Overview

Using a person's photograph in corporate online content can create unexpected legal risks, particularly when the person is a public figure and the photograph was obtained from a publicly accessible source.

In this China portrait rights dispute, a company published an article through its corporate WeChat account that included photographs of a former public figure. The individual subsequently brought a lawsuit alleging infringement of portrait rights and sought monetary compensation, recovery of rights-protection expenses and a public apology.

The company disputed the alleged infringement. It argued that the article was a positive feature about the individual's career and achievements, the photographs had been obtained from publicly available online sources, and the publication did not distort, defame or otherwise misuse the individual's image. The company also challenged the extent of the claimed damages and the requested form of public apology.

Importantly, the case did not end with a court finding that the company had infringed the individual's portrait rights. Following the court's mediation, the parties reached a settlement that brought the dispute to a final conclusion without an infringement judgment.

The case illustrates an important risk-management issue for companies operating websites, WeChat accounts and other digital media: the fact that an image is publicly available online does not by itself eliminate portrait-rights risk, and the appropriate response to a claim may involve both substantive defenses and settlement strategy.

Case Snapshot

The Core Legal Issues

1. Does using a publicly available photograph automatically constitute portrait-rights infringement?

The central issue was not simply whether the photograph had been used, but whether the circumstances of its use gave rise to legal liability.

The company argued that the photographs were obtained from publicly accessible online sources and were used in an article describing the individual's career and achievements.

The defense therefore distinguished between:

• the existence of a photograph online;
• the circumstances in which the photograph was obtained;
• the purpose and context of publication;
• whether the image was altered or presented in a derogatory manner; and
• whether the publication created a commercial association or other legally significant use.

This distinction was important because online availability should not be treated as an automatic license to use a person's image for any purpose. At the same time, the legal assessment of an alleged portrait-rights infringement depends on the specific circumstances of the publication.

2. Does the use of a public figure's image receive greater tolerance?

The claimant was a public figure, which formed part of the company's defense.

The company argued that the article was a positive presentation of the individual's career and did not contain defamatory, degrading or misleading content.

The defense therefore focused on the context and nature of the publication, rather than relying solely on the claimant's public status.

This is an important distinction for businesses: being a public figure does not mean that a person's portrait can be freely used without legal consideration.

Instead, the purpose, presentation, context and potential commercial implications of the use should all be assessed.

3. How should a company respond when the claimant seeks both compensation and a public apology?

The claimant sought not only financial compensation and rights-protection expenses, but also a public apology in a widely circulated newspaper.

From the defendant's perspective, the potential risk therefore extended beyond financial liability.

A judgment requiring a public apology could potentially create additional reputational and commercial consequences for the company.

The defense accordingly challenged both the alleged infringement and the proportionality of the requested remedies.

This allowed the litigation strategy to focus not only on the amount of potential compensation, but also on preventing an unnecessarily broad form of public remedy.

Legal Strategy

The case therefore required more than a simple argument that the photographs were “found online.” The strategy addressed the legal nature of the use, publication context, alleged commercial purpose, requested remedies and overall litigation risk.

Settlement Strategy and Risk Control

An important feature of this case was that the objective was not merely to minimize the amount eventually paid.

The company also sought to avoid a formal judicial finding of infringement.

This distinction can be significant in intellectual property and personality-rights disputes.

A court judgment expressly finding infringement may create additional reputational consequences and may become relevant to future disputes or business communications.

Through active defense and court-led mediation, the parties ultimately reached a settlement.

The settlement:

• resolved the dispute on a one-time basis;
• did not contain a judicial finding that the company had infringed the claimant's portrait rights;
• did not require the company to issue the originally requested public apology; and
• brought the dispute to a final resolution.

For businesses, this demonstrates why settlement structure can be as important as settlement amount.

Outcome

The case was ultimately resolved through court mediation rather than an infringement judgment.

Under the settlement arrangement, the company made a one-time payment to resolve the financial aspects of the dispute, with the final amount being substantially lower than the claimant's original demand.

The company was not required to publish the requested public apology.

The mediation agreement also provided for a comprehensive resolution of the dispute, preventing the parties from continuing to pursue additional claims arising from the same matter.

For confidentiality reasons, the specific settlement amount and other detailed financial terms are not disclosed in this case study.

Why This Case Matters

Publicly available images still require legal review

Businesses should not assume that an image can be freely used simply because it can be found through a search engine or on a public website.

The source of an image, the identity of the person depicted, the purpose of publication and the context of use should all be considered before publication.

Portrait rights and copyright are different issues

A company may face more than one type of legal risk when publishing a photograph.

Copyright concerns may relate to the ownership or licensing of the photograph itself, while portrait-rights issues concern the rights and interests of the person depicted.

A compliance review should therefore consider both dimensions where appropriate.

