New track for cost reduction and efficiency improvement in the film and television industry: legal analysis of AI and derivatives
2025 07/04
This year marks the 130th anniversary of the birth of world cinema and the 120th anniversary of the birth of Chinese cinema. At the opening forum of the Shanghai International Film Festival on June 15, 2025, "reducing costs and increasing efficiency" became a hot topic among film industry leaders and directors.
In recent years, the cost of film and television production has been constantly rising, from film and television adaptation authorization to script creation, from actor salaries to special effects production, from venue leasing to publicity expenses, every expense has been increasing. Taking Chen Zhixi, Chairman and President of Wanda Film Co., Ltd., as an example, she mentioned in a forum that while 12 million yuan could make a movie like "Pancake Man" back then, 120 million yuan may not be enough to make a movie now. The significant increase in costs has put enormous financial pressure on many film and television projects, making "cost reduction and efficiency improvement" an inevitable choice for the film and television industry.
At the forum, industry experts proposed that using AI technology to achieve cost reduction and developing derivative products to promote efficiency improvement is the key path to breaking through the current difficulties. The impressive results of Da Mai's layout of virtual shooting studios and the billions of sales of derivative products from Nezha 2 also demonstrate the potential of new directions. However, whether it is technological innovation in AI applications or business model expansion in derivative development, there are many legal risks hidden.
1、 Possible risks of AI cost reduction
（1） Copyright dispute over AI generated content
When using AI to generate virtual scenes, special effects shots, and even script outlines in film and television production, copyright ownership issues can easily lead to disputes. There is no clear definition of the rights holder for AI generated content in China's Copyright Law. If a contractual agreement is not reached before use, it may lead to ownership disputes between AI service providers, film and television producers, and users. For example, a certain film and television company using AI to design character images may be sued by AI service providers when authorizing third-party development of derivative products due to the lack of copyright ownership agreement, resulting in not only huge compensation but also project stagnation. Therefore, when film and television companies cooperate with AI service providers, they must clearly stipulate in the contract that the copyright of AI generated content belongs to the producer, and exclude any subsequent claims by AI service providers.
（2） Data compliance and privacy protection issues
AI technology relies on massive data training, and the legitimacy of data sources and usage is crucial. Unauthorized collection of online materials and use of personal biometric information for virtual image modeling by AI developers may violate relevant provisions of the Personal Information Protection Law and the Data Security Law. The film and television production company should clearly require the AI development company to establish a strict data usage approval system in the contract, ensure that the data source is legal, the purpose of use is clear, and obtain the consent of relevant parties in accordance with the law.
（3） Technical infringement risk
To reduce costs, some film and television production companies may use unauthorized AI tools or algorithms, which will face legal risks such as patent infringement and illegal use of open source code. Using cracked AI special effects software not only constitutes software copyright infringement, but may also result in the work being unable to be distributed due to infringement issues. Enterprises should conduct regular compliance reviews of AI tools, use genuine software, and avoid infringing on others' intellectual property rights.
2、 Possible risks of enhancing derivative efficiency
（1） IP authorization boundary blurred
The development of derivatives needs to be based on a clear IP authorization scope. If it exceeds the category, geographical or time limits stipulated in the authorization agreement, it will constitute infringement. Taking Nezha 2 as an example, if the film company only authorizes the development of toy derivatives and a third party produces stationery peripherals without authorization, it will infringe on the rights and interests of the IP owner. In addition, the breakage of the authorization chain can also easily lead to disputes, such as the second level authorizer cooperating with the authorized party without the original IP party's authorization transfer, which may result in the entire project being suspended. When signing an IP authorization contract, all parties should refine the categories of derivatives, sales regions, authorization periods, and sub authorization restrictions to avoid vague terms.
（2） Potential infringement risks of trademarks and designs
If derivative designs are not thoroughly searched for trademarks, patents, and copyrights, they are highly likely to infringe upon the prior rights of others. For example, a character doll developed by a certain film and television company was sued for design infringement due to its highly similar appearance to other anime characters, and the product was forced to be taken down and bear high compensation. Therefore, before developing derivatives, enterprises must conduct intellectual property searches to ensure that the design does not infringe on the rights of others.
（3） Quality Responsibility and Consumer Rights Protection Risks
The quality of derivatives directly affects IP reputation and corporate responsibility. According to the relevant provisions of the Product Quality Law, consumers can claim compensation from producers and sellers for derivatives with safety hazards or quality defects. If film and television companies, as IP licensees, fail to fulfill their quality supervision obligations, they may bear liability for fault compensation. Enterprises can include quality supervision clauses in the authorization agreement, requiring the authorized party to regularly submit quality inspection reports and clarify the responsibility for quality issues.
