the relationship between the two countries has grown continuously, with frequent visits between top leaders. They have seen a growing economic and trade relationship between each other and a rapid progress in cultural exchanges. In recent years, the “Korean Wave” has found its unique place in the global cultural and entertainment industry, becoming a force to be reckoned with. It also has a great influence on the Chinese entertainment industry as the two countries deepen their cultural exchanges. This article discusses the PRC legal issues involved from three aspects of “bringing in”, “going global” and “joint cooperation”, based on our previous experience in cultural and entertainment projects. Hopefully it will bring you some inspirations.
I. Bringing In: Introduction of TV Program Formats
In recent years, many Korean copyrighted TV programs, especially Korean variety shows, have been introduced to China, many of which are familiar to Chinese audiences. KWM Korea Practice Team has advised on the copyright licensing of well-known variety shows such as “Running Man China”, “Sound of My Dream” and “Everybody Laugh Together”.
Filing of programs based on overseas copyright formats
In accordance with the Notice of the State Administration of Press, Publication, Radio, Film and Television of the PRC on Vigorously Promoting the Independent Innovation of Radio and Television Programs, in order to effectively conduct the filing of programs based on overseas copyright formats and further standardize the broadcasting practices, all TV satellite channels must go through the filing formalities before airing such programs. Therefore, the variety shows developed on the basis of copyrights of Korean variety shows are required to go through relevant filing procedures.
Copyright protection of TV variety show formats
On one hand, the introduction of a copyright format requires a government filing procedure, and in fact, many domestic TV stations introduced overseas TV variety show formats by signing copyright license agreements for TV programs with the copyright holders of the shows. However, on the other hand, there is a controversy as to whether the TV variety show format is a copyrighted work in China. In reality, there are many cases in which successful variety show formats cannot be protected after being imitated, which has led to controversy over whether the TV variety show format is protected by copyright law.
Although some academics argue that the TV variety show format has the characteristics of works under copyright law, i.e., intellectual achievement, originality and reproducibility, which therefore should be protected by copyright law, the current Copyright Law of the PRC, which was amended and came into effect in 2010, has not yet included the TV variety show format in its scope of protection, making it difficult to protect the rights of the formats in the judicial field.
On 11 November 2020, the new Copyright Law of the PRC was promulgated after several years of revision and will come into force as of 1 June 2021. The following two amendments to the new Copyright Law may bring new opportunities and breakthroughs for the copyright protection of TV variety shows.
- In the new Copyright Law, “audio-visual works” have replaced “film works and works created using methods similar to film making” under the current Copyright Law, which expands the scope of works.
The Intellectual Property Tribunal of the Beijing Higher People’s Court once stated that “the variety show images refer to the information fixed on a material medium after the filming of a live variety show. After the completion of the third revision of the Copyright Law, there will be no much controversy over the determination of the nature of variety show images. This is because the “film works and video recordings” are replaced by “audio-visual works” in the Copyright Law under revision. Although the scope of “audio-visual works” is not clearly defined in the new Copyright Law, we may expect that with the improvement of relevant supporting regulations, variety shows will be included in the “audio-visual works” and protected under the new Copyright Law.
- The requirement that other works must be restricted by laws and administrative regulations in the current Copyright Law has been revised to “other intellectual achievements which have the characteristics of works” in the new Copyright Law. Such a provision keeps pace with the times, making it possible for new types of works to be protected by the Copyright Law. The format of TV variety show has the characteristics of a work under the Copyright Law, thus the new Copyright Law may be applicable to the format in the future judicial practice.
We expect that with the implementation of the new Copyright Law, the copyright format of overseas variety shows will receive effective legal protection in China, so as to increase the stability of copyright licensing transactions, maintain the order of the variety show copyright market, and ultimately promote the positive development of variety shows.
II. Going Global: China’s Investment in the Korean Entertainment Industry
As China’s overall strength grows, it has become a general trend for Chinese enterprises to “go global”. A lot of Chinese capital flowed to Korean film and entertainment companies as the Korean entertainment industry has become popular for investment. According to news reports, Huayi Brothers and its subsidiary Huayi & Joy Entertainment Limited have invested in a number of Korean film and television companies, and Huace Film &TV invested in the Korean entertainment company Next Entertainment World. In addition, Legend Capital’s investment in Big Hit Entertainment in Korea has also attracted much attention from legal community.
The Notice of the General Office of the State Council on Forwarding the Guiding Opinions of the National Development and Reform Commission, the Ministry of Commerce, the People’s Bank of China and the Ministry of Foreign Affairs on Further Guiding and Regulating Outbound Investment Orientation (the “the Guiding Opinions”) issued on 4 August 2017 stipulates that Chinese enterprises are restricted in carrying out outbound investment that is inconsistency with China’s foreign policies of peaceful development, mutually beneficial win-win and opening up strategy as well as macro-control policies, including outbound investment in entertainment industry. The Catalogue of Sensitive Industries for Outbound Investment (Edition 2018), introduced later on 31 January 2018, made it clear that the entertainment industry is an industry in which outbound investment made by enterprises shall be restricted. In accordance with the Administrative Measures for the Outbound Investment by Enterprises and other provisions, the industries restricted from investment belong to sensitive industries and any investment in such industries shall be approved by the National Development and Reform Commission (NDRC).
