Arbitration, A New Approach for Film & TV Dispute Resolution
SHI Zhenjie ^*

        As a high-quality industry with low input but high yield, low carbon consumption and environmental friendliness and good driving effect on upstream and downstream industries, the culture industry is winning more and more attention of the State, which is reflected in all aspects including policy support and fund support, such as the promulgation of the Several Opinions on Improving the Reform of the Cultural System, the Program Planning for Cultural Development during the Eleventh Five-year Plan Period, the Planning on Revitalization of Culture Industry, and the Guiding Opinions on Financial Support to the Revitalization, Development and Prosperity of Culture Industry. As an important part of the culture industry, the film & TV sector has realized rapid growth and maintained the trend of booming development in the favorable policy environment. At present, China has become a big film & TV producer in the world. In 2012, its yield of TV plays was 17,000 episodes, ranking No. 1 in the world; its film yield was 600, ranking No. 3 in the world with a box office of RMB 17 billion.

        However, relevant disputes are also increasing with the booming development of the film & TV sector. The film & TV sector has the most legal disputes in all sectors of the culture industry due to the following reasons: the objects of film & TV transactions include copyright and relevant rights, which have complex natures and diversified forms; the film & TV sector has rich investment channels and involves many investors and producers, leading to a broad scope of rights and complicated right ownerships. Based on the long-term experience of the author in the protection of legal rights related to films and TV plays, the characteristics and difficult points of legal disputes in the film & TV sector as well as the comparison between litigation and arbitration are concluded as follows:

        Firstly, the problem of circular infringement of right is hard to be solved. In the current China where the Internet is so universal , almost every film or TV play will become the victim of piracy once it is publicly shown or broadcast. Even if the pirated copies are deleted on notification or by judgments, it is hard to prevent the appearance of new pirated copies soon afterwards. Let’s take a rights protection case concerning the piracy of a TV play handled by the author in 2012 as the example. A popular TV play was pirated by a video website A, and the producer won the lawsuit after hearings lasting for nearly a year (the twists and turns in the litigation are not detailed here). However, only 3 days after the judgment became effective, the author unintentionally visited the video website and surprisingly discovered that it was broadcasting the pirated TV play again, the only difference is that the video is linked to another video website B. The author has experienced such incidents for many times. In such cases, the copyright owners are often incapable to go through another lawsuit after protecting their rights through litigation, and the right-infringing websites seem to have grasped the mentality of the copyright owners and are often successful in repeated piracy. With the further diversified development of new media carriers, the shock to the copyright in the film & TV sector will be surely huger and huger. Due to its inherent hysteretic nature, the judicial system is often unable to make looking-forward stipulations or agreement on relevant behaviors and consequences; therefore, the problem of circular infringement of right in the film & TV sector is hard to be fundamentally solved in a short time.

        Due to the flexibility of arbitration, both parties may reach agreement on the behaviors for the present or for any period in the future and restrain the occurrence of such behaviors. Once they reach a consensus and sign a written agreement or an award is made, the arbitration’s validity is then formed and enjoys judicial protection. The arbitration’s flexibility is also manifested in its dispute resolution manners. As litigation pursues procedural justice, it is too rigid and not flexible enough as a dispute resolution approach. The film & TV sector is full of flexibility, and the strongly flexible arbitration is a just match for it. From the commencement of the arbitration to each step of its process till the formation of the final legal instrument, the relevant parties are permitted to adjust the arbitration proceedings under the principle of free will. Besides, the mediation of the dispute goes all through the arbitration proceedings. The mediation process has no fixed rules and can be adjusted according to the circumstances of each case as well as the demands of the relevant parties. The mediation gives priority to humanized factors, pays more respect to the relevant parties’ habits, morals and industrial standards, and resolves a dispute by applying the business customs in copyright trading. Therefore, in the film & TV dispute resolution, the mediation can satisfy the reliance of the relevant parties on industrial practice and set the relevant parties in an environment familiar to them, creating more flexibility for the mediation in combination with arbitration.

        Second, in the litigation, the understanding of the agreement between the relevant parties to a contract is rather inflexible and no comprehensive consideration is given to industrial practice. According to the author’s experience in the litigation of film & TV disputes, some cases have to overcome indescribable hardships; some other cases are not even accepted by the people’s court, making it impossible to safeguard the legal rights and interests. As the ownerships in film & TV right infringement cases are rather complicated, and there are nonstandard agreements as to such ownerships in relevant contracts or authorizations, the cases are often rejected by the people’s court once there are disputes on such ownerships due to insufficient entitlement documents. Let’s take a TV play piracy case handled by the author as an example: the TV play was produced by 2005 and Company A owns the right to distribute it and safeguard its legal rights and interests. As the distribution through new media was not a mainstream channel in China in 2005, the right of communication through information network was not specified in the distribution authorization. Company A brought a lawsuit in 2013 when the TV play was pirated by a video website, the case was not accepted by the people’s court due to the lack of specifications on the right of communication through information network in the distribution authorization. Besides, the people’s courts generally recognize the use of “distribution right”, a term with no strict legal meanings, before 2012; nowadays the people’s courts require a clear distinction between the right to broadcast radio & TV programs and the right of communication through information network stipulated in the Copyright Law, and clear evidences on the right to protect a certain right. The author hereby reminds relevant entities involved in film & TV copyright trading to clarify the scope of their rights when signing contracts and obtaining authorizations, so as to avoid legal risks.

