Warner Music - Victim of a Chinese frivolous lawsuit?

[By Arthur Tan-Chi Yuan]

[Author’s note: Key lessons for non-Chinese litigants: frivolous lawsuit] 

Beijing Chaoyang District People’s Court

 Beijing Manjiang Tech Development Co. Ltd. (Plaintiff)

v.

Beijing Warner Music Copyright Agency (Defendant)

February 17, 2012[1]

This is probably a run-of-the-mill case involving a contract dispute over copyright license between the plaintiff Beijing Manjiang Tech Development Co. Ltd., (“Manjiang”) and defendant Warner music copyright agency (“Warner”).  However, it highlights that evidence speaks volume in Chinese courts regardless of the origin or nationality of the parties.

Facts:

Plaintiff alleged that, in consideration of ¥100,000.00, it signed a music copyright license agreement (“agreement”) with Warner in 2010 for a license to distribute 50 songs on the China Mobile Music platform (“China Mobile”) over information networks.  Thereafter, plaintiff alleged that China Mobile requested a proof of ownership or license of the 50 songs before it could pay Manjiang.  Manjiang next requested Warner to provide such proof, but Warner allegedly rejected the repeated requests.  As such, Manjiang asked the court to find that Warner had rescinded the contract and shall pay a damage of ¥10 million.

Defendant Warner countered that it never received any request from Manjiang to produce evidence of ownership.  In addition, Warner claimed that there was no evidence that China Mobile requested such proof.  Third, Warner has ownership or rights to license the 50 songs in question.  Consequently, Warner requested the Court to dismiss all claims.

Finding:

After reviewing the admitted evidence, the Court found that Warner signed a contract (“original contract”) with Warner Music Publishing Hong Kong Limited Taiwan branch (“Warner Taiwan”) on June 30, 2010.  Warner Taiwan granted an exclusive license of 68 songs’ copyrights in “new media” to Warner.  The contract defined “new media” as CD, DVD, audio ringtones, incoming call, recordings other than ringtones, incoming call tunes, Internet browsing, Internet download, etc.  The parties agreed that the term of the contract is from June 30, 2010 to March 1, 2012.

On August 5, 2010, 2010, Warner signed the agreement in dispute with Manjiang.  The agreement granted Manjiang the rights to make the lyrics and recording of 50 songs available on China Mobile’s of central music platform (12530) from August 5, 2010 through December 31, 2011.  The agreement also stated that Warner shall warrant that it has the ownership or license to the works covered by the above provision in the agreement.  Warner also warranted that it has not breached any third party contract in signing the agreement.  According to the terms of the contract, Manjiang would pay a one-time licensing fee of ¥100,000.00 to Warner. 

After reviewing the agreement and the original contract, the court found that the 50 songs associated with the current lawsuit were part of the 68 songs covered by the original contract. 

Reasoning:

The Court found that Manjiang failed to proffer any evidence showing (1) there was a request from China Mobile requesting proof of ownership to the 50 songs and (2) there was a rejection from Warner refusing to provide such proof.  The agreement is an arm’s length agreement between Manjiang and Warner, and Warner indeed has the exclusive license to these 50 songs from Warner Taiwan for online distribution.

Holding:

Therefore, the Court found for Warner and dismissed Manjiang’s complaint.  Plaintiff has the right to appeal 15 days from the judgment of this case.

[Author’s note: Any errors of the summary and translation of the original Chinese decision are mine and shall not be attributed to any portion of the original.]

Note:

  1. Was this a case the transaction between Manjiang and China Mobile that went sour when Manjiang realized that the songs didn’t worth that much and wished it could rescind the contract with Warner?
  2. This case appears to be a frivolous suit against Warner.  According to an article[2] by judge Wang from Ningqiang Basic People’s Court in Hanzhong City, Shaanxi province, the existing Civil Procedure Law of China[3] lacks provisions to effectively curb such abuses (e.g., the right to sue) by litigants, as well as other abuses.  In this case, the plaintiff paid ¥2300.00 (about US$370.00) court acceptance fee to have its day in court.  It could still appeal, and if it does, Warner had no choice but to be dragged in court again.  Chinese legal scholars are aware of this problem and are urging the central government to amend the current civil procedure law to combat this drain on judicial resources and restore justice and the fundamental principle of honesty and truthfulness in Chinese civil procedure law.[4]

 

Translated Decisions: