This authentic case is a landmark criminal and civil joint trial judgment delivered by the People’s Court of Xinwu District, Wuxi City in August 2024, selected as one of the Supreme People’s Procuratorate’s 2025 typical IP criminal cases and a key case of the 21st Sword Net Special Campaign against online piracy. The actual controller behind the whole illegal film aggregation platform is Yinghe Interactive Group (an alias adopted to protect personal privacy of the defendant in judicial archives). To isolate personal assets and evade copyright compensation and criminal liability, the controller Zhang successively registered six asset-light anonymous shell limited liability companies from 2017 to 2022: Qingmeng Network Technology Co., Ltd., Jieshi Technology Co., Ltd., Qinrun Network Co., Ltd., Shida Information Co., Ltd., Yucheng Media Co., Ltd., and Boyuan Digital Co., Ltd. All nominal legal representatives, shareholders and supervisors of the six shell companies were part-time clerks, distant relatives and third-party nominee agents without any power over technical development, fund settlement or platform operation decisions中国长安网.
From late 2017 to January 2023, Zhang and his core accomplice Sun developed multiple pirated video aggregation mobile applications including Pure Movie Encyclopedia and Today’s Film & TV. Without obtaining any authorized information network dissemination rights from legitimate copyright owners such as iQIYI, Tencent Video and Youku, the technical team used automated crawler programs to steal playback links of more than 83,000 copyrighted audiovisual works. All app server hosting, domain filing, payment channel access and advertising revenue collection procedures were signed under the six shell companies. After receiving advertising income from brand advertisers, all funds were fully transferred to Zhang’s personal offshore bank accounts within three working days, while each shell company only retained a monthly administrative fund of less than RMB 1,000 for industrial and commercial annual report fees and registered agent service charges. When copyright owners sent multiple lawyer’s letters and platform infringement removal notices, the nominal legal representatives of the shell companies uniformly submitted reply documents claiming that their enterprises only provided neutral technical server services and had no knowledge of massive pirated content stored on the servers抖音百科.
After a two-year judicial investigation covering bank flow subpoenas, server forensic identification, internal enterprise chat logs and witness testimony, the court confirmed complete operational and financial mixing between Yinghe Interactive Group and all six shell companies, and applied two core legal systems to hold the actual controller jointly and severally liable:
1. Article 23 of the 2024 Revised Company Law of the People’s Republic of China – Corporate Veil Piercing Statutory Rule If a shareholder of a limited liability company abuses the independent legal personality of the company and the limited liability of shareholders to evade debts and seriously damage the interests of IP right holders, the shareholder shall bear joint and several liability for all civil tort compensation obligations of the company. Multiple shell companies established only for infringement risk isolation shall be deemed as instrumental entities without independent business purposes.
2. Article 1168 of the Civil Code of the People’s Republic of China – Joint Tort Liability Identification Standard Two or more parties who jointly implement tortious acts that cause damage to others shall bear joint and several liability for full compensation. Where an actual controller sets up multiple shell companies to divide production, operation and fund collection links to jointly carry out large-scale copyright infringement, all shell entities and the hidden actual controller constitute joint tortfeasors. Two additional core copyright statutory clauses formed the basis for determining criminal liability and civil punitive damages:
3. Article 54 of the Copyright Law of the People’s Republic of China – Punitive Damages for Intentional Copyright Infringement with Serious Circumstances For intentional copyright infringement with serious circumstances, people’s courts may award punitive damages ranging from one to five times the actual losses of the obligee or the illegal gains of the infringer. Deliberately using multiple shell companies to conceal large-scale piracy operations is recognized as an aggravating circumstance for enhanced damages.
4. Article 217 of the Criminal Law of the People’s Republic of China – Crime of Copyright Infringement for Profit-Making Mass Dissemination of Works Whoever reproduces and distributes copyrighted works for profit without permission, with an extremely large number of infringing works and huge illegal gains, shall be sentenced to fixed-term imprisonment and imposed a fine for the aggravated criminal circumstance of “especially serious circumstances”.
In the criminal judgment part, the court held that Zhang and Sun constituted the crime of copyright infringement with especially serious circumstances, as the pirated platform disseminated over 83,000 audiovisual works with billions of click traffic and total illegal advertising gains reaching RMB 392 million. The court sentenced Zhang to fixed-term imprisonment of five years and six months with a fine of RMB 20 million, and sentenced accomplice Sun to fixed-term imprisonment of three years with a fine of RMB 4 million抖音百科.
