Copyright Licensing Restrictions in China — Detailed Explanation with Case Laws

1. Introduction

Copyright licensing is ordinarily a legitimate exercise of intellectual-property rights. A copyright owner may decide whether to license, whom to license, the territory, duration, field of use, royalty, exclusivity, sublicensing, distribution channels, and other contractual conditions.

However, under Chinese competition law, copyright licensing restrictions may become problematic where the licensing arrangement is used to eliminate or restrict competition, particularly where the licensor has substantial market power or where competing businesses are prevented from accessing indispensable content.

The central legal issue is therefore not whether a copyright owner is allowed to impose licensing conditions, but whether the particular restriction goes beyond legitimate copyright exploitation and produces anti-competitive effects without sufficient justification.

2. Legal Framework in China

The principal framework consists of:

Anti-Monopoly Law of the People's Republic of China (AML);

Copyright Law and rules concerning collective copyright management;

Provisions on Prohibiting the Abuse of Intellectual Property Rights to Eliminate or Restrict Competition;

rules and guidance concerning standard-essential patents and intellectual-property licensing; and

judicial interpretation and decisions of the Supreme People's Court (SPC) and specialized intellectual-property courts.

The AML's abuse-of-dominance provisions are particularly important. Article 17 of the earlier AML prohibited, among other things:

unjustified refusal to deal;

requiring exclusive transactions;

tying or imposing unreasonable trading conditions; and

discriminatory trading conditions.

The current Chinese framework continues to examine these categories through the amended AML and specialized IPR-antitrust rules. (The State Council of China)

3. Meaning of Copyright Licensing Restrictions

A copyright licensing restriction is a contractual or commercial limitation imposed by a copyright owner or licensing intermediary on the use, distribution, access, or exploitation of copyrighted material.

Examples include:

exclusive licensing;

territorial restrictions;

customer restrictions;

platform exclusivity;

restrictions on sublicensing;

restrictions on multi-platform distribution;

minimum resale or distribution conditions;

tying copyright licences to other services;

restrictions on competing technologies;

discriminatory royalty rates;

refusal to license;

excessive licensing fees;

restrictions on access to collective-management repertoires; and

restrictions preventing creators from licensing content elsewhere.

These restrictions do not automatically constitute monopolistic conduct.

The competitive assessment normally requires consideration of the relevant market, market power, the nature of the restriction, its actual or potential effects, legitimate business justification, and whether less restrictive alternatives exist.

4. Copyright Ownership Does Not Automatically Establish Market Dominance

An important principle emerging from Chinese cases is that ownership of intellectual property does not automatically mean that the owner possesses a dominant position.

Copyright is inherently exclusive. But competition law generally does not treat the mere existence of an exclusive copyright as equivalent to unlawful monopoly power.

The relevant questions include:

Are there substitute works?

Can competitors obtain alternative content?

Is the copyrighted work commercially indispensable?

Can users switch to alternative platforms?

Can competing technologies or content be developed?

Does the copyright owner control an important input?

What is the duration of the restriction?

What is the geographical scope?

Does the restriction foreclose competitors?

This distinction is particularly important in the Chinese judicial approach to IP-related competition disputes.

5. Exclusive Copyright Licensing

A. Concept

An exclusive licence gives one licensee, or a limited group of licensees, rights that competing businesses cannot obtain.

For example:

A music platform obtains exclusive rights to 90% of a major record company's catalogue for ten years.

Such an arrangement can have legitimate commercial purposes:

recovering investment;

encouraging production;

preventing free riding;

guaranteeing minimum revenue;

financing new content;

creating incentives for distribution.

But exclusivity can become a competition concern where a powerful platform uses it to foreclose rivals from essential or highly attractive content.

6. Refusal to License

A refusal to license is generally not automatically unlawful.

Intellectual-property rights would have little practical value if every owner were required to license its works to every requesting party.