It is true that the introduction of the above-mentioned regulations has had a lot of impact on overseas M&A in the entertainment industry. However, according to the NDRC’s reply to reporters’ questions about the Guiding Opinions, such outbound investment is classified into restricted categories due to the emergence of irrational outbound investment trends, and the relevant competent authorities are required to review and approve such investment. This is to strengthen the government’s policy guidance and prompt enterprises to make a prudent move, instead of completely eliminating the possibility of overseas investment in entertainment industry. In the implementation of classified guidance, the Guiding Opinions propose differentiated policies and measures for three types of outbound investment activities, guiding enterprises to reasonably make their outbound investments in accordance with the principles of positive encouragement, moderate restriction and strict prohibition. The Guiding Opinions aim to clarify the “restricted or forbidden areas” for Chinese enterprises to “go global” and better safeguard national interests and security.
Therefore, we expect that under the guidance of the outbound investment policies, enterprises with a clear development strategy can find high-quality outbound investment projects and assets, making their “going global” steps more stable and sustainable.
In addition, some new cooperation modes in the entertainment market also deserve our attention. For example, Alibaba Group reached a cooperation agreement with the Korean entertainment company CUBE, under which Alibaba will be exclusively responsible for CUBE artists’ development in Chinese market. The cooperation is a new attempt to respond to the market demand, which is different from the previous “going global” approaches.
III. Joint Cooperation: Cooperation between China and Korea in Film Production
In recent years, China’s film market has developed vigorously, and the foreign film industry, including the Korean film industry, is eager to enter the Chinese market.
Quota system of film imports
China’s film market is subject to double restrictions of “film import quota” and “film censorship”. In addition, in accordance with the Measures for Control over Imported Films and other regulations, the business of importing and releasing films shall be exclusively handled and controlled by the China National Films Release and Projection Corporation, and with respect to films to be released nationwide for commercial purposes, formalities to pay customs duties shall be fulfilled at the time of the import thereof. In view of the above restrictions, Sino-foreign cooperation in film production has become an investment method worth considering.
Sino-foreign cooperation in film production
According to the Provisions on the Administration of Chinese-foreign Cooperative Production of Films (2017 Amendment), Chinese-foreign co-production of films includes the following three forms: joint production, assisted production and production by entrustment. In accordance with Article 16 of the Provisions, any cooperatively produced film by China and foreign countries may be screened publicly in or outside China after it passed the censorship, and obtained a Permit for Public Screening of Films issued by the competent authorities. With respect to any film produced with the assistance of the Chinese party with compensation and the film produced by the Chinese party within China entrusted by the foreign party, where the procedures for the exit thereof may be followed on the strength of the approval document issued by the competent authorities, it can be understood that the film cannot be directly distributed or released in China. Therefore, in order to smoothly release films in China and enter the Chinese film market, joint production has become the preferred method for Chinese-foreign co-production of films.
Joint production, i.e. the way of production by which the Chinese and foreign parties jointly contribute capitals (including funds, labor or kinds), produce films and share interests and risks. If any foreign leading cast members need to be engaged in any joint production, it shall be approved by the competent authorities, and the proportion of foreign leading actors may not exceed 2/3 of the total number of leading actors.
On 3 July 2014, representatives of the State Administration of Press, Publication, Radio, Film and Television of the PRC and representatives of the Ministry of Culture, Sports and Tourism of the Korea officially signed the Agreement on Film Co-production, which provides that “films co-produced by both parties based on this Agreement enjoy all rights and interests granted or may be granted to domestic films by their respective laws now existing or hereafter in effect”. Under this background, China and Korea have co-produced a large number of films, including “Miss Granny” and “Bounty Hunters” (on which KWM provided legal services), which achieved box office success.
In terms of the overall market, China has signed intergovernmental film co-production agreements with 22 countries, including France, the UK, Canada and Japan to promote Sino-foreign co-production and international cultural exchanges. In recent years, the number of Sino-foreign co-produced films that have been approved has increased year by year, and it has also been reported that “box office figures in Mainland China show that the box office of co-productions accounts for half of the country’s box office”. Therefore, Sino-foreign co-produced films are expected to have greater potential for development in the future.
In this article, we discussed some of the issues involved in cooperation and investment in the field of culture and entertainment based on our project experience. Due to the flexibility of the culture and entertainment sector, in practice, there are many other ways to cooperate and communicate in the field in addition to those mentioned above. This article only discusses some of the common ways, and the above opinions are for reference only.
* KWM Republic of Korea Cloud Office does not provide legal advice in relation to, or practise, Korean law in any form.
This article is for general information purposes only and does not constitute advice.
 Survey of the Beijing Higher People’s Court on Issues concerning the Trial of Copyright Cases of Variety Shows, 2015 (3), China Copyright