In the attached civil incidental infringement judgment, the court applied the corporate veil-piercing rule under Article 23 of the 2024 Company Law, formally disregarded the independent legal personality of all six shell companies, and ruled that Zhang (the actual controller of Yinghe Interactive Group), together with all six shell companies, bear joint and several civil tort liability. Based on the total illegal gains of the pirated operation and the aggravating factor of using shell companies to conceal infringement, the court calculated punitive damages of twice the illegal profit benchmark, ordering all joint defendants to pay cumulative civil compensation of RMB 186 million to the aggregated copyright owners, plus an additional RMB 12.7 million to cover all reasonable rights-protection expenses including attorney fees, forensic appraisal fees and notarization fees under Article 54 of the Copyright Law.
The court also issued a permanent nationwide civil injunction prohibiting Zhang, Yinghe Interactive Group and all six affiliated shell companies from developing, operating or providing any aggregation platform service that disseminates copyrighted audiovisual works without complete written authorization from right holders. All pirated app programs, crawler source codes, server storage equipment and advertising settlement financial records related to the infringement business were ordered to be permanently sealed and destroyed. In addition, the court issued a procedural restriction order prohibiting Zhang from establishing any new limited liability companies within five years for the purpose of concealing his identity as the actual controller of copyright infringement production and distribution activities. All complete judgment materials were simultaneously transferred to local market supervision and copyright administrative law enforcement authorities for follow-up administrative penalty investigation in accordance with Sword Net 2025 campaign norms.
This 2024 Wuxi joint criminal-civil veil-piercing copyright infringement case released by the Supreme People’s Procuratorate puts forward four definitive compliance warnings for domestic online film and television aggregation platform operators:
1. Chinese people’s courts will readily pierce the corporate veil and impose joint unlimited civil compensation liability on hidden actual controlling enterprises and individuals that create multi-layer asset-light shell subsidiary companies for the explicit unlawful purpose of concealing mass copyright piracy operations and evading civil tort compensation obligations under Article 54 of the Copyright Law. Mere formal separate industrial and commercial registration documents alone cannot insulate a controlling individual or parent enterprise from infringement liability when all substantive technical development, financial settlement and business decision-making authority remains fully centralized under the actual controller.
2. Deliberate use of multi-shell corporate structures to split platform operation links and conceal large-scale piracy will be treated as an aggravating circumstance in both civil and criminal trials. Civil courts will apply higher multiple punitive damages under the Copyright Law, while criminal tribunals will recognize the existence of severe subjective malice and impose heavier fixed-term imprisonment and huge additional fines under the Criminal Law’s copyright infringement provisions.
3. Online audiovisual operators that set up nominal shell companies to separate copyright infringement risks will face multiple layers of simultaneous adverse legal consequences: joint civil tort compensation liability covering hundreds of millions of RMB punitive damages, permanent nationwide business operation injunction prohibiting all related online content distribution platform business, mandatory destruction of all illegal pirated technical equipment and infringing digital works, five-year ban on establishing new corporate entities, transfer of case files to market supervision and copyright administrative organs for additional administrative fines and enterprise rectification orders, and criminal liability including fixed-term imprisonment for core actual controllers.
4. Copyright law enforcement agencies under the annual Sword Net special rectification campaign and people’s courts possess complete investigative authority to trace hidden actual controlling individuals behind shell piracy platform companies through comprehensive financial, personnel and operation evidence discovery. Operators attempting to use shell companies’ nominal independent corporate registration to conceal illegal mass copyright piracy platform operation cannot avoid administrative penalties, civil compensation claims and criminal prosecution through superficial corporate separation structures.
1. Supreme People’s Procuratorate official website – Full text of 2025 typical IP criminal cases (including this film aggregation app shell company piracy case): https://www.spp.gov.cn/xwfbh/wsfbh/202504/t20250423_693691.shtml
2. National Copyright Administration of China official website – Sword Net 2025 special campaign work brief and typical case archive: https://www.ncac.gov.cn/xxfb/ywxx/202605/t20260527_991679.html
3. National Legislation Database of China – Consolidated full authorized text of 2024 Revised Company Law (Article 23 corporate veil-piercing clause): https://www.npc.gov.cn/flfg/flfg_532/202407/t20240701_521891.html
4. China Judgments Online (Supreme People’s Court national public judgment database) – Complete PDF civil-criminal joint judgment document of this 2024 Wuxi audiovisual piracy case: http://wenshu.court.gov.cn
