Empirical Assessment of Copyright Enforcement: A Comparative Study of the Music Industry in the P.R.C. and the R.O.C. By Gi-Kuen Li A dissertation submitted in partial satisfaction of the requirement for the degree of Doctor of Juridical Science in the Graduate Division Of the University of California, Berkeley Committee in charge: Professor Robert P. Merges, Chair Professor Peter S. Menell Professor Brian D. Wright Spring 2016 Empirical Assessment of Copyright Enforcement: A Comparative Study of the Music Industry in the P.R.C. and the R.O.C. Copyright © 2016 by Gi-Kuen Jacob Li Abstract Abstract Empirical Assessment of Copyright Enforcement: A Comparative Study of the Music Industry in the P.R.C. and the R.O.C. by Gi-Kuen Jacob Li Doctor of Juridical Science University of California, Berkeley Professor Robert P. Merges, Chair Since 2000, the revenue of the music industry plummeted worldwide. Meanwhile, the advancement of technology created many changes that impacted the copyright law system, which raised doubts about the effectiveness and necessity of copyright law system. Many literatures related to this topic focused on the discussion about the North America and the Europe regions. In the past two decades, researchers started to explore the intellectual property right protection in the P.R.C.; however, few works emphasized the comparative perspective between the copyright protection in the P.R.C. and the R.O.C. This dissertation argues that copyright law is still important to encourage and reward creativity. Under the utilitarian rationale, copyright law should be able to maintain incentive for authors and creators. By comparing the similarities and differences of legislation, law enforcement, judiciary, and unspoken rules in the music industry between the P.R.C. and the R.O.C., this dissertation aimed to find out what is the effect of copyright law enforcement on the music industry in the P.R.C. and the R.O.C. respectively? Before 1990, the P.R.C. lacked the codification of copyright law. After the P.R.C. Copyright Law was promulgated, the multiple copyright enforcement regimes diluted the P.R.C.’s protection efforts. The laws, enforcement campaigns, and judicial decisions did not create significant impact on average citizens or the music industry. Even today, the P.R.C. Copyright Law is still ignored by many citizens in mainland China. On the contrary, the R.O.C. Copyright Act was promulgated relatively earlier, amended frequently, and was enforced consistently. In addition, the record companies’ business practices were introduced along with the entrant of western music to Taiwan in the 1980s, and the unspoken rule to protect creator’s incentive and revenue stream was well established. It was believed that this great environment of the Taiwanese music industry attracted talents all over the Greater China region to Taiwan, and further made Taiwan the center of creativity for Mandarin Chinese music. Through copyright law legislation and amendment, enforcement, judicial decision, and unspoken rules, the notion to respect copyright were embedded in most people’s minds in 1 Abstract Taiwan. Therefore, the record companies in Taiwan were willing to respect the hard work of composers, lyricists, and producers. This revenue stream maintained a virtuous circle that attracted new talents to join the industry, which it would be impossible to achieve without the existence of effective copyright law. The evidence exhibited in this dissertation including the comparison between the music industry in mainland China and Taiwan, indicates that copyright enforcement is highly relevant to the robust music industry in Taiwan. On the contrary, a relatively late promulgation of copyright law and lack of effective copyright law enforcement were considered to be an important reason for the underdeveloped domestic music industry in mainland China. 2 Table of Contents Table of Contents List of Figures .................................................................................................................... iii List of Tables ..................................................................................................................... iv 1 Introduction ................................................................................................................. 1 2 Background ................................................................................................................. 4 2.1 The Music Industry as Research Target ............................................................... 4 2.2 Chinese Culture and Copyright ............................................................................ 4 2.3 Music Industry in mainland China ....................................................................... 5 2.3.1 Brief History in Chinese Music Industry ...................................................... 6 2.3.2 The Highly Anticipated but Struggling Market ............................................ 7 2.4 Music Industry in Taiwan .................................................................................. 13 2.4.1 Center of Creation, Exporter of Music ....................................................... 13 2.4.2 Brief History of Taiwanese Music Industry ................................................ 15 2.5 The Dynamics of the Greater China Music Industry ......................................... 20 3 Methodology ............................................................................................................. 22 3.1 Research Question .............................................................................................. 22 3.2 Comparative Research ........................................................................................ 22 3.3 Empirical Research ............................................................................................ 23 3.3.1 Quantitative Data Descriptive Analysis ...................................................... 24 3.3.2 Qualitative Data Analysis ........................................................................... 24 3.4 Limitations ......................................................................................................... 28 3.4.1 Limitation on the Research Coverage ......................................................... 28 3.4.2 Limitation on the Empirical Methods ......................................................... 29 4 Progression of the Law ............................................................................................. 31 4.1 The Development of Copyright in Chinese History (pre 1949) ......................... 31 4.2 Copyright Law with “Chinese Characteristics” – the P.R.C. Copyright Law ... 33 4.2.1 The 1990 Copyright Law ............................................................................ 34 4.2.2 The 2001 Amendment ................................................................................. 34 4.2.3 The 2010 Amendment ................................................................................. 35 4.2.4 The “Chinese Characteristics” of P.R.C. Copyright Law ........................... 36 4.3 Internationally Influenced Copyright Act – the R.O.C. Copyright Act ............. 37 4.3.1 Conforming to International Standard Era: 1985 – 2002 ............................ 37 4.3.2 Adapting the Copyright Act to Technological Challenges: 2003 - present 38 i Table of Contents 4.4 Convergence or Divergence? ............................................................................. 40 5 Enforcement of the Law ............................................................................................ 41 5.1 An Enforcement with “Chinese Characteristic” – P.R.C. Copyright Law Enforcement .................................................................................................................. 43 5.1.1 The Unique Administrative Copyright Enforcement Regime .................... 44 5.1.2 The Ambiguous Criminal Copyright Enforcement Regime ....................... 49 5.1.3 How Special 301 Report Impacted P.R.C. Copyright Enforcement ........... 51 5.1.4 Conclusion .................................................................................................. 60 5.2 From Pirate Island to Asian Enforcement Model – R.O.C. Copyright Law Enforcement .................................................................................................................. 61 5.2.1 The Law Enforcement System in Taiwan ................................................... 61 5.2.2 How Special 301 Report Impacted the R.O.C. Law Enforcement ............. 68 5.2.3 Conclusion .................................................................................................. 77 5.3 Enforcing the Laws in “Cross-strait” Relation ................................................... 77 6 Judiciary .................................................................................................................... 81 6.1 Copyright Litigation in P.R.C. Judiciary ............................................................ 81 6.1.1 Landmark Judicial Decisions ...................................................................... 83 6.1.2 Conclusion .................................................................................................. 86 6.2 Copyright Litigation in R.O.C. Judiciary ........................................................... 86 6.2.1 Landmark Judicial Decisions ...................................................................... 89 6.3 Conclusion .........................................................................................................