In KTV copyright cases, the court used to mostly adopt the method of statutory compensation to determine the amount of damages. Is there a more accurate calculation method? The author thinks that it is an advancement in judicial technology to calculate the damages by taking the license fees as the plaintiff's actual loss instead of only applying the statutory compensation. In this article, the author refers to the "Guidance on Damages Compensation" issued by the Beijing Higher People's Court in April this year. Taking the case of China Audiovisual Copyright Collective Management Association (hereinafter referred to as Audiovisual Copyright Association) sued H Company as an example to explain in detail the practice of calculating the damage compensation as the actual loss of the license fee.

Disputes caused by MTV works

In this case, the Audiovisual Copyright Association claimed that Yingguan Company, Gunshi Company, Haidie Company, Huayi Company, and Kongque Lang Company enjoy the copyright of the works involved. The plaintiff signed the Audiovisual Copyright Authorization Contract with the above-mentioned five companies respectively, and both parties agreed that the plaintiff’s rights included negotiating with the users of audiovisual programs on the terms of using, issuing licenses and charging for fees. According to the notarization of the plaintiff, the KTV store operated by the defendant H Company played 380 MTV works with the same name as the involved MTV works, such as "The Girl Next Door" and "Irresistible". These works are identical to those in plaintiff's original CD publication in terms of pictures, lyrics, sounds, songwriters and singer. Therefore, the plaintiff requested the court to rule that the defendant should immediately delete all 380 MTV works involved in the case from the music library, and compensate the plaintiff for economic loss of RMB 190,000 and extra expenses of RMB 9,724.

The defendant argued that they had 50 private rooms but the rooms were reduced to 40 due to the poor operation in 2018. Regarding the number of private rooms, the plaintiff did not submit evidence to the contrary within the time limit set by the court. According to the published record on the plaintiff's official website, the charging standard in Shanghai from 2016 to 2018 is RMB 11 per day per terminal. The defendant had no evidence to prove that he paid the plaintiff license fees from the notarization date to the filing date of the case.

The People's Court of Shanghai Pudong New District held that all the 380 MTV works involved in the case should be identified as works created in a similar way to filming movies. Yingguan Company and the other four companies are the copyright owners of the works involved. The plaintiff, authorized by the copyright owners, has the right to manage the screening rights of the works involved and to file a lawsuit in his own name. Without permission, the defendant, for the purpose of profit, played all the 380 MTV works involved in the case to consumers through the song ordering system, thus should bear legal responsibilities such as stopping the infringement and compensating for loss in accordance with the law. The defendant should stop publicly playing all the 380 MTV works involved in the case at his business premises.

Regarding the determination of the amount of compensation, the court held that in this case, the plaintiff brought a lawsuit because the user of the work did not pay the license fee for the works. The license fee was the purpose of the plaintiff’s litigation, which can be determined as the actual loss of the right holder. The defendant should pay a reasonable license fee of at least RMB 271,000, and the amount of compensation claimed by the plaintiff has not exceeded the license fee that the defendant should pay for normal operations. Therefore, the court fully supported the amount of compensation claimed by the plaintiff. Since the plaintiff’s charging standard is based on the number of days of use and the number of terminals, the license fee included all MTV works used by the defendant during the time period involved in the case under the Audiovisual Copyright Association. If a lawsuit is brought on the grounds of permission to show other MTV works that the plaintiff has the right to manage other than the works involved in the case, the amount of compensation already obtained in the case is not entitled to repeat compensation.

H Company refused to accept the first instance decision and appealed to Shanghai Intellectual Property Court, and then withdrew the appeal. The first instance judgment has now come into effect.