This civil copyright dispute case was closed by a local intermediate people’s court in eastern China in June 2025, selected as a typical digital copyright case by local copyright bureau. The plaintiff is Star Vision Media Co., Ltd., a professional documentary production enterprise that completed the 8-episode humanistic documentary City Fragments in 2023. The company completed copyright registration of the full documentary with the China Copyright Protection Center and held exclusive information network communication rights for all online dissemination channels within mainland China. The defendant side set up a two-layer shell company structure to avoid copyright compensation liabilities. The first shell entity is Cloud Interactive Network Co., Ltd., a nominal platform operation company with zero actual employees and no independent operating income; the second entity is a personal media studio registered under a natural person’s name, which signed cooperation agreements with Cloud Interactive to operate short video accounts on mainstream video platforms.
The core infringement conduct took place between March 2024 and January 2025. The studio, under the direction of Cloud Interactive’s actual controller, split the complete documentary City Fragments into more than 120 short edited clips ranging from 3 to 8 minutes each. These edited clips were uploaded to 11 verified short video accounts operated by the studio, with commercial advertising links embedded at the beginning and end of each video to obtain platform advertising sharing revenue.
Cloud Interactive Network Co., Ltd. submitted a defense argument claiming it only provided technical server storage services and did not participate in content editing, uploading or profit distribution. The company argued that all video publishing behaviors were independently decided by the personal studio, and the shell company should not bear joint copyright infringement compensation liability. The court conducted a comprehensive review of bank transfer records, internal WeChat chat logs, and cooperation contracts submitted by the plaintiff’s notarized evidence. Multiple critical factual points were confirmed: First, all advertising revenue generated by the short video accounts was uniformly transferred to the corporate bank account of Cloud Interactive, and the studio only received a fixed monthly labor fee with no share of advertising profits. Second, all video editing scripts, clip segmentation standards, and account operation schedules were formulated by the actual controller of Cloud Interactive and sent to studio staff via internal communication tools. Third, Cloud Interactive fully covered all platform certification fees, server rental costs and account maintenance expenses for the 11 short video accounts.Based on the above evidence, the court ruled that Cloud Interactive was the actual controller and primary beneficiary of the entire infringement project, and its setting up of a nominal zero-employee shell company to separate legal liabilities constituted an intentional evasion of civil tort compensation obligations. The two entities shall bear joint and several liability for all copyright infringement damages.
The defendant argued that the short clips only extracted fragmentary content of the original documentary, added original commentary text and personalized editing logic, and belonged to transformative fair use under China’s Copyright Law Article 24. The court applied the four-factor fair use judgment standard and made a negative ruling:
1. Purpose of use: The defendant’s editing and uploading behavior was entirely for commercial profit through platform advertising, with no non-profit educational, news reporting or academic research purposes.
2. Nature of the original work: City Fragments is a fully original documentary with complete independent creation, high artistic and commercial value, and is not public domain factual material.
3. Proportion of extracted content: The total duration of all edited short clips covered more than 78% of the full original documentary’s core plot and narrative content; continuous browsing of the defendant’s short videos allowed the public to fully grasp the complete story logic and core creative expression of the original documentary.
4. Market impact: The mass free dissemination of edited clips directly replaced the plaintiff’s official paid streaming channels on video platforms, resulting in a sharp decline in the plaintiff’s authorized streaming income and serious damage to the commercial market value of the documentary work.
The court finally held that the defendant’s editing and dissemination behavior did not meet any conditions of statutory fair use and constituted complete infringement of the plaintiff’s exclusive information network communication rights.
Combined with the scale of infringement, the defendant’s subjective malicious intent of setting up shell companies to evade liability, the duration of continuous infringement, and the plaintiff’s reasonable rights protection expenses including notarization fees, attorney fees and copyright identification fees, the court issued the following formal judgment:
1. Cloud Interactive Network Co., Ltd. and the personal media studio shall immediately cease all infringement acts, permanently delete all 120+ infringing short video clips stored on servers and all video platform accounts within 7 working days after the judgment takes effect.
2. The two defendants shall jointly and severally compensate Star Vision Media Co., Ltd. for economic losses of RMB 480,000 and reasonable rights protection expenses of RMB 62,000, with a total compensation amount of RMB 542,000.
3. The court made a clear judicial statement in the judgment document: Enterprises shall not establish empty shell companies without actual business operations to split legal subjects and avoid civil compensation liabilities for intellectual property infringement. Courts will fully review capital flow, actual control relations and profit distribution evidence to identify the actual infringer and order joint and several liability for all related shell entities.
1. National Copyright Administration of China Official Typical Copyright Cases Library: https://www.ncac.gov.cn/xxfb/ztzl/2024bqxcz/index.shtml
2. China Court Network Digital Copyright Civil Judgment Document Inquiry System: https://www.chinacourt.org/cpws/
3. China Copyright Protection Center Copyright Registration Official Guidelines: https://www.ccopyright.com.cn/service/register.html
4. Supreme People’s Court Judicial Interpretation on Trial of Information Network Communication Right Infringement Disputes: http://gongbao.court.gov.cn/Details/14914e9f3a8fdc5398c1f25e0d58fc.html
