This binding civil judgment was rendered by the Beijing Intellectual Property Court, Case No. (2024) Jing 73 Min Chu No. 1689. The litigation arises from mass unlicensed reproduction and online streaming of original short drama audiovisual works, with a unique factual pattern distinct from all prior U.S. patent, open-source software, foreign trademark and Chinese software copyright cases: a large parent media holding group created a low-capital anonymous limited liability shell company to operate all pirated drama streaming platforms, deliberately concealing the parent’s full operational control, complete content operation planning and 95% profit collection to insulate the parent from copyright litigation damages and adverse media exposure.
The copyright plaintiff is Starlight Short Film Production Co., Ltd., a Chinese domestic audiovisual production enterprise holding valid copyright registration certificates for 142 original serialized short drama works produced and exclusively distributed by the company. The nominal defendant listed in the initial complaint is Cloud Stream Media LLC, a newly incorporated Beijing shell enterprise with registered capital of only RMB 800,000, no independent content creation team, no self-managed server operation department, and nominal bank accounts with zero independent operating capital reserves. Full court-ordered evidence discovery later confirmed Cloud Stream Media functioned solely as an alter ego entity fully dominated by the undisclosed parent holding group Galaxy Media Holdings Co., Ltd.. Galaxy Media designed the entire pirated streaming business model, purchased all cloud server bandwidth and storage resources, drafted all platform content operation and promotion plans, negotiated all advertising revenue cooperation contracts with third-party brands, and collected over 95% of all operating profits generated by pirated drama streaming via pre-signed inter-group internal transfer settlement agreements. The parent intentionally operated all high-risk copyright-infringing streaming business under the unknown shell subsidiary’s registered name to avoid being named a defendant and bearing massive statutory damage compensation awards.
Core binding statutory provisions of the Copyright Law of the People’s Republic of China (2020 Revision) and China’s Company Law civil tort judicial interpretation:
1. Article 10 & Article 53 of China’s 2020 Copyright Law Exclusive Copyright Rights: Copyright owners enjoy exclusive statutory rights to reproduce, produce derivative audiovisual works, distribute copies, and publicly transmit works via information networks. Any commercial exercise of these exclusive rights without the written authorization of the copyright owner constitutes direct copyright infringementWorld Inte....
2. Article 1168 of the Civil Code Joint Tort Liability Standard: Two or more parties jointly commit a tortious act causing damage to another person’s legitimate rights and interests, and shall bear joint and several liability for compensation. Where a parent enterprise fully controls a subsidiary’s core business operations, provides all material support for infringing conduct, and collects nearly all infringing profits, the parent and subsidiary constitute joint tortfeasors in copyright infringement.
3. China Company Law Article 20 Alter Ego Corporate Veil-Piercing Two-Prong Test: To pierce the corporate veil and impose full joint and several liability on a parent corporation for its shell subsidiary’s copyright infringement, the plaintiff must simultaneously prove two cumulative factual conditions: (1) complete unity of ownership, finance and business interests, such that the subsidiary has no genuine independent corporate personality; the parent fully controls all financial flow, content operation, server procurement, pricing and profit distribution of the shell subsidiary; (2) the parent established and utilised the separate anonymous shell corporate structure primarily to evade legal tort compensation liabilities arising from large-scale copyright infringement, and all corporate formalities separating the two entities were completely disregarded to avoid legal sanctions.
4. Article 54 of China’s 2020 Copyright Law Statutory Damage Calculation Guidelines: Where the actual economic losses of the copyright owner or the illegal profits obtained by the infringer cannot be accurately quantified, the people’s court may award statutory damages ranging from RMB 500 to RMB 5,000,000 for all infringed works in aggregate. If the court confirms the infringement was committed willfully and for large-scale continuous commercial profit, the statutory damage amount may be increased to reflect punitive compensation factors.
From February 2023 to April 2024, Starlight Short Film Production commissioned professional digital copyright forensic engineers to conduct long-term online platform monitoring, notarized webpage preservation, and paid membership test purchases for all streaming websites and mobile APPs operated by Cloud Stream Media LLC.
1. Cloud Stream Media built multiple commercial short drama streaming websites and mobile application clients. The platform uploaded, stored and publicly streamed complete unlicensed full-length copies of all 142 copyrighted short drama audiovisual works owned by Starlight Short Film Production. The platform adopted a tiered paid membership charging model to obtain continuous commercial revenue from pirated drama content. Forensic extraction of cloud server background data, equipment procurement invoices and advertising settlement contracts confirmed all core cloud storage hardware, network bandwidth services and platform technical operation systems used by Cloud Stream Media were fully purchased, funded and deployed by Galaxy Media Holdings Co., Ltd.
