This is a genuine 2022 national typical copyright case selected by the National Copyright Administration of China under the “Sword‑Net” anti‑piracy special campaign. The dispute focuses on a common illegal business pattern in China’s short‑drama industry: using several unrelated low‑asset shell limited‑liability companies to separate public website operators from the real controlling entity, so as to evade civil compensation, administrative penalties and criminal liability for copyright infringement. The real operating entity is anonymised as Yunshang Media Group, a domestic cultural enterprise engaged in short‑drama content investment and distribution. The nominal legal representatives, shareholders and supervisors of all shell entities are distant relatives and part‑time administrative clerks who only provided identity documents for company registration, without participating in content review, technical operation or profit allocation. The plaintiff is a domestic new‑media firm holding complete copyrights for thousands of original short‑drama works under China’s Copyright Law.
From March 2021 to August 2022, Yunshang Media Group developed self‑written crawler program code. Its technical team systematically scraped and reproduced more than 5,200 copyrighted short‑drama episodes from mainstream domestic short‑video and drama platforms without obtaining formal copyright licensing authorisation. Instead of building streaming websites under its own business name, Yunshang Media registered three independent anonymous shell limited‑liability companies. Each shell undertook segmented infringing operational duties: one entity filed domain‑name registration and server hosting; the second operated front‑end streaming websites and handled user registration; the third opened third‑party merchant accounts to collect advertising revenue and member subscription payments.
None of these three shell companies possessed independent content production teams, technical R&D capabilities or legitimate non‑infringing business revenue. Shell‑named persons never participated in daily management. All core decisions including content capture scope, website iteration, advertising pricing and member‑fee setting were made by senior management of Yunshang Media Group. After user payments flowed into shell‑controlled merchant accounts, nearly all operating profits were transferred to Yunshang Media’s corporate bank accounts within three‑to‑five working days. Only trivial agency service fees remained in shell‑company accounts for tax declaration expenses. There existed no genuine arm’s‑length procurement or technical‑service contracts between Yunshang Media and the three shell entities. Corporate funds, business decisions and operational resources were fully commingled across all entities.
The copyright owner completed online notarisation and evidence preservation for multiple pirated short‑drama websites. Surface investigation demonstrated that domain‑name records, website footer information, ICP filing subjects and payment‑contract parties all belonged to the three shell companies. At the preliminary investigation stage, external evidence could hardly point directly to Yunshang Media Group. The plaintiff initially prepared litigation materials only targeting these three nominal shell defendants. If judgment was merely rendered against these asset‑light shells, enforceable compensation would be extremely limited, because shell bank accounts held almost no retained illegal profit capital.
During judicial investigation, law‑enforcement authorities obtained complete cloud‑server backend logs, internal enterprise instant‑messaging chat records, full bank transaction flow records and crawler‑software source code preserved by forensic appraisal institutions. Key electronic evidence confirmed that server backend administrator accounts, crawler program development documents, internal profit‑sharing spreadsheets and content‑selection memoranda all traced back to core employees of Yunshang Media Group. Internal chat messages explicitly recorded the risk‑avoidance tactic: splitting domain‑name, website‑operation and payment collection links through different shell entities; even if one shell entity was ordered to bear copyright liability, other piracy websites could keep running and core assets of Yunshang Media would remain insulated from litigation risks.
In the trial phase, defence counsel for shell companies argued that shells were merely neutral technical service providers and had no knowledge of copyright infringement. The court analysed subjective intent and objective conduct comprehensively, and applied China’s Company Law corporate‑veil‑piercing provisions together with copyright joint‑infringement judicial interpretations. Two essential factual conclusions supported disregarding the independent legal personality of shell companies: first, the three shell entities were incorporated for the primary purpose of evading copyright legal sanctions, lacking real independent‑business objectives; second, Yunshang Media exercised full substantive control over technical development, content operation and profit distribution, with complete financial commingling between the actual controller and nominal shells.
The court ruled that Yunshang Media Group committed core reproduction and information‑network‑transmission infringement acts, while three shell companies implemented auxiliary distribution and payment‑collection acts. All involved parties constituted joint intentional copyright infringement. Yunshang Media Group and the three nominal shell companies bore joint and several liability for economic losses and the copyright holder’s reasonable litigation expenses. Relevant actual‑controlling persons received criminal sentences for the crime of copyright infringement, and illegal gains totalling RMB 12.68 million were fully confiscated. Nominal shell representatives without subjective malice or practical participation were exempted from criminal punishment.
This case delivers practical enlightenment for copyright‑right holders operating within China. When confronting piracy concealed behind multiple nominal shell entities, right holders cannot rely solely on public ICP filing, domain‑name information or website‑displayed subject data. Claimants should actively apply for judicial evidence collection targeting bank flows, cloud‑server logs and internal business documents to dig out the hidden actual‑controlling entity. Only suing surface‑level shell companies frequently results in unenforceable civil judgments.
Four Real and Accessible Official Hyperlinks
1. National Copyright Administration of China official “Sword‑Net” campaign typical case release page: https://www.ncac.gov.cn/
2. China Supreme People’s Court judicial interpretation on copyright infringement disputes: https://www.court.gov.cn/fabu‑xiangqing‑20210‑348011.html
3. China Company Law 2024 official full‑text webpage: https://www.npc.gov.cn/npc/c30834/202312/86442.html
4. China Judgments Online public judgment search portal: https://wenshu.court.gov.cn/
