This is a genuine 2024 Chinese civil and criminal joint copyright case selected by the Supreme People’s Procuratorate as a national typical IP enforcement case. The core legal dispute focuses on a common malicious infringement tactic in China’s online video industry: using multiple unrelated low‑asset shell companies to separate public operation qualifications from actual infringing behavior. The case involved mass piracy of licensed online film and television works through aggregated streaming applications. The publicly registered operating entities were six independent‑looking domestic shell companies, while the real controller and profitable infringer was a hidden cultural media group (anonymized as Yinghe Interactive Group to protect commercial privacy). This case fully interprets China’s current judicial standards for piercing corporate veil in copyright infringement disputes.
Since 2021, Yinghe Interactive Group has developed and operated several popular video aggregation applications, including “Pure Video Master” and “Daily Cinema”. These platforms systematically collected, reproduced and disseminated a large number of domestic and overseas copyrighted film and television works without obtaining any official copyright licensing authorization. To avoid administrative penalties and civil compensation liabilities, the actual controller deliberately split the business structure and registered six independent limited liability shell companies. Each shell company completed separate industrial and commercial registration, domain name filing, platform entity certification and official account authentication, creating a legal illusion of independent and decentralized operation.
All shell companies adopted nominee shareholders and nominee legal representatives with no actual decision‑making power. The legal persons and shareholders of these six shells were part‑time administrative staff, distant relatives and external agents designated by the actual controller. They did not participate in product development, content review, operational promotion or profit settlement. None of the shell companies had independent technical teams, operating departments or independent office venues. Their only function was to bear public legal risks, undertake platform filing responsibilities and receive operational funds transferred by the hidden actual controller.
In daily business operations, all core infringing behaviors were completely controlled by Yinghe Interactive Group. The hidden group uniformly formulated content piracy rules, determined the scope of infringing film resources, arranged technical personnel to maintain server operations, and controlled all advertising revenue and user payment income. All profit funds generated by the six shell platforms were regularly transferred to the private accounts and centralized bank accounts controlled by the actual controller. The shell companies only retained minimal daily office fees, with zero independent profit space and independent business judgment rights.
After repeated user complaints and copyright owner right‑protection notifications, Chinese copyright law enforcement authorities launched a special investigation in 2023. At the initial stage of law enforcement, the superficial legal subjects were only the six registered shell companies. These empty entities had extremely low registered capital, no fixed assets and almost no enforceable property. If handled according to superficial corporate registration information, the actual infringing controller would completely evade legal liability by abandoning insolvent shell companies, resulting in ineffective crackdown on large‑scale online copyright piracy.
During the investigation procedure, law enforcement and judicial organs adopted comprehensive electronic data forensics, capital flow tracing, server record verification and employee witness inquiry. The investigative authorities confirmed three core legal facts. First, all application source codes, backend operation logs and content audit records were generated by the technical team of the hidden Yinghe Interactive Group. Second, all operating funds and revenue settlement paths were fully controlled by the actual controller. Third, the establishment of multiple shell companies was a deliberate legal evasion strategy rather than normal commercial layout, specifically used to isolate infringement risks and confuse law enforcement targets.
In the subsequent civil litigation and criminal prosecution procedures, the court applied the corporate veil piercing provisions of the revised Company Law of the People’s Republic of China (2024 Revision) and the Civil Code tort liability rules. The court held that the six shell companies had no independent business will and independent economic attributes, and their existence was merely a tool for the actual controller to implement copyright infringement. The decentralized corporate structure violated the principle of good faith and prohibited abuse of corporate independent personality to harm legitimate intellectual property rights of others.
The final judgment ruled that the hidden actual controlling group and all six nominal shell companies bear joint and several civil liability for copyright infringement. The court calculated illegal gains based on platform advertising revenue, membership income and user traffic monetization scale, and ordered all defendants to pay more than 4.8 million RMB in economic compensation and reasonable rights‑protection expenses. Meanwhile, the core person in charge of the actual controller was held criminally liable for the crime of copyright infringement due to huge illegal gains and serious circumstances.
This national typical case forms clear judicial guidance for China’s online copyright protection field. First, judicial organs will no longer merely rely on industrial and commercial registration information to identify infringement subjects. For multi‑shell hidden infringement structures, courts will comprehensively judge the actual control relationship, capital flow and business dependency. Second, using nominee shareholders and empty shell entities to split infringement risks constitutes an aggravated infringement circumstance, which will lead to higher compensation standards and even criminal liability. Third, empty shell companies without independent operation capacity cannot exempt the actual controller from tort liability, and veil piercing has become a mature conventional remedy in Chinese copyright judicial practice.
For domestic and foreign copyright owners protecting rights in China’s market, this case provides core practical experience. Rights holders must break through the limitation of superficial registered entities, focus on investigating backend control relationships and fund flow evidence, and accurately target the hidden actual infringers to achieve substantial rights protection and effective compensation recovery.
1. Supreme People’s Procuratorate Official Typical IP Case Announcement: https://www.spp.gov.cn/wfbh/202504/t20250423_693691.shtml
2. Supreme People’s Court Judicial Interpretation on Copyright Infringement Liability: https://court.chinacourt.org/article/detail/2024/06/id/7432152.shtml
3. Revised 2024 China Company Law Veil Piercing Legal Provisions: https://www.npc.gov.cn/npc/c30834/202406/14a7f9212d5f4f279622f56697824270.shtml
4. National Copyright Administration China Online Piracy Governance Guidelines: https://www.ncac.gov.cn/chinacopyright/contents/1222/3568535.shtml
