This is a real criminal‑civil joint copyright case selected in 2025 by the Supreme People’s Procuratorate of China, arising from massive online audiovisual piracy through deep‑link aggregation applications in Jiangsu Province The case reflects a prevalent evasion tactic in China’s online piracy industry: perpetrators establish batches of shell companies with nominee shareholders and legal representatives, to decouple public filing subjects from real infringing operations. The actual controller will deliberately keep his personal name off public industrial‑commerce records, domain name registrations and platform filing materials, aiming to avoid civil compensation, administrative penalties and criminal sanctions. All corporate names in this article have been anonymized to comply with judicial document privacy protection principles.
The defendant, referred to as Person Z in judicial files, started planning the piracy business in late 2017. Instead of operating under one single corporate entity, he successively registered six separate limited‑liability shell companies within five years. Nominal legal representatives, shareholders and supervisors for these six entities were distant relatives, part‑time clerks and third‑party nominee agents who received small compensation for lending their identities. These nominees exercised zero decision‑making power over product development, server leasing, advertising cooperation, fund settlement or technical iteration. Each shell company held minimal capital and no independent technical teams. Their core function was only to complete ICP website filing, software copyright registration for pirated applications, sign advertising agency contracts and receive advertising revenue payments.
Person Z and his core technical team developed and ran several well‑known video‑aggregation mobile applications. Without obtaining formal copyright authorization from mainstream domestic video platforms, they adopted deep‑link parsing technology to grab massive numbers of copyrighted films, TV dramas and variety shows from legitimate streaming platforms, then displayed these works inside their own mobile applications for end‑users to watch for free. Commercial profits mainly originated from pop‑up advertisements, opening‑screen advertisements and embedded advertising orders. According to judicial audit results, between 2017 and January 2023, these pirated applications disseminated more than 83 000 copyrighted audiovisual works, generating total illegal advertising revenue of 392 million RMB
When copyright owners first launched rights‑protection actions, they faced huge procedural obstacles. Public filing information, software registration documents and advertising contracts all pointed to six disconnected shell companies. On the surface, no single corporate entity controlled the whole piracy ecosystem. If right‑holders only sued the nominal shell entities, those shell firms possessed almost no disposable assets for compensation. Once receiving litigation notices, perpetrators could easily let shell companies go bankrupt or complete deregistration, leaving plaintiffs with hollow winning judgments that could never be enforced. Person Z himself did not appear in any public contract or filing record, creating a typical corporate‑veil shelter for large‑scale digital copyright infringement.
Copyright owners submitted criminal reports to local public security organs. Investigators realized early that prosecuting only nominal shell companies would not achieve substantive sanction. Investigative authorities adopted multi‑dimensional evidence‑collection strategies focusing on capital flow, technical traceability, internal employee testimony and electronic forensics. Bank account investigation revealed that advertising income flowing into different shell corporate accounts would be quickly transferred through multiple layers of private accounts, and finally converged into bank accounts controlled by Person Z and his core partners. Forensic examination of seized office computers and cloud‑server logs demonstrated uniform technical architecture, unified backend management accounts and identical server resource rental information across all six shell‑registered applications. Internal employee chat records and payroll‑payment records further proved that Person Z issued core operational instructions and directly managed technical and sales staff, regardless of which shell company appeared on official paperwork.
After comprehensive evidence‑gathering, procuratorial organs filed criminal charges against Person Z, core technical executives, together with related shell corporate defendants. Chinese courts held that although multiple shell companies independently completed formal filing procedures, they were merely instrumental tools controlled by the actual controller for implementing copyright‑infringement activities. Under China’s Company Law and Criminal Procedure Law, where legal persons are controlled and manipulated by natural persons to commit illegal acts through fragmented corporate structures, courts can pierce corporate‑form appearances and hold the hidden actual controller directly criminally liable. In August 2024, the people’s court handed down the first‑instance judgment. Person Z was convicted of copyright infringement crime and sentenced to fixed‑term imprisonment of five years and six months, with a fine of 20 million RMB. Core technical manager received three‑year imprisonment with a fine of 4 million RMB. Related shell companies were also imposed heavy corporate fines Meanwhile, copyright owners initiated follow‑up civil compensation lawsuits against both shell entities and the actual natural‑person controller to claim huge economic losses.
This case delivers highly practical take‑aways for domestic and foreign copyright holders facing Chinese online‑piracy threats. Merely relying on public industrial‑commerce and filing information is insufficient to identify real infringers. When facing scattered shell‑company subjects, right‑holders should actively apply to judicial organs for investigation into capital‑transfer records, server‑rental data, employee payroll records and electronic‑forensic materials. Plaintiffs should list both nominal shell companies and suspected hidden actual controllers as co‑defendants in civil litigation, instead of only suing publicly‑displayed corporate parties. Asset preservation application is strongly recommended at the early litigation stage, to prevent perpetrators from transferring or dissipating assets through shell‑company liquidation or cancellation.
For internet‑industry compliance practitioners, this case illustrates that simply splitting businesses across multiple nominee‑controlled companies cannot evade copyright‑related civil, administrative and criminal liabilities. Courts and procuratorates in China now possess mature evidence frameworks to identify de‑facto control relationships behind fragmented corporate layouts.
1. Supreme People’s Procuratorate of China typical IP criminal case bulletin: https://www.spp.gov.cn/xwfbh/wsfbh/202504/t20250423_693691.shtml
2. National Copyright Administration of China 2024‑2025 Sword‑Net Campaign case summary: https://www.ncac.gov.cn/xxfb/ywxx/202605/t20260527_991679.html
3. Procuratorate official news report disclosing case investigation details: https://www.spp.gov.cn/zdgz/202410/t20241008_668093.shtml
4. China’s Company Law official full text (corporate veil‑piercing provisions): https://www.npc.gov.cn/flfg/flfg_5321/202312/t20231229_432447.htm