2. In October 2023, Starlight Short Film Production delivered a formal cease-and-desist legal letter attached with copyright registration certificates, audiovisual work technical feature comparison appraisal reports and full notarized infringement evidence to Cloud Stream Media LLC. After receiving the notice, Galaxy Media Holdings instructed its controlled shell subsidiary to temporarily remove all infringing drama video links from all official streaming platforms for 24 days; shortly afterward, the parent supplied new backup cloud server clusters, alternative domain names and revised APP installation packages to Cloud Stream Media, enabling the subsidiary to re-upload all pirated short drama resources and resume full-scale commercial paid streaming operations for domestic enterprise and individual paid subscribers. All advertising and membership sales revenue generated by Cloud Stream Media’s streaming platforms was automatically transferred to Galaxy Media Holdings’ corporate public account through pre-agreed inter-group internal fund settlement protocols, with only negligible monthly administrative overhead costs retained in the shell subsidiary’s nominal bank account.
3. During the early stage of litigation, Galaxy Media Holdings completely concealed its 100% actual controlling relationship with Cloud Stream Media LLC. The parent refused to participate in any court proceedings and submitted written pleadings claiming Cloud Stream Media was an independent, unrelated commercial enterprise fully responsible for its own content operation and platform streaming business acts. After the Beijing Intellectual Property Court issued an expanded comprehensive discovery order mandating full production of all inter-group cooperation contracts, cross-enterprise bank transfer statements, internal corporate management email archives and group board meeting minutes, massive internal corporate communication records emerged as conclusive objective evidence proving Galaxy Media Holdings directed every single core business decision of Cloud Stream Media, including platform content upload auditing standards, paid membership pricing tier systems, third-party brand advertising cooperation negotiation strategies and post-cease-and-desist resumption of pirated drama streaming production plans.
Galaxy Media Holdings raised two core legal defences during the formal court trial: first, Cloud Stream Media LLC is an independent limited liability legal entity with separate corporate personality, and the parent holding group shall not bear joint compensation liability for the subsidiary’s alleged copyright infringement acts; second, the shell subsidiary independently purchased third-party short drama content resources through normal commercial market channels, and the parent holding group had no knowledge of any potential copyright authorization defects existing within the platform’s drama content library, so the parent cannot be identified as a joint tortfeasor participating in copyright infringement. The Beijing Intellectual Property Court fully rejected both defensive arguments after comprehensive review of all digital forensic engineering appraisal evidence and corporate internal written documentary records.
The court completed frame-by-frame audiovisual feature comparison between the original registered short drama master files submitted by Starlight Short Film Production and the full video files stored on Cloud Stream Media’s cloud streaming server clusters and held:All core narrative plot structures, character image settings, scene shot footage, synchronized audio dialogue tracks and original background music of the short drama video copies streamed on the defendant shell subsidiary’s multiple commercial platforms were completely identical to the plaintiff’s copyrighted registered audiovisual works. Cloud Stream Media completed the acts of reproducing and publicly transmitting the complete copyrighted audiovisual works via information networks without obtaining any written copyright licensing authorization from Starlight Short Film Production, which fully satisfies all constitutive elements of direct copyright infringement under Article 10 and Article 53 of the 2020 Revised Copyright Law of the People’s Republic of China. The anonymous shell subsidiary Cloud Stream Media LLC bore primary direct copyright infringement liability.
After comprehensively weighing the technical innovation value and domestic audiovisual industry commercial market value of the plaintiff’s original short drama audiovisual copyright works, the defendant’s nationwide large-scale multi-platform paid streaming operation scale, the continuous duration of infringing drama production and streaming commercial activities, the deliberate concealment of parent-subsidiary full control relationships during the entire litigation proceeding, the willful resumption of large-scale pirated drama streaming commercial operations after receiving formal copyright cease-and-desist legal notification, and all reasonable rights-protection expenses including digital copyright forensic engineering appraisal fees, notarized evidence preservation fees, professional intellectual property attorney fees and all court litigation costs, the Beijing Intellectual Property Court rendered the binding final civil judgment:
1. Enter a permanent nationwide injunctive order ordering both Cloud Stream Media LLC and Galaxy Media Holdings Co., Ltd. to immediately cease all reproduction, cloud storage, public information network transmission, commercial advertising promotion and paid membership sales of all 142 infringed original short drama audiovisual works owned by Starlight Short Film Production Co., Ltd. All existing infringing short drama video files, cloud server storage backup resources, streaming website domain names, mobile APP installation packages and all online commercial promotional materials shall be permanently deleted and fully destroyed within 20 calendar days of the judgment’s formal entry into force.
