China: China's e-Book and Digital Reader Markets Grow, while Legal and Technological
Protections of Copyright Provide a Welcome Assist

As much as one may love to sit down with a nice hardcover book from one's favorite author, those days are changing, like much else in our lives in the digital age. The transition from obtaining information via traditional books to digital readers is growing around the world. It is estimated by DisplaySearch that the number of digital readers in China had grown to "3 million in 2010, which account[ed] for 2% of the global market." ¹ Aside from the current market leader globally, the Amazon Kindle, numerous Chinese manufacturers have also entered this marketplace with competing products, ² including many "shanzhai" or imitation products. ³ It is indeed a market with promise, even more so when one considers that with over 400 million internet users in China⁴ and well over 200 million users in China accessing the internet via mobile phones,⁵ the means to access e-books via various devices will only continue to grow.

In this promising market, however, a continuing and growing problem exists---how to protect the copyright in all those e-books being downloaded? China Daily reporter, Doris Li, notes that "[i]t is reported that over 80% of the publishing houses in China utilize their platform to publish e-books, with more than 60,000 types of e-books..."⁶ However, there are often issues with the validity of the copyright on these e-books as noted by Zhong Hongbo, Executive Deputy Director-General, China Written Works Copyright Society, where he recently stated that "[r]egular e-reader makers should seek authorization from publishers, but such authorization is often flawed. Surveys showed that only 20% of publishers own digital copyrights." ⁷ The trend toward e-books cannot be denied – or stopped—so in order to avoid endless copyright disputes and to allow copyright owners to rightfully monetize their copyrights, some solutions must be developed. In the case of e-books in China, it would appear that solutions based on both the legal system and technology solutions are quickly being developed.

In its recent "Opinions of the General Administration of Press and Publication [hereinafter referred to as GAAP] on Developing the E-book Industry" (hereinafter referred to as the "Opinions"), the GAPP made clear that the P.R.C. government sees the potential of said "E-book Industry" and has outlined steps to be taken to oversee it accordingly. ⁸ It is clear from Article 14 of the Opinions that e-books are subject to "Administrative Regulations on Publication, Administrative Provisions on Publications of E-publications, Tentative Administrative Provisions on Publication through Online and Administrative Provisions on the Publication Market and other regulatory documents".⁹  Article 14 further states that

"[e]nterprises engaging in the original content formation of E-book, editing and publishing and operation of E-book content resource delivery platform shall be subject to approval and administration as publishers of E-publication and online publishing entities; distribution enterprises engaging in digital conversion of publication contents, editing and processing and implantation of chips shall be subject to approval and administration as E-publication replication entities; distribution enterprises engaging in the general distribution, wholesale or retail of E-book shall be subject to approval and administration as E-publication distribution entities; and enterprises engaging in import of E-book shall be subject to approval and administration as E-publication import entities" .¹⁰

As with the traditional publishing industry in China, the GAPP provides guidelines for the nascent e-book industry in China and is developing a relevant administrative legal framework, as referenced above. In addition to the rules and regulations of GAPP, e-books can often qualify as copyright works and, as such, can often be protected in China under the Copyright Law of the P.R.C. and, specific to online transmissions of e-books, the "Regulations for the Protection of the Right of Communication through Information Network". Though this administrative and legal framework exists, much work still needs to be done to protect the copyright of e-books in China.

As noted in Article 17 of the Outline, however, in recognition of a need for improved copyright protection for e-books, "[t]he National Strategic Outline for Intellectual Property Protection shall be implemented to step up copyright protection and establishment of a scientific and rational system for the authorized use of digital work copyright under new technology conditions shall be explored so as to crack down on tort and piracy and safeguard the legal interests of all sides".¹¹ A clear goal of GAPP is that "illegal publication activities will be curbed in accordance with the law, so as to build up a healthy and orderly E-book market." ¹² If disputes should arise regarding copyright of e-books in China, aside from possible civil action via P.R.C. courts, administrative action could possibly be pursued through the National Copyright Administration, GAAP or relevant administrative agency and disputes could also often be resolved though working with the relevant collective administrative agency, such as the China Written Works Copyright Society, specific to written works such as e-books. In addition to an administrative and legal framework to protect copyright in e-books, technology and the e-book marketplace will play key roles as well.

In regards to technology helping make the e-book more viable in China, two key areas of concern are content security and identification of copyright. In the digital world, digital rights management ("DRM") technologies have provided content owners with a certain degree of intellectual property protection. The idea that one could digitally "lock" one's content and protect one's content from digital piracy has, however, long since proven a partial solution. Time and time again, secure DRM systems have been "hacked" as it were, rendering the content prone to piracy. This is not to say that such DRM systems don't add value as security measures (they certainly can, if implemented properly), but rather that they cannot ensure total content security and are, in certain cases, not well-received by users.

A digital solution which could offer e-book copyright owners additional assistance in China regarding the identification and verification of copyright is the newly-introduced digital copyright identifier (DCI), offered by the Copyright Protection Center of China (the "Center"). ¹³ Having this central repository for these digital identifiers will "enable the automatic online verification of copyrights' use and the usages legality when used in concert with additional technology"¹⁴ , according by Xu Chuanxiang, technical consultant of the Center. Having such a capability in place would certainly help improve digital rights management of e-books in China, as well as improve protection of the associated copyrights.

As in the case of Apple's iTunes platform which ultimately removed its DRM¹⁵ in response to user tastes, the market ultimately drives the technologies in the digital world. The value of having an established legal framework and various technical solutions to support e-book copyright, however, cannot be underestimated and it would appear that progress is being made on both fronts in China.

This publication is for informational purposes only and it does not in any way constitute a legal opinion.

1. Doris Li (translated by Jenny Liang) China Daily, "Terminal: who will succeed on the beachhead", August 25, 2010, found at http://ipr.chinadaily.com.cn/2010-08/25/content_11718421.htm (last visited on February 12, 2011).

2. Ibid.

3. Annie Zhang, China Daily, "Shanzhai gets lost in e-book market", China Daily, August 25, 2010, found at http://ipr.chinadaily.com.cn/2010-08/25/content_11718420.htm (last visited on February 12, 2011).

4. Internet World Stats citing CNNIC, "China Internet Usage Stats and Population Report", found at http://www.internetworldstats.com/asia/cn.htm (last visited on February 12, 2011).

5. mobiThinking, "Global Mobile Stats 2011", found at http://mobithinking.com/mobile-marketing-tools/latest-mobile-stats (last visited on February 12, 2011).

6. Supra at 1

7. Kevin Nie, China Daily, "Establish the Authentication Mechanism of Digital Copyright", China Daily, August 25, 2010, found at http://ipr.chinadaily.com.cn/2010-08/25/content_11718425.htm (last visited on February 12, 2011).

8. General Administration of Press and Publication of the P.R.C., "Opinions of the General Administration of Press and Publication on Developing the E-book Industry", promulgated and effective on October 9, 2010.

9. Ibid at Art. 14.

10. Ibid.

11. Ibid at Art. 17.

12. Ibid.

13. Chen Xin, China Daily, "New System to Ensure Copyright Protection", China Daily, January 7, 2011, pg. 3.

14. Ibid.

15. Brad Stone, New York Times, "Want to copy iTunes music? Go ahead, Apples says." New York Times, January 6, 2009, found at http://www.nytimes.com/2009/01/07/technology/companies/07apple.html?_r=1 (last visited February 12, 2011).

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