Hotspots · Analysis

Is the era of high breach of contract fines for internet celebrities coming to an end?

In recent years, with the explosive growth of internet celebrity economy, disputes over termination of contracts between MCN institutions and broadcasters have occurred frequently, and the issue of "high breach of contract fines" has repeatedly sparked heated discussions. From the typical case of reducing the penalty from 60 million to 6 million, to the deep intervention of judicial rulings in industry rules, the resolution path for internet celebrity termination disputes has gradually become clear. This article analyzes the focus of controversy from a legal perspective and explores the path to the healthy development of the industry.

1、 Judicial Judgment Logic: Three Principles for Adjusting Penalty for Breach of Contract

According to Article 585 of the Civil Code of the People's Republic of China, liquidated damages should be based on actual losses, taking into account the performance of the contract and the degree of fault of the parties. In judicial practice, courts gradually correct imbalanced contractual relationships through three major logics:

（1） Using actual losses as anchor points to break the principle of 'agreement is justice'

Some MCN institutions have used formulas such as "number of fans x 3 yuan/person" to calculate liquidated damages, but due to a lack of actual evidence of losses, they are often adjusted by the court. For example, in the "Han Peiquan case" (Han Peiquan himself stated that the case was judged by the Chaoyang District People's Court of Beijing), the court believed that the institution's claim for a breach of contract penalty of 60 million yuan was seriously imbalanced with actual losses such as training investment and expected returns, and ultimately reduced it to 6 million yuan based on the performance of the contract. In addition, if an institution uses standard terms to increase the liability of the anchor (such as only agreeing on the anchor's unilateral breach of contract liability), the court may determine the invalidity of the terms based on Article 497 of the Civil Code of the People's Republic of China.

（2） Introduce industry conventions and principles of fairness, standardize calculation standards

In response to the confusion of penalty standards for breach of contract, judicial practice has gradually referred to industry norms. Several online associations and other organizations suggest that the penalty for breach of contract should not exceed three times the annual income of the anchor, and oppose overbearing clauses such as "10 times the annual income". In the case of Xiaohuijun, the plaintiff announced the latest outcome of their rights protection: the court has for the first time determined that the involvement of the "planning team" in malicious termination constitutes infringement and ordered Xiaohuijun to bear nearly 600000 RMB in compensation. This case not only warns anchors not to abuse public opinion pressure, but also requires institutions to protect their rights legally.

（3） Refine the handling of non compete restrictions and account ownership

The court adopts the principle of "combining the registration subject with operational investment" in disputes over account ownership. For example, in the case of Ms. A, it was determined that the account belongs to the institution, but an unsettled commission of 390000 yuan needs to be paid; The 'Dao Xiao Dao case', on the other hand, included the anchor in the list of dishonest individuals due to their failure to fulfill a termination fee of 4 million yuan, demonstrating the strictness of contractual obligations. In addition, if the non compete clause fails to pay economic compensation, the anchor may claim invalidity, but some courts believe that "failure to pay compensation" does not necessarily relieve the non compete obligation (such as the case of a technology company in Chongqing).

2、 Industry restructuring path: from "zero sum game" to "symbiotic win-win"

（1） Policy regulation strengthens institutional bottom line

Beijing, Shanghai and other places have implemented the "Model Text of Service Contracts for the Internet Culture Industry", which clearly links the penalty for breach of contract with the service period and actual income. For the high penalty part agreed in the contract, judicial reduction can be applied to curb the "sky high clause" from the source.

（2） Contract design innovation, building flexible mechanisms

The leading institutions are exploring a 'symbiotic' contract model:

1. Dynamic adjustment of profit sharing: Floating the sharing ratio based on fan growth and commercial monetization effects, replacing fixed high sharing;

2. Ladder style penalty: The penalty for breach of contract after 1 year of service is reduced to 50%, and after 2 years it is reduced to 30%, reducing the risk of long-term binding;

3. Pre agreement on account ownership: Clearly define the IP image and copyright division method to avoid ownership disputes after termination of the contract.

（3） Technology empowers dispute resolution

The third-party mediation platform utilizes technologies such as blockchain certification and online arbitration to record live streaming data and revenue sharing in real-time, enabling smart contract management and reducing performance disputes. This "technology+law" model provides a new path for efficient dispute resolution.

3、 Risk Warning: Bi directional Compliance Guidelines for Anchors and MCN Institutions

（1） Anchor: Beware of term traps and make good use of legal remedies

1. Strictly review core terms: focus on "automatic renewal", "exclusive exclusivity", "penalty calculation method", and avoid signing "lifetime bundling" agreements;

2. Retain performance evidence: Keep live streaming data, revenue streams, etc. If the institution does not provide resource support, it may claim breach of contract from the other party;

3. Actively exercise rights: if encountering exorbitant liquidated damages, the court may request a reduction; If the standard terms increase liability, it can be claimed that they are invalid.