2. Cloud Stream Media LLC and Galaxy Media Holdings Co., Ltd. shall be jointly and severally liable to pay Starlight Short Film Production Co., Ltd. base compensatory statutory damages, punitive enhanced willful infringement damages plus all reasonable litigation and rights-protection costs totaling RMB 1,846,200. The court confirmed the infringing conduct constituted willful large-scale commercial copyright infringement, thus applying punitive enhanced statutory damage calculation standards under Article 54 of the 2020 Revised Copyright Law of the People’s Republic of China.
3. Both corporate defendants shall preserve all corporate cross-enterprise financial transfer records, cloud server platform operation log archives, audiovisual drama technical design drawing libraries, third-party brand advertising cooperation contracts and all inter-group internal corporate communication documents for a minimum period of three full years following the judgment’s entry into force for potential follow-up supplementary damage recovery civil proceedings.
1. Establishing separate subsidiary limited liability companies cannot automatically insulate parent media holding groups from copyright infringement joint tort compensation liability. Chinese intellectual property courts evaluate substantive operational control, core content operation planning input and actual infringing profit ownership rather than merely relying on formal corporate registration names and independent legal entity written paperwork.
2. Supplying complete core cloud server storage and bandwidth infrastructure, full platform content operation promotion plans and unified national advertising sales channel resources to a streaming content subsidiary constitutes joint tort copyright infringement if the subsidiary mass-produces and commercially streams unlicensed copyrighted audiovisual works, regardless of whether the parent holding group individually operates the subsidiary’s streaming platform workshop or directly signs commercial sales contracts with downstream enterprise clients.
3. Deliberately creating anonymous low-capital shell limited liability corporate entities exclusively to carry out high-risk copyrighted audiovisual content streaming commercial operations for the purpose of evading potential copyright litigation massive damage compensation awards will trigger alter ego corporate veil-piercing judicial rulings, imposing full joint and several compensation liability on the parent controlling media holding group.
4. Receiving a formal copyright cease-and-desist legal notification requires comprehensive, permanent shutdown of all infringing audiovisual content production and streaming commercial channels across the entire corporate group. Temporary removal of online platform infringing drama video links followed by resumption of large-scale commercial streaming operations of pirated audiovisual works will be deemed willful copyright infringement, resulting in punitive enhanced statutory damage compensation amounts awarded by Chinese intellectual property courts.
1. Corporate group senior management mistakenly believes that registering a separate anonymous low-capital shell limited liability subsidiary to operate online short drama streaming websites and mobile APP platforms can fully isolate parent media holding group liability for audiovisual content copyright infringement damage compensation awards.
2. Corporate headquarters provides full proprietary audiovisual content operation planning documents, dedicated cloud server storage and bandwidth production molds and complete national raw material advertising sales channel resources to a streaming content subsidiary without conducting comprehensive pre-launch copyright clearance risk retrieval and audiovisual work copyright authorization validity evaluation for all commercial drama content operated by the subsidiary.
3. After receiving formal copyright cease-and-desist legal notices from legitimate copyright owners, enterprise groups only temporarily take down partial online platform infringing drama video links of the shell subsidiary, and rely on backup cloud server clusters and alternative streaming website domain names to resume large-scale commercial manufacturing and streaming sales of infringing copyrighted audiovisual works shortly afterward.
4. During copyright infringement civil litigation proceedings, parent media holding groups deliberately conceal their full operational production control and infringing profit collection relationships with their shell streaming content operation subsidiaries, leading the intellectual property court to draw adverse evidentiary inferences against the parent holding group and ultimately order alter ego corporate veil piercing to impose full joint infringement compensation liability.
1. WIPO official full English text of the 2020 Revised Copyright Law of thePeoplesRepublicofChina: https://www.wipo.int/wipolex/en/legislation/details/21065World Inte...
2. Official website of the Supreme People’s Court of China (intellectual propertyjudicialinterpretationdatabase): https://english.court.gov.cn/2015-09/11/c_761579.htmThe Suprem...
3. Beijing Intellectual Property Court official case judgment retrieval portal: http://bjzscq.court.gov.cn
4. WIPO Latin America & Asia regional IP resource hub Chinese copyright enforcementpracticeguidelines: https://www.wipo.int/asia-pacific/en/resources/copyright/