        In the circumstance that a case is not accepted by the people’s court, the arbitration in accordance with the arbitration agreement both reached by parties may be regarded as one of the best options. Due to its features of openness and resource sharing, the film & TV sector offers greater probability for cooperation; while the adoption of compulsory judicial proceedings is easy to cause the intensification of contradictions and is to the disadvantage of the sector’s sustainable development. In contrast, the mediation and arbitration based on free will is good for alleviating contradictions and for maintaining the transaction order in the film & TV sector. The principle of free will gives full play to the relevant parties’ autonomy of will. The relevant parties may decide by themselves whether to accept the mediation or reach an arbitration agreement; during the mediation process, they may decide the time needed by mediation by themselves, choose mediation rules voluntarily, select mediators independently, and decide whether to reach a settlement agreement at their own will; in the arbitration process, they may select arbitrators independently, and decide whether to reach a settlement agreement at their own will.

        Third, disproportion between the litigation cost and the compensation. The litigation cost includes time cost, material cost and human cost. In the current situation of China with imperfect judicial system for intellectual property right, there is often a disproportion between the cost of right protection through litigation and the benefits. The intellectual property right is insufficiently protected by China’s judicial system. In one of the right protection case handled by the author concerning a popular TV play which has won the Magnolia Award of the Shanghai International TV Festival, the defendant’s right infringement intention was obvious and the people’s court affirmed that the right infringement behaviors were serious, but the plaintiff was awarded an compensation of only dozens of thousands yuan by the judgment, and the compensation amount nearly became an industrial benchmark. The case highlights the predicament in the protection of intellectual property right for the time being. According to the copyright owner of the TV play, the production cost and distribution cost total at RMB 1 million an episode, and the damage of the piracy cause the company millions of RMB, thus the compensation amount is just like a drop in the bucket. Besides, the litigation process was rather complicated, and it took nearly a year from the case acceptance to the enforcement of judgment. Though the relationship of rights and obligations is very clear in the case and the copyright ownership is undoubted, the copyright owner Struggling to win a favorable judgment after the first and second instances of jurisdiction objection and four hearings; and the enforcement of the case likewise went through twists and turns. Therefore, it can be seen that the benefits brought by the litigation progress are uneconomical.

        As the judges usually have no working experience in the film & TV sector, it is hard for them to make judgment when exercising the right of discretion, which caused that the compensation amounts in the judgments on film & TV disputes are generally low. As the film & TV sector is highly professional and is greatly influenced by senior and authoritative experts in the sector, these experts can easily win the trust of both parties in dispute resolution. The arbitration institutions may employ industrial experts as arbitrators, transform rigid judicial decisions into the mediation by professionals, and change the relevant parties from enemies to friends and partners. Therefore, experts may play a prominent role in the arbitration process. With their business expertise, wisdom, experience, skills and influence and through human-oriented encouragement and guidance, the experts may persuade the relevant parties to reach settlement through negotiation & dialogue and resolve disputes in a reasonable manner.

        Finally, the requirement of the film & TV sector for confidentiality can hardly be satisfied in the litigation. As the film & TV sector has a broad audience and enjoys high social attention, reputation is very important in the sector, and most practitioners attach great importance to the protection of business secrets and individual privacy; such a requirement can hardly be satisfied in the litigation. On the one hand, the hearings must be open unless in statutory circumstances; on the other hand, the judgments are also legal instruments that are open for inquiry. The confidentiality of arbitration is manifested not only in the fact that the mediation or arbitration proceedings are not open but also in many details. For example, the relevant parties may declare that the documents and evidence materials submitted by them can only be accessed by the mediators; one party may also specially require the mediators or arbitrators to keep confidential its statement made without the presence of the other party. These advantages of arbitration can fully satisfy the demand of the film & TV sector for confidentiality.

        As an approach different to the traditional right protection mode of resolving legal disputes with litigation, the arbitration makes up the defects in the litigation of film & TV disputes. In fact, the application of arbitration for dispute resolution in the film & TV sector is quite normal in the US. As early as 1938 in the litigation between 5 largest film distribution companies in the US and the US Department of Justice, both sides reached a settlement agreement, requiring the film industry to establish an arbitration system managed by a neutral third party to resolve the corresponding disputes; and American Arbitration Association was designated by the court to provide the arbitration services as a neutral third party. After that, American Arbitration Association has resolved a large amount of disputes in the film industry with its professional and highly efficient arbitration services, and has made indispensable contributions to the soaring development of the US film industry.

        As an untraditional industry with its unique features, the film & TV sector should not cling to outdated customs and take the litigation in judicial organs as the only approach for dispute resolution. As a traditional approach for dispute resolution, the litigation has its advantages as strict procedures, high authority and great deterrent force, but it also has disadvantages inadaptable to the rules and business practice of the film & TV sector. To resolve the disputes in the film & TV sector through highly confidential, autonomous, efficient and flexible dispute resolution institutions should and will inevitably become an inexorable trend, which is good for the sustainable development of the cultural creative industry including the film & TV sector.

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