1. Acupressure: The Role of Market Forces in China’s Emerging Copyright Enforcement Environment October 4, 2012 Eric Priest University of Oregon School of Law

4. E.g., exclusive license for Palace, most popular Chinese TV series in 2011 cost $300k per episode, vs. $1.5k per episode in 2009 for most popular show Latent By 2011, Tudou spent nearly $50 million on content licenses In 2011 content acquisition accounted for nearly 40% of Youku’s total expenditures Video sites now license exclusive rights to others at highly inflated prices Licensing Bubble

6. Four Proffered Explanations 1. Concern about copyright litigation 2. Responding to increased pressure from Chinese authorities 3. Burnish reputations with US investors ahead of planned US IPOs 4. Hope to develop on-demand and subscription services as new revenue- generating services

7. Explanation 3: Burnish Reputations Ahead of US IPOs? Does intellectual property liability of Chinese websites rank highly among concerns of U.S. investors? Baidu an instructive example: NASDAQ IPO in 2005 “biggest in five years,” despite being dogged by copyright infringement lawsuits April 2008, IFPI Chairman called Baidu “China’s largest violator of music copyrights, generating huge revenue by deliberately providing access to illegal content”— the following month Baidu’s stock price rose by 16%

9. Software Piracy An indirect liability approach to motivate US companies to pressure their Chinese manufacturers and suppliers to purchase licensed software

10. Washington Unfair Competition Law 2011 “Any person who manufactures an article or product while using stolen or misappropriated information technology in its business operations after notice and opportunity to cure... causes a material competitive injury as a result of such use of stolen or misappropriated information technology, is deemed to engage in an unfair act where such an article or product is sold or offered for sale in this state, either separately or as a component of another article or product, and in competition with an article or product sold or offered for sale in this state that was manufactured without violating this section.” - Rev. Code Wash. § 19.330.020

11. Washington Unfair Competition Law 2011 Two categories of businesses face potential liability: Manufacturers of products sold in the state if “stolen information technology” was used in the manufacturing or supply chain Certain third parties with $50+ million annual revenue (including retailers) who sell products in state that were manufactured using stolen IT May also proceed in rem against goods

12. Washington Unfair Competition Law 2011 Subject to a notice and a 90-day cure period Remedies include injunction, actual or statutory damages

13. Thoughts In both examples, firms other than copyright owner directly pressure and “police” the infringer Infringer adherence to copyright laws induced by fear of revenue loss, not fear of copyright liability More direct (and potentially effective) solution than traditional approaches (lobbying USTR, administrative and judicial enforcement) Does this result in a permanent “culture” shift toward copyright compliance in these industries, or just a copyright “bubble”? Might development of private standards or industry best practices concerning copyright compliance by Chinese partners, suppliers, etc., be effective?