Public figures are not automatically free to use

The fact that a person is well known does not eliminate portrait-rights considerations.

The purpose and manner of use remain important.

Settlement can protect against reputational consequences

In a personality-rights dispute, avoiding an adverse judicial finding may be commercially important.

A negotiated resolution can sometimes provide a more controlled outcome than allowing the dispute to proceed to a final judgment.

The form of relief matters

A claimant's requested compensation is only one aspect of the litigation risk.

Requests for public apologies, publications or other forms of corrective action may create additional business and reputational consequences.

Companies should therefore assess the full range of requested remedies, not just the monetary claim.

Frequently Asked Questions

Can a company use a public figure's photograph in a corporate WeChat article?

Not necessarily. The fact that an image is publicly accessible does not automatically mean that a company has unrestricted rights to use the person's portrait.

The purpose, context, manner and potential commercial implications of the use should be reviewed.

Does using a photograph from the internet eliminate portrait-rights liability?

No. An image being available online does not by itself establish that its use is legally permissible.

Businesses should separately consider the rights of the photographer or copyright owner and the portrait rights of the person depicted.

Are public figures treated differently in portrait-rights disputes?

A person's public status may be relevant to the legal assessment, but it does not mean that the person has no portrait rights.

The circumstances and purpose of the specific use remain important.

Can a company avoid a public apology through settlement?

Potentially. If the parties reach a settlement before judgment, the final resolution may differ significantly from the claimant's original requests.

In this case, the dispute was resolved through mediation without the company being required to issue the requested public apology.

Is mediation appropriate in an intellectual property or portrait-rights dispute?

It can be, particularly where the parties want to control financial exposure, reputational risk and the scope of any public-facing remedy.

The appropriate strategy depends on the facts and the client's commercial objectives.

Key Takeaways

For companies publishing photographs of individuals through websites, WeChat accounts, social media or other digital channels:

1. Do not assume that publicly available photographs are automatically free to use.
2. Assess portrait rights separately from copyright and image-licensing issues.
3. Consider the purpose, context and manner of publication.
4. For public figures, assess whether the use creates a commercial association or other legally significant implication.
5. When facing a claim, challenge both liability and the scope of the remedies being requested.
6. In appropriate cases, settlement can help control both financial and reputational risk.
7. A settlement that avoids an infringement finding may be materially different from simply negotiating the amount of compensation.

This case demonstrates that effective litigation strategy in a portrait-rights dispute is not limited to defending the alleged infringement itself. Controlling the form of the final resolution can be equally important to the client's long-term commercial interests.

About the Author

Yu Yuting
Partner | NEO-ARK Law Firm

Lawyer Yu focuses on foreign-related litigation, cross-border disputes, commercial matters, and legal services for overseas individuals and businesses in China.

Email: [email protected]

Overview

A contractual late-payment penalty can become a significant issue in a commercial contract dispute, particularly when a client fails to pay for completed professional or consulting services.

In this China service contract case, a real estate consulting company completed the contracted consulting work, delivered the required report and fulfilled its contractual obligations. The client accepted the work but failed to pay the agreed service fee.

The contract contained a 0.04% daily late-payment penalty for overdue payment, together with provisions addressing litigation-related expenses. When the consulting company commenced proceedings, the defendant argued that the contractual penalty was excessive and should be reduced.

The court ultimately supported the contractual payment obligation and the agreed late-payment penalty, as well as the relevant recoverable litigation-related costs.

The case demonstrates an important practical issue in Chinese commercial litigation: a well-drafted payment and default clause can provide a strong basis for recovering both the underlying contractual debt and agreed remedies when the counterparty fails to perform.

Case Snapshot

The Core Legal Issues

1. Can a consulting company recover unpaid service fees after completing the contracted work?

The first issue was whether the consulting company could establish a clear contractual right to payment.

The company had completed the agreed consulting work and delivered the required report. The client had accepted the work but did not make the agreed payment.

The legal analysis therefore focused on the contractual relationship and the sequence of performance:

contract → performance → delivery and acceptance → payment obligation → non-payment.

Establishing this contractual chain allowed the claim to be presented as a straightforward breach of contract and payment dispute, rather than a broader disagreement over the quality or scope of the consulting services.

2. Can a 0.04% daily late-payment penalty be enforced?

This was the central legal issue in the case.

The parties had expressly agreed that overdue payment would trigger a 0.04% daily late-payment penalty.

The defendant challenged the clause and argued that the penalty should be reduced.

The court ultimately supported the contractual penalty.

For businesses entering into commercial service agreements in China, this illustrates why payment and default provisions should be drafted with care. A late-payment clause can become an important recovery mechanism when the counterparty delays payment.

A well-drafted clause should clearly address:

• the payment deadline;
• the event triggering the penalty;
• the calculation basis;
• the applicable daily or periodic rate; and
• the relationship between the penalty and other contractual remedies.