3、 Other compliance recommendations
（1） Improve contract management
From AI collaboration to IP authorization, contracts are the key to avoiding risks.
Before signing a contract with a partner, it is necessary to fully evaluate the project costs and risks, and conduct necessary due diligence on the cooperation.
When signing a contract, it is necessary to clarify the contract terms, ensure equal rights and obligations, and make detailed provisions on key content such as copyright ownership, authorization scope, and breach of contract liability to avoid disputes caused by contract loopholes.
When changing the content of the contract, sufficient communication should be conducted with the other party, a written supplementary agreement should be signed, and the agreement content should be ensured to comply with legal provisions.
After the contract is signed, a contract performance tracking mechanism should be established to promptly identify and resolve any issues that arise during the contract performance process, in order to avoid cost increases caused by contract disputes.
（2） Strengthen intellectual property protection
1. Before using someone else's intellectual property, establish an intellectual property review mechanism, conduct comprehensive rights review from AI generated content to derivative design, and ensure obtaining legal and effective authorization. For important intellectual property, it is recommended to hire a professional intellectual property lawyer for review and evaluation.
During the creative process, it is important to pay attention to protecting one's intellectual property rights and promptly registering copyrights, trademarks, etc. At the same time, a clear intellectual property ownership agreement should be signed with the creators to avoid any impact on project progress and revenue due to ownership disputes.
3. Regularly review and manage the intellectual property of the enterprise, promptly clear expired or invalid intellectual property, and avoid unnecessary cost expenditures.
（3） Institutional construction and job supervision
1. Establish a compliance management system for the development of AI applications and derivatives within the enterprise, regularly conduct legal and compliance training, and enhance employees' legal and compliance awareness.
2. Establish a compliance review position to supervise the entire process of AI applications, derivative product development, and other businesses, ensuring that enterprise operations are legal and compliant.
The path of "cost reduction and efficiency improvement" in the film and television industry is full of challenges. In the exploration of "AI cost reduction and derivative product efficiency improvement", every step of innovation for enterprises needs to be based on legal compliance. Only by building a strong legal defense line can enterprises steadily move forward on the road of cost reduction and efficiency improvement, and achieve sustainable development.
In recent years, the cost of film and television production has been constantly rising, from film and television adaptation authorization to script creation, from actor salaries to special effects production, from venue leasing to publicity expenses, every expense has been increasing. Taking Chen Zhixi, Chairman and President of Wanda Film Co., Ltd., as an example, she mentioned in a forum that while 12 million yuan could make a movie like "Pancake Man" back then, 120 million yuan may not be enough to make a movie now. The significant increase in costs has put enormous financial pressure on many film and television projects, making "cost reduction and efficiency improvement" an inevitable choice for the film and television industry.
At the forum, industry experts proposed that using AI technology to achieve cost reduction and developing derivative products to promote efficiency improvement is the key path to breaking through the current difficulties. The impressive results of Da Mai's layout of virtual shooting studios and the billions of sales of derivative products from Nezha 2 also demonstrate the potential of new directions. However, whether it is technological innovation in AI applications or business model expansion in derivative development, there are many legal risks hidden.
1、 Possible risks of AI cost reduction
（1） Copyright dispute over AI generated content
When using AI to generate virtual scenes, special effects shots, and even script outlines in film and television production, copyright ownership issues can easily lead to disputes. There is no clear definition of the rights holder for AI generated content in China's Copyright Law. If a contractual agreement is not reached before use, it may lead to ownership disputes between AI service providers, film and television producers, and users. For example, a certain film and television company using AI to design character images may be sued by AI service providers when authorizing third-party development of derivative products due to the lack of copyright ownership agreement, resulting in not only huge compensation but also project stagnation. Therefore, when film and television companies cooperate with AI service providers, they must clearly stipulate in the contract that the copyright of AI generated content belongs to the producer, and exclude any subsequent claims by AI service providers.
（2） Data compliance and privacy protection issues
AI technology relies on massive data training, and the legitimacy of data sources and usage is crucial. Unauthorized collection of online materials and use of personal biometric information for virtual image modeling by AI developers may violate relevant provisions of the Personal Information Protection Law and the Data Security Law. The film and television production company should clearly require the AI development company to establish a strict data usage approval system in the contract, ensure that the data source is legal, the purpose of use is clear, and obtain the consent of relevant parties in accordance with the law.