However, where a dominant undertaking controls an input that competitors cannot reasonably replace and refuses access without legitimate justification, competition-law concerns may arise.

Relevant considerations include:

indispensability;

availability of substitutes;

technical feasibility of licensing;

economic feasibility;

history of previous licensing;

discriminatory treatment;

effect on downstream competition;

investment incentives; and

legitimate reasons for refusal.

Chinese judicial practice has emphasized that dominance and anti-competitive effect must be established rather than presumed merely from ownership of IP.

7. Excessive Copyright or IP Licensing Fees

A dominant undertaking may also face scrutiny where it charges unfairly high licensing fees.

Relevant factors can include:

relationship between royalty and economic value;

comparable licensing arrangements;

historical royalty rates;

duration of the licence;

scope of rights;

whether expired rights are included;

whether unrelated rights are bundled;

whether the licensee is forced to grant reciprocal rights; and

whether the royalty structure creates substantial foreclosure effects.

China's enforcement approach in the Qualcomm matter illustrates the importance of examining licensing conditions rather than treating intellectual-property royalties as immune from antitrust scrutiny. (NDRC)

8. Tying and Bundling

Copyright licensing may also become problematic where the licensor makes access to copyrighted content conditional upon purchasing another product or service.

Examples:

"You may obtain the music catalogue only if you purchase our advertising service."

or:

"The software copyright licence is available only if the customer purchases our cloud-hosting service."

Where the licensor possesses market power, such conduct may constitute tying or the imposition of unreasonable trading conditions.

The Chinese courts have recognized the broader principle that dominant firms cannot use their position in one market to restrict consumer or competitor choice in another market without sufficient justification. The Wu Xiaoqin case is particularly illustrative of this approach. (Supreme People's Court of China)

9. Restrictions on Multi-Platform Distribution

Digital copyright makes this issue particularly important.

A platform may attempt to require:

exclusive uploading;

exclusive streaming;

exclusive distribution;

prohibition on simultaneous licensing;

restrictions on creator migration; or

prohibition on distributing the same work through competing platforms.

Such provisions can increase switching costs and reinforce network effects.

The concern becomes stronger where a platform already possesses substantial market power and uses copyright contracts to prevent rivals from obtaining content or prevent creators from reaching rival platforms.

10. Discriminatory Licensing Conditions

A dominant copyright licensing organisation may also be investigated where similarly situated licensees receive materially different conditions without adequate justification.

For example:

Different commercial conditions are not automatically unlawful. They may reflect:

different volumes;

different distribution costs;

different risks;

different territories;

different rights packages; or

different commercial commitments.

The competition issue arises where the discrimination is unjustified and materially disadvantages competitors.

Chinese IPR-antitrust guidance specifically identifies discriminatory licensing conditions as an issue requiring examination. (NDRC)

11. Copyright Collective Management Organisations

Collective copyright management presents special competition concerns.

A collective management organisation can control a large repertoire of works and may become an important gateway through which businesses obtain copyright licences.

Consequently, questions can arise concerning:

refusal to contract;

exclusive intermediary arrangements;

unreasonable contractual conditions;

discriminatory access;

mandatory use of designated intermediaries; and

restrictions on direct licensing.

Two Chinese cases involving the China Audio-Video Copyright Association (CAVCA) are particularly important.

12. Case Law

Case 1 — Tencent / China Music Group — Online Music Exclusive Copyrights (2021)

Authority: State Administration for Market Regulation (SAMR).

This is one of China's most important cases concerning exclusive copyright licensing in the digital economy.

Tencent's acquisition of China Music Group was investigated because the transaction substantially increased its control over online music resources. SAMR found that the merged entity controlled more than 80% of exclusive music-library resources and could potentially use this position to obtain further exclusive copyright agreements or preferential licensing conditions. (SAMR)

SAMR therefore required Tencent to:

terminate relevant exclusive copyright arrangements;

refrain from entering into new exclusive copyright agreements without complying with the imposed requirements; and

take other measures designed to restore competitive conditions.