3. Can contractual litigation-cost provisions help recover legal expenses?

The contract also contained provisions concerning certain litigation-related expenses.

The consulting company therefore sought recovery of the relevant costs in addition to the outstanding service fee and late-payment penalty.

The court supported the applicable litigation-related claims.

This highlights a broader contract-drafting point: dispute-resolution provisions should be considered at the contract stage, not only after a dispute arises.

Where a contract clearly allocates certain costs and the relevant legal requirements are satisfied, those provisions may become part of the creditor's recovery strategy.

Legal Strategy

The case was therefore handled as an enforcement-oriented commercial litigation matter, rather than merely as a claim for an unpaid invoice.

Why Property Preservation Was Important

Winning a commercial lawsuit does not necessarily guarantee successful recovery.

Where a debtor's assets may be transferred or become difficult to locate during litigation, a creditor may face additional enforcement risks even after obtaining a favorable judgment.

In this case, the consulting company applied for pre-judgment property preservation when commencing the proceedings.

The preservation measure helped secure assets relevant to the claim and strengthened the creditor's position for subsequent enforcement.

For companies pursuing commercial claims in China, property preservation can therefore be an important part of the overall litigation strategy, particularly where there are concerns about the counterparty's financial position or ability to satisfy a future judgment.

Outcome

The court confirmed the validity of the consulting agreement and found that the consulting company had fulfilled its contractual obligations while the client had failed to make the required payment.

The court supported:

• recovery of the outstanding consulting service fee;
• the agreed 0.04% daily late-payment penalty;
• the applicable contractual litigation-related expenses; and
• relevant court-approved preservation and litigation costs.

The defendant's request to reduce the contractual late-payment penalty was not accepted.

The property preservation measure also provided additional protection for the creditor's eventual recovery.

For confidentiality reasons, the specific amounts awarded by the court are not disclosed in this case study.

Why This Case Matters

This case demonstrates several recurring issues in Chinese commercial contract litigation.

Contract drafting matters

A clear payment clause and a clearly defined late-payment mechanism can significantly strengthen a creditor's position when a dispute arises.

Performance should be documented

For professional service providers, establishing that the contracted work was completed and delivered is often essential.

Contractual deliverables, acceptance records, invoices and relevant communications can collectively establish the payment obligation.

Contractual penalties should be assessed before litigation

A contractual penalty does not automatically guarantee recovery at the stated rate in every dispute.

Its wording, the circumstances of the breach and applicable Chinese legal rules all need to be considered.

In this case, however, the agreed 0.04% daily penalty was supported by the court.

Preservation can protect the value of a claim

A creditor may have a strong legal claim but still encounter enforcement difficulties if the debtor's assets cannot be located or have been transferred.

Early consideration of property preservation can therefore be an important component of commercial litigation planning.

Frequently Asked Questions

Can a Chinese court enforce a contractual late-payment penalty?

A contractual late-payment clause may be enforceable when properly agreed and applicable to the breach. However, the final recoverable amount depends on the wording of the contract, the circumstances of the dispute and applicable Chinese law.

In this case, the court supported the agreed 0.04% daily penalty.

Can a company recover unpaid consulting fees in China?

Yes. A consulting company may bring a contractual payment claim when it can establish the agreement, its contractual performance, the client's payment obligation and the client's failure to pay.

Can contractual litigation expenses be recovered in China?

Potentially. Recovery depends on the contract and applicable legal rules. Where the parties have agreed that certain litigation-related expenses may be recoverable, that provision can become an important part of the claim.

What is property preservation in Chinese litigation?

Property preservation is a court-ordered measure intended to prevent relevant assets from being transferred, concealed or otherwise made unavailable for enforcement while litigation is pending.

Should a creditor consider property preservation before judgment?

Where there is a meaningful enforcement risk, early preservation may be worth considering. The appropriate approach depends on the debtor's assets, the value of the claim and the circumstances of the dispute.

Key Takeaways

For companies seeking to recover unpaid contractual payments in China:

1. Draft payment and late-payment provisions precisely.
2. Maintain clear records showing contractual performance and acceptance.
3. Review the enforceability of contractual penalty clauses before litigation.
4. Address litigation-related expenses when drafting the contract.
5. Assess property preservation at the beginning of a dispute where appropriate.
6. Treat enforcement planning as part of the litigation strategy from the outset.

A commercial contract dispute is therefore not only about proving that money is owed. Effective recovery may also depend on contract drafting, proof of performance, protection of assets and enforcement planning.

About the Author

Yu Yuting
Partner | NEO-ARK Law Firm

Lawyer Yu focuses on foreign-related litigation, cross-border disputes, commercial matters, and legal services for overseas individuals and businesses in China.

Email: [email protected]