（3） Technical infringement risk
To reduce costs, some film and television production companies may use unauthorized AI tools or algorithms, which will face legal risks such as patent infringement and illegal use of open source code. Using cracked AI special effects software not only constitutes software copyright infringement, but may also result in the work being unable to be distributed due to infringement issues. Enterprises should conduct regular compliance reviews of AI tools, use genuine software, and avoid infringing on others' intellectual property rights.
2、 Possible risks of enhancing derivative efficiency
（1） IP authorization boundary blurred
The development of derivatives needs to be based on a clear IP authorization scope. If it exceeds the category, geographical or time limits stipulated in the authorization agreement, it will constitute infringement. Taking Nezha 2 as an example, if the film company only authorizes the development of toy derivatives and a third party produces stationery peripherals without authorization, it will infringe on the rights and interests of the IP owner. In addition, the breakage of the authorization chain can also easily lead to disputes, such as the second level authorizer cooperating with the authorized party without the original IP party's authorization transfer, which may result in the entire project being suspended. When signing an IP authorization contract, all parties should refine the categories of derivatives, sales regions, authorization periods, and sub authorization restrictions to avoid vague terms.
（2） Potential infringement risks of trademarks and designs
If derivative designs are not thoroughly searched for trademarks, patents, and copyrights, they are highly likely to infringe upon the prior rights of others. For example, a character doll developed by a certain film and television company was sued for design infringement due to its highly similar appearance to other anime characters, and the product was forced to be taken down and bear high compensation. Therefore, before developing derivatives, enterprises must conduct intellectual property searches to ensure that the design does not infringe on the rights of others.
（3） Quality Responsibility and Consumer Rights Protection Risks
The quality of derivatives directly affects IP reputation and corporate responsibility. According to the relevant provisions of the Product Quality Law, consumers can claim compensation from producers and sellers for derivatives with safety hazards or quality defects. If film and television companies, as IP licensees, fail to fulfill their quality supervision obligations, they may bear liability for fault compensation. Enterprises can include quality supervision clauses in the authorization agreement, requiring the authorized party to regularly submit quality inspection reports and clarify the responsibility for quality issues.
3、 Other compliance recommendations
（1） Improve contract management
From AI collaboration to IP authorization, contracts are the key to avoiding risks.
Before signing a contract with a partner, it is necessary to fully evaluate the project costs and risks, and conduct necessary due diligence on the cooperation.
When signing a contract, it is necessary to clarify the contract terms, ensure equal rights and obligations, and make detailed provisions on key content such as copyright ownership, authorization scope, and breach of contract liability to avoid disputes caused by contract loopholes.
When changing the content of the contract, sufficient communication should be conducted with the other party, a written supplementary agreement should be signed, and the agreement content should be ensured to comply with legal provisions.
After the contract is signed, a contract performance tracking mechanism should be established to promptly identify and resolve any issues that arise during the contract performance process, in order to avoid cost increases caused by contract disputes.
（2） Strengthen intellectual property protection
1. Before using someone else's intellectual property, establish an intellectual property review mechanism, conduct comprehensive rights review from AI generated content to derivative design, and ensure obtaining legal and effective authorization. For important intellectual property, it is recommended to hire a professional intellectual property lawyer for review and evaluation.
During the creative process, it is important to pay attention to protecting one's intellectual property rights and promptly registering copyrights, trademarks, etc. At the same time, a clear intellectual property ownership agreement should be signed with the creators to avoid any impact on project progress and revenue due to ownership disputes.
3. Regularly review and manage the intellectual property of the enterprise, promptly clear expired or invalid intellectual property, and avoid unnecessary cost expenditures.
（3） Institutional construction and job supervision
1. Establish a compliance management system for the development of AI applications and derivatives within the enterprise, regularly conduct legal and compliance training, and enhance employees' legal and compliance awareness.
2. Establish a compliance review position to supervise the entire process of AI applications, derivative product development, and other businesses, ensuring that enterprise operations are legal and compliant.
The path of "cost reduction and efficiency improvement" in the film and television industry is full of challenges. In the exploration of "AI cost reduction and derivative product efficiency improvement", every step of innovation for enterprises needs to be based on legal compliance. Only by building a strong legal defense line can enterprises steadily move forward on the road of cost reduction and efficiency improvement, and achieve sustainable development.