Principle

The case demonstrates that exclusive copyright agreements can become a competition concern where they substantially foreclose rivals from important content resources.

13. Case 2 — Tencent–Ximalaya Acquisition (2026)

This is a particularly significant recent development.

In May 2026, SAMR conditionally approved Tencent's acquisition of Ximalaya after identifying possible competition concerns in China's online-audio and online-music markets.

SAMR specifically considered Ximalaya's existing exclusive arrangements for valuable audio content and concluded that the transaction could increase the merged entity's ability to obtain exclusive rights and thereby increase entry barriers. (SAMR)

The conditions included:

no new exclusive licensing arrangements with online-audio copyright owners;

termination of existing exclusive arrangements within the prescribed period;

no unjustified restrictions on creators distributing their works across multiple platforms; and

restrictions concerning bundling of audio/music services with automobile manufacturers.

Principle

The case shows the movement of Chinese competition enforcement toward platform-content foreclosure analysis.

Copyright licensing is therefore considered not merely as an IP issue but also as a potential source of platform market power and entry barriers.

14. Case 3 — Huizhou HuanChang100 Entertainment v. China Audio-Video Copyright Association

Case: Huizhou HuanChang100 Entertainment Co. Ltd. v. China Audio-Video Copyright Association
Beijing Intellectual Property Court, (2018) Jing 73 Min Chu No. 780

The plaintiff, a KTV operator, sought a direct copyright licensing arrangement for works managed by CAVCA.

CAVCA directed the plaintiff to negotiate through another company. The plaintiff argued that this arrangement imposed unreasonable conditions and constituted abuse of dominance.

The Beijing Intellectual Property Court ultimately rejected the plaintiff's claims. The case is important because it demonstrates that a refusal or indirect licensing structure is not automatically an antitrust violation. (CAVCA)

Principle

A claimant must establish the elements of the alleged abuse, including:

relevant market;

dominance;

unreasonable conduct; and

competitive harm.

The mere existence of an intermediary licensing structure does not by itself establish unlawful conduct.

15. Case 4 — Beidou Satellite Digital New Media v. CAVCA

Case: Beidou Satellite Digital New Media (Beijing) Co. Ltd. v. China Audio-Video Copyright Association
Beijing Intellectual Property Court, (2018) Jing 73 Min Chu No. 1527

The plaintiff operated VOD equipment and required licensing of audio-video works for KTV systems.

It alleged that CAVCA abused a dominant position by:

refusing to renew the licence;

imposing unreasonable contractual conditions; and

restricting access to its repertoire.

The court examined the refusal-to-deal issue and concluded that CAVCA had legitimate reasons for refusing to renew the agreement, including contractual breaches and concerns concerning the plaintiff's conduct and creditworthiness. (IPC Court)

Principle

This case is important for the proposition that:

A refusal to license copyrighted material is not necessarily abusive where the licensor can demonstrate a legitimate and objectively supported justification.

Thus, Chinese competition law does not create an unconditional right to obtain a copyright licence.

16. Case 5 — Qualcomm Antitrust Decision (2015)

Authority: National Development and Reform Commission (NDRC).

Although involving patents rather than copyright, Qualcomm is highly relevant to IP licensing restrictions generally.

NDRC found that Qualcomm possessed dominant positions in relevant standard-essential-patent licensing markets and engaged in several practices, including:

charging unfairly high licensing fees;

licensing non-essential patents together with standard-essential patents;

requiring certain cross-licensing arrangements; and

imposing conditions connected with supply of baseband chips.

NDRC imposed a fine of approximately RMB 6.088 billion, equal to 8% of Qualcomm's 2013 China sales, and required corrective measures. (NDRC)

Principle

The case demonstrates that IP rights do not immunize licensing conduct from the AML.

