Software is one of the most valuable assets a foreign company brings to China, and one of the most vulnerable. Chinese copyright law protects software as a literary work, and the protection arises automatically when the software is created — no registration is required for the copyright to exist. But enforcing a software copyright in China without registration is difficult, and the practical measures that protect software in Western markets may not work in China without adaptation.
Here’s what a foreign software company needs to know about protecting its software in China, from registration to enforcement.
Copyright Protection Under Chinese Law
The Chinese Copyright Law protects computer software as a category of work. The software code — source code and object code — is protected as a literary work. The user interface — the screens, the menus, the icons, the layout — may be protected as an artistic work if it’s sufficiently original. The software documentation — the user manual, the technical documentation — is protected as a written work.
The copyright protects the expression of the software — the code that was written — not the idea, the algorithm, or the function that the software performs. A competitor who writes a different program that performs the same function as the copyright-protected software doesn’t infringe the copyright — the function is an idea, not expression. A competitor who copies the code, or who writes a program that’s substantially similar to the copyright-protected program, infringes the copyright.
The term of protection is 50 years from the date of first publication, or 50 years from the date of creation if the software is not published. The term is standard for software copyright internationally and is consistent with the term in most developed countries.
The copyright owner is the person or entity that created the software, or the employer if the software was created by an employee in the course of employment. A commissioning agreement — a software development agreement where the commissioner pays for the development — should specify that the copyright belongs to the commissioner, not the developer. Under Chinese law, the copyright in commissioned software belongs to the commissioning party if the contract so provides, and to the developer if the contract is silent on copyright ownership.
Copyright Registration
Copyright registration is not required for the copyright to exist — the copyright exists from the moment the software is created — but registration is practically essential for enforcement in China. The copyright registration certificate is the primary evidence of copyright ownership in a Chinese court or an administrative enforcement proceeding. A foreign company that sues for software copyright infringement without a Chinese copyright registration certificate faces an evidentiary burden that’s significantly heavier than a company that has the certificate.
The registration is made with the Copyright Protection Center of China — the CPCC — which is the agency designated by the Chinese government to register software copyrights. The applicant submits the source code — the first 30 pages and the last 30 pages of the source code, with confidential portions redacted — the user documentation or the design documentation, and the registration application form.
The CPCC reviews the application for completeness and for consistency — the code should match the description of the software in the application form — and issues the registration certificate. The review is formal, not substantive — the CPCC doesn’t evaluate the originality of the software or compare it against existing software. The registration process takes 30 to 60 working days.
The registration should be made as early as possible — ideally before the software is distributed in China. A registration that’s made after an infringement has been discovered is evidence of ownership from the registration date forward, but it doesn’t prove ownership at the time of the infringement — the infringer can argue that the software was not registered at the time of the infringement and that the plaintiff can’t prove it owned the copyright at that time.
The Source Code Deposit
The registration requires a deposit of the source code — a paper copy or an electronic copy of the first 30 pages and the last 30 pages of the source code. A software program that has fewer than 60 pages of source code deposits all of the code. A program that has more than 60 pages deposists the first 30 and the last 30.
The deposit is confidential — the CPCC doesn’t publish the source code or make it available to the public. The deposit is the evidence of what the software is, and it’s a reference that the court or the enforcement authority can use to compare the registered software with the allegedly infringing software. A company that’s concerned about disclosing trade secrets through the deposit can redact portions of the code that are not necessary for identification — the algorithm, the business logic — while retaining enough code to identify the software.
The deposit is made once at the time of registration. A software update that significantly changes the code should be registered as a separate work — a new version — with a new deposit. A minor update that doesn’t change the identity of the software doesn’t require a new registration.
The Practical Protection Measures
Copyright registration is the legal foundation, but it’s not the protection. The protection is a combination of legal rights and practical measures that make infringement harder and detection easier.
The first practical measure is the end-user license agreement — the EULA — which is the contract between the software company and the user. The EULA should prohibit the user from copying the software beyond the licensed number of copies, from reverse engineering the software, from modifying the software, and from transferring the software to a third party. The EULA should state that the copyright in the software belongs to the licensor and that the license is a right to use, not a transfer of ownership.
The EULA in China should be in Chinese. An English-language EULA that the user hasn’t read and can’t understand has limited evidentiary value in a Chinese enforcement proceeding. The Chinese EULA should be presented to the user before the software is installed — a click-wrap agreement that the user must accept before proceeding with the installation — and the acceptance should be recorded.
The second practical measure is technical protection — the technological measures that prevent unauthorized use. Activation keys that are tied to a specific machine, online activation that verifies the license against a server, and periodic online verification that checks that the license is still valid reduce the opportunity for unauthorized use. The technical protection measures are not impenetrable — determined infringers can defeat them — but they raise the cost of infringement and increase the likelihood that the infringement will be detected.
The third practical measure is market monitoring — actively searching for unauthorized copies of the software in the Chinese market. The monitoring can be conducted by the company’s Chinese staff, by a local agent, or by a professional market monitoring service. A company that discovers an unauthorized copy on a Chinese e-commerce platform can file a takedown notice with the platform, and the platform is required to remove the infringing listing. A company that discovers an unauthorized copy being used by a Chinese business can send a cease-and-desist letter and, if the infringement continues, pursue administrative enforcement or litigation.
Administrative Enforcement
China has an administrative enforcement system for copyright infringement that’s separate from the court system. The copyright administrative authorities — the National Copyright Administration and its local bureaus — have the authority to investigate copyright infringement, to order the infringer to stop the infringement, to confiscate the infringing copies and the equipment used to make them, and to impose fines.
The administrative enforcement is faster and less expensive than litigation. A complaint filed with the local copyright bureau can result in a raid on the infringer’s premises within days — the copyright bureau has the authority to enter the premises, to search for and seize infringing copies, and to detain the infringer for questioning. The speed and the cost-effectiveness of administrative enforcement make it the preferred remedy for straightforward software copyright infringement cases.
Administrative enforcement is most effective when the infringement is clear — the software is an exact copy, the infringer is a known entity at a known address, the proof of the copying is unarguable. For cases where the infringement is less clear — the allegedly infringing software is similar but not identical, the infringer claims independent development — litigation may be necessary to establish the infringement and to obtain damages.
Litigation
Software copyright litigation in a Chinese court follows the same general rules as other civil litigation in China — the plaintiff files a complaint, the defendant files a defense, the court conducts a trial, and the court issues a judgment. The plaintiff bears the burden of proving that it owns the copyright and that the defendant infringed it.
The copyright registration certificate is the primary evidence of ownership. The plaintiff also proves infringement by showing that the defendant’s software is substantially similar to the plaintiff’s software — code comparison, expert witness testimony, forensic analysis — and that the defendant had access to the plaintiff’s software. The access requirement means that the plaintiff must show how the defendant could have obtained the software to copy it.
The damages for software copyright infringement are the plaintiff’s actual losses, the defendant’s illegal gains, or statutory damages if the actual losses and the illegal gains are difficult to prove. The statutory damages are up to 500,000 RMB — approximately 75,000 USD — per work infringed. The statutory damages cap is significantly lower than the damages that are available in a US or European copyright case, and the low cap is a limitation on the deterrent effect of Chinese software copyright litigation.
The cost of litigation — the attorney fees, the expert witness fees, the translation costs, the court costs — can be recovered from the losing party if the court orders it. The court has the discretion to award costs, and the award is typically a fraction of the actual costs incurred.
