This real mixed civil‑criminal copyright case derives from national typical IP case released by Supreme People’s Procuratorate of China, focusing on a prevalent illegal business model within the domestic short‑drama and online video industry The infringer deliberately set up multiple independent shell companies as nominal platform operators, while concealing the actual controlling entity completely from public industrial‑commercial filings, website ICP registration, platform backend and public contact information. Nominal legal representatives and shareholders were nominees using relatives’ and employees’ identity documents, without any real decision‑making power over content uploading, server deployment, advertising revenue settlement or technical iteration. Such concealment tactics aim to isolate liability, disperse legal risks and avoid compensation after receiving copyright complaints or lawsuits. This case demonstrates how Chinese judicial organs collect cross‑verified electronic evidence, apply personality‑confusion standards and identify joint liability of hidden actual controllers in copyright infringement disputes.
The plaintiff, a domestic cultural and media enterprise, holds the complete information‑network‑transmission copyright for more than one hundred self‑produced original short drama works. These paid short dramas obtained copyright registration certificates from the China Copyright Protection Center and were officially released on mainstream domestic video platforms. The hidden actual controller entity (anonymised as Horizon Media Tech) planned and invested in an illegal short‑drama aggregation platform. Instead of filing domain‑name and ICP records under its own business name, the controller registered three independent limited‑liability shell companies using nominee identities. All platform‑related public information, website filing ，merchant settlement accounts and App market submission qualifications belonged to these three shell entities. Horizon Media Tech kept its own corporate name entirely out of public documents.
The shell companies only provided nominal qualification shells. Server rental, back‑end code development, pirated‑content crawling, user payment channel docking, advertising business negotiation and daily operation management were all directly implemented by employees dispatched from Horizon Media Tech. Nominal shareholders and legal representatives only lent identity materials for company registration, received fixed monthly agency fees, and never participated in platform operation, revenue distribution or business decision‑making. Massive authorised short‑drama resources owned by the plaintiff were crawled, copied and published on this aggregation platform without obtaining any written copyright licensing authorisation. The platform adopted a paid‑recharge viewing model, obtaining substantial illegal profits from user membership fees and pop‑up advertising income.
After discovering large‑scale piracy, the copyright holder issued multiple DMCA‑style takedown notices to the three publicly‑listed shell companies. The shell entities performed partial content deletion, yet new pirated short‑drama resources kept being continuously uploaded. The plaintiff filed a civil copyright‑infringement lawsuit only against the three nominal shell companies at the local intellectual‑property court. During the initial civil litigation stage, defence lawyers for shell companies submitted identical arguments: each shell company operated independently; they merely rented out corporate qualifications for filing purposes; they possessed no knowledge of specific pirated‑content behaviour; the hidden Horizon Media Tech should not be joined in this lawsuit due to lack of surface‑level documentary connection. If the court accepted this argument, the plaintiff would face hollow judgments: the three shell companies had almost no independent operating assets, and nearly all platform revenue was transferred to bank accounts controlled by Horizon Media Tech. Compensation judgments would be extremely difficult to enforce.
The plaintiff applied to the court for evidence preservation and forensic electronic appraisal. Judicial appraisal institutions conducted technical analysis on platform backend code, cloud‑server access logs, payment flow records, corporate WeChat workgroups and internal email records. Multiple decisive factual chains emerged. First, core backend source code, content‑crawling task configuration and user‑data management modules all belonged to project teams under Horizon Media Tech. Second, capital flow audit showed that after platform user payments entered shell‑company accounts, almost all funds were transferred out within 72 hours to corporate bank accounts controlled by Horizon Media Tech; shell companies only retained tiny fixed qualification service fees. Third, internal chat records proved that Horizon’s management directly issued work orders for content uploading, platform version updates and advertising cooperation. Fourth, sworn inquiry statements from nominee legal representatives confirmed they only provided identity credentials and exercised zero management authority.
Combining electronic forensics evidence, capital‑commingling facts and personnel‑mixing circumstances, the court applied Chinese Corporation Law personality‑denial rules and Copyright Act joint‑infringement provisions. The court held that three shell companies existed merely as qualification tools for implementing copyright infringement, without independent genuine business purposes. Horizon Media Tech exercised full substantive control over platform operation and obtained primary illegal economic benefits; it constituted joint tortfeasor together with three shell companies. Both hidden actual‑controlling entity and nominal shell defendants bear joint and several civil liability for copyright infringement. Meanwhile, procuratorial organs initiated related criminal proceedings against responsible natural persons for criminal copyright‑infringement offences.
In the final civil judgment, the court ordered all defendants to cease infringement activities, delete all pirated short‑drama resources, and awarded economic compensation plus reasonable litigation costs. This case delivers critical practical guidance for domestic and foreign copyright owners. Merely suing publicly displayed nominal shell entities creates huge enforcement risks in Chinese online‑copyright disputes. Rights holders must actively apply for court‑ordered electronic forensics, capital‑flow investigation and evidence preservation orders. Building complete evidence chains including code attribution, fund transfer trails and personnel‑control relationships is essential to trace hidden actual‑benefit subjects. Judgments against empty‑asset shell companies often cannot realise actual economic relief for copyright losses. For online‑platform copyright enforcement, identifying the real controller who obtains major illegal profits determines whether rights protection achieves substantive effect.
https://www.spp.gov.cn/xwfbh/wsfbh/202504/t20250423_693691.shtml