（2） MCN organization: shifting from "control" to "empowerment"

1. Compliance design contract: Refer to the demonstration text and abandon illegal clauses such as "sky high liquidated damages" and "non compensatory non compete restrictions";

2. Diversify risks: Replace single penalty claims with commercial insurance, copyright pledge, and other methods;

3. Establish a benign exit mechanism: Allow broadcasters to negotiate termination after completing KPIs, and build a "cooperation exit win-win" ecosystem.

Conclusion: Reconstructing Contract Justice in the Digital Economy Era

The frequent disputes over internet celebrities terminating contracts are essentially a conflict between "contractual freedom" and "substantive fairness" in the context of traffic economy. Judicial rulings gradually break the unwritten rules of the industry by reducing liquidated damages and determining the invalidity of standard terms; Policies and industry norms guide MCN institutions to shift from "zero sum game" to "symbiotic win-win". For anchors, legal awareness is a "talisman" to avoid risks; For institutions, contractual justice is the cornerstone of sustainable development. Only by balancing freedom and order, innovation and compliance, can we build a healthy ecosystem for the "internet celebrity economy" and promote the sustained prosperity of the cultural industry.

Industry · New Policies

1. On March 19th, the Chinese government website released the "Regulations of the State Council on the Handling of Foreign Related Intellectual Property Disputes", which will come into effect on May 1st.

The Regulation consists of 18 articles, emphasizing the strengthening of intellectual property services; Strengthen the capacity building of enterprises and support the establishment of mutual assistance funds for the protection and protection of foreign-related intellectual property rights; Regulating overseas investigation and evidence collection; The competent commerce department of the State Council may investigate and take necessary measures in accordance with the law for cases where Chinese citizens or organizations have not been given national treatment, or where sufficient and effective intellectual property protection cannot be provided; The relevant departments of the State Council may take corresponding countermeasures and restrictive measures in accordance with the law against foreign countries that use intellectual property disputes as an excuse to contain and suppress China, and adopt discriminatory restrictive measures against Chinese citizens and organizations.

2. On March 21, the China National Intellectual Property Administration website published the Opinions of the China National Intellectual Property Administration, the Ministry of Education, the Ministry of Science and Technology, the Market Supervision Administration, the Financial Supervision Administration, the National Copyright Administration, the Chinese Academy of Sciences on Further Optimizing the Business Environment in the Field of Intellectual Property.

The Opinion consists of six aspects and proposes sixteen measures in four aspects, including: expanding the autonomy of universities and research institutes in the disposal of intellectual property rights; Promote the credit evaluation of patent and trademark agents; Improve the market-oriented pricing mechanism for intellectual property rights; Strengthen the legal protection of intellectual property rights and new domain protection rules; Promote rapid examination of trademarks and patents; Strengthen international cooperation and exchanges; Optimize the intellectual property administrative service process, enhance the level of digital services, and so on.

3. On March 27th, in order to guide data intellectual property transactions in Beijing, safeguard the legitimate rights and interests of all parties involved in data intellectual property transactions, and promote the compliant circulation and effective utilization of data intellectual property, the Beijing Intellectual Property Bureau formulated the "Beijing Data Intellectual Property Registration and Transaction Guidelines".

The "Beijing Data Intellectual Property Registration and Transaction Guidelines" consists of eight chapters and 23 articles, covering eight parts: general provisions, transaction subject, transaction subject, transaction method, transaction contract, transaction security, transaction management and dispute resolution, and supplementary provisions. It comprehensively covers all processes and links of data intellectual property transactions.

4. On April 23rd, the Supreme People's Procuratorate announced 9 typical cases of intellectual property protection, involving trademark rights, copyright, trade secrets and other fields.

In Case Four, the Supreme People's Procuratorate clarified that when handling criminal cases of copyright infringement involving the dissemination of pirated novels through the internet, the procuratorial organs should accurately grasp the criteria for determining the circumstances of the offense, ensure precise crackdown, and prevent injustice. By proposing sentencing recommendations, it is suggested that the court apply the "prohibition of employment" in accordance with the law, cut off the black and gray industry chain of disseminating pirated novels, and purify the original space of online literature from the source. In response to the operational and management issues discovered during the investigation of online novel reading apps, timely issue social governance inspection suggestions to relevant online advertising intermediary platforms, and urge them to effectively rectify them.