According to Articles 3(1)(11) and 6 of the Copyright Act, "Adaptation" means to create another work based upon a pre-existing work by translation, musical arrangement, revision, filming, or other means.  A creation adapted from one or more pre-existing works is a derivative work and shall be protected as an independent work.  Protection of a derivative work shall not affect the copyright in the pre-existing work.  Furthermore, according to Articles 37(1) and (4), the economic rights holder may license others to exploit the work.  The territory, term, content, method of exploitation, and other particulars of the license shall be as stipulated by the parties; particulars not clearly covered by such stipulations shall be presumed to have not been licensed.  An exclusive licensee may, within the scope of the license, exercise rights in the capacity of an economic rights holder, and may perform litigious acts in its own name.  The economic rights holder may not exercise rights within the scope of an exclusive license.  In practice, disputes have arisen over the copyright owner's use of derivative works after the pre-existing work has been exclusively licensed to others.

 

In its Judgment No.: 113-Tai-Shang-1449, the Supreme Court expressed the opinion that derivative works created from alterations are considered "derivative works" of the pre-existing work and enjoy derivative copyright only for the "altered" portion of the work, not for the original (pre-existing) part of the work.  The Supreme Court further opined that if the owner of a derivative work uses such work, which inevitably incorporates content or characteristics of the pre-existing work, this utilization may constitute an infringement of the copyright of the pre-existing work. Accordingly, the Supreme Court reversed the second-instance judgment and remanded the case to the Intellectual Property and Commercial Court.  In other words, the Supreme Court has questioned whether licensing a derivative work to a third party does not involve reproducing the components or features of the pre-existing work.

 

According to the Supreme Court's foregoing opinion, in the future, copyright owners will need carefully consider the scope of the exclusive license (if any) of the pre-existing work when exploiting derivative works, in order to avoid being deemed in breach of the exclusive license agreement.