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The so called “three-step test”, that the limitations and exceptions of copyright shall be allowed in certain special cases, provided that they do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the author, grants copyright flexibilities to balance the interests of all stakeholders, especially within the European system of circumscribed limitations and exceptions. This is essential for the domain of computer law, confronted by rapid and unpredictable global technological developments, and is, thus, enshrined in the most important international intellectual property (IP) treaties. Through the proposed third amendment to the Copyright Law of the PRC, the legislature intends to adopt this test while also introducing an open-ended list of limitations and exceptions that constitutes a China-specific “two-step test.” This contravenes prima facie the thesis endorsed by the WTO Panel in the case concerning Section 110(5) of the US Copyright Act in 2000. In contrast, court decisions in China frequently apply the fair use doctrine of US copyright law, neglecting to consider its peculiar context of the US common law tradition and, thus, unduly expanding the Chinese courts' discretionary power. This paper summarizes the case law in China and takes a comparative approach to address the divergence between the judicial application of cyber copyright law and the existing legislation. It suggests revising the proposed Article 43 of the Copyright Law of the PRC to capture the due interpretation of the three-step test, thereby finessing the delineation between rights protection and free use with the compensation of remuneration under the principle of proportionality. It argues that transplanting the US fair use doctrine into Chinese copyright law is feasible, but with the preconditions of endeavouring to strengthen judicial reform to integrate the IP adjudication systems, enhancing the coherence and efficiency of copyright enforcement, and facilitating consistent dialogues between scholars, practitioners, and lawmakers. [ABSTRACT FROM AUTHOR]

Abstract: This paper examines the concept of copyright as an intellectual property in the digital age and the utilitarian objective which an intellectual property seeks to achieve. In that respect ‘fair use’ as a concept of U.S. copyright law has been critically analysed. An ongoing Court battle involving the dispute between Google and the Author''s Guild & Publishers has been examined and an attempt has been made to justify the act of Google under the fair use doctrine. At the heart of the work, one shall be able to appreciate the pressing need for the copyright laws to be rewritten for the digital age. Recourse has been made to numerous case law to appreciate the concept of fair use and this paper concludes by holding Google''s project of digitizing copyrighted books as ‘fair’ as it fulfills the primary aim of copyright law which is “encouragement of learning” and “dissemination of knowledge”. [Copyright &y& Elsevier]