It is especially relevant to copyright licensing where a licensor uses control over valuable IP to impose unrelated or disproportionate contractual conditions.

17. Case 6 — Ningbo Ketian and Others v. Hitachi Metals

Supreme People's Court, 2023

This case concerned patent licensing rather than copyright, but it is highly significant for understanding Chinese judicial treatment of IP licensing and dominance.

The plaintiffs alleged that Hitachi Metals:

refused to license important patents; and

bundled allegedly essential and non-essential patents.

The first-instance court accepted a relatively narrow licensing-market definition and found dominance.

The Supreme People's Court reversed that approach. It held that the evidence did not sufficiently establish the alleged narrow market and that alternative technologies existed. The SPC therefore rejected the finding that Hitachi Metals had abused a dominant position. (American Bar Association)

Principle

Ownership of a large patent portfolio does not automatically establish dominance.

For copyright licensing, the analogous question is whether the particular catalogue or body of works is genuinely indispensable and whether meaningful substitutes exist.

18. Case 7 — Beijing Guowei v. CAVCA / KTV Licensing Dispute

Chinese judicial practice involving CAVCA has also addressed the circumstances in which a collective-management organisation can refuse contractual renewal.

The Beijing Intellectual Property Court's reasoning in the related CAVCA litigation emphasized that legitimate contractual and credit-related reasons may justify refusal where the conduct does not materially impair competition. (IPC Court)

Principle

The existence of a collective-management organisation's significant control over a repertoire does not eliminate the requirement to examine:

contractual performance;

objective justification;

competitive effects; and

the actual circumstances of the requesting licensee.

19. Case 8 — Unfair Licensing / SEP Jurisprudence: Conversant v. Huawei and ZTE

Supreme People's Court — Conversant Wireless Licensing Dispute

The litigation between Conversant Wireless and Huawei concerning standard-essential patents involved questions concerning licensing rates, jurisdiction, and the relationship between patent rights and competition in technology markets.

The Chinese courts addressed the appropriate determination of Chinese SEP licensing rates and issued important procedural protection in connection with parallel foreign litigation. (IPC Court)

Although not a copyright case, the dispute is useful by analogy because it illustrates how Chinese courts approach licensing rights where the underlying IP has substantial commercial significance and the parties have unequal bargaining positions.

20. Key Legal Tests

For a copyright licensing restriction to attract antitrust scrutiny, the following framework can be applied.

Step 1 — Define the relevant market

Possible markets include:

online music licensing;

audiovisual copyright licensing;

literary-content licensing;

streaming-content licensing;

digital publishing rights;

sports-content rights;

film distribution rights; or

a narrower technology/content market.

Market definition is critical because the existence of dominance depends heavily upon the availability of substitutes.

Step 2 — Establish market dominance

Consider:

market share;

control over important copyright catalogues;

network effects;

platform scale;

bargaining power;

dependence of downstream firms;

switching costs;

entry barriers;

availability of substitute content; and

control over distribution infrastructure.

The Hitachi Metals decision demonstrates the importance of rigorous market definition and evidence of substitutability in IP-related dominance analysis. (American Bar Association)

Step 3 — Identify the restriction

The restriction may involve:

21. Legitimate Business Justifications

Not every restriction should be condemned.

A copyright owner may legitimately argue that restrictions are necessary to:

protect investment;

prevent piracy;

ensure quality control;

protect confidential information;

prevent free riding;

recover production costs;

provide minimum guarantees to creators;

finance new creative works;

manage territorial rights;

prevent unauthorised sublicensing;

protect technological security; or

ensure effective distribution.

The question is whether the justification is genuine, proportionate and connected to the licensing arrangement, rather than merely a pretext for exclusion.

22. Copyright Licensing Restrictions in Digital Platforms

The issue becomes particularly important in China's platform economy.

Digital platforms may possess:

large user bases;

valuable copyright catalogues;

recommendation algorithms;

creator ecosystems;

advertising systems;

payment systems; and

network effects.

An exclusive copyright arrangement can therefore create a feedback loop:

Exclusive content → more users → more creators → greater platform attractiveness → greater bargaining power → more exclusive content

This can make exclusive licensing substantially more significant than an ordinary bilateral copyright contract.

The Tencent music decision demonstrates precisely why Chinese competition authorities have examined control over exclusive music libraries as a potential source of market foreclosure. (SAMR)

23. Consumer and Creator Effects

Copyright licensing restrictions can affect several groups simultaneously.

Consumers

Potential effects include:

fewer content choices;

higher subscription prices;

reduced availability;

multiple subscriptions becoming necessary;

reduced interoperability.

Creators

Potential effects include:

reduced ability to multi-home;

dependence on a dominant platform;

reduced bargaining power;

restrictions on distribution.

Competitors

Potential effects include:

inability to obtain important content;

increased entry costs;

reduced scale;

loss of network effects;

foreclosure from important distribution channels.

Copyright owners

Restrictions can also produce legitimate benefits by:

increasing royalty income;

reducing piracy;

encouraging investment;

improving quality control.

The legal analysis therefore requires balancing the exclusive-right incentive structure of copyright against the competitive effects of licensing restrictions.

24. Relationship Between Copyright Law and Competition Law

A fundamental distinction should be maintained:

Copyright law asks:

Does the owner possess the exclusive right?

Competition law asks:

How is that right being exercised in the market?

Therefore:

Valid copyright + legitimate licence = ordinarily permissible

but:

Valid copyright + dominant position + unjustified exclusionary restriction + substantial competitive harm = potential antitrust problem

This is why the existence of a copyright cannot by itself provide an absolute defence to an antitrust claim.

25. Important Principles from the Cases

The cases collectively establish several important propositions:

IP ownership does not automatically establish market dominance.

Exclusive copyright licences are not inherently unlawful.

Exclusivity can become problematic when it forecloses competitors from important content.

A refusal to license requires examination of legitimate justification.

Dominant licensors cannot automatically impose unreasonable trading conditions.

Tying unrelated rights or services can raise abuse-of-dominance concerns.

Discriminatory licensing conditions may be problematic when similarly situated licensees receive unjustified differential treatment.

Collective copyright-management organisations may be subject to competition law.

Alternative content and technological substitutability are highly important.

Digital-platform network effects can magnify the competitive consequences of exclusive licensing.

Remedies may include termination or modification of exclusive arrangements rather than invalidation of copyright itself.

Recent Chinese enforcement demonstrates increasing attention to content exclusivity as a platform-competition issue.

26. Examination-Oriented Analysis

A useful way to analyse a problem concerning copyright licensing restrictions in China is:

Copyright exists
↓
Identify licensing restriction
↓
Define relevant content/licensing market
↓
Determine market power/dominance
↓
Examine foreclosure or exploitation
↓
Assess consumer, creator and competitor effects
↓
Consider legitimate business justification
↓
Consider less restrictive alternatives
↓
Determine whether AML/IPR rules are infringed
↓
Apply appropriate remedy

27. Conclusion

Chinese competition law does not prohibit copyright licensing restrictions simply because they limit access to copyrighted works. Exclusivity, territorial limitations, royalties, refusal to license and other contractual restrictions can form legitimate components of copyright exploitation.

The competition-law problem arises where copyright is combined with substantial market power and the licensing arrangement is used without adequate justification to foreclose rivals, impose unreasonable conditions, restrict multi-platform distribution, discriminate among comparable licensees, or otherwise eliminate or restrict competition.

The Tencent/China Music Group, Tencent–Ximalaya, CAVCA/KTV, Qualcomm, Hitachi Metals, and Conversant/Huawei matters collectively illustrate the Chinese approach: the existence of IP rights is recognized, but their exercise can be examined where it materially affects competitive conditions. (SAMR)