Huge fine on Qvod based on illegal revenues
2014-June-19 Source: Szdaily web edition
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Shenzhen’s market supervision bureau said during Tuesday’s hearing that the 260-million-yuan (US$43 million) fine it decided to impose on a local Internet company is based on its business revenues from allowing users to watching pirated and pornographic videos.

Qvod Technology Co. Ltd., an Internet video player service provider, made an apology, but disagreed with the hefty penalty and applied for an additional hearing.

Tuesday’s closed-door hearing was attended by the market watchdog, Qvod and the companies which accused Qvod of infringing on their intellectual property rights (IPR), according to yesterday’s report by the Southern Metropolis Daily.

The market watchdog explained that the 260-million-yuan fine is three times Qvod’s illegal revenues.

The final penalty will be announced after seven workdays, the market watchdog said.

Li Weixiang, an IPR and high-tech lawyer with Shenzhen Lawyers Association, said the possibility is trivial for the hearing to change the penalty.

Qvod can apply for a review if it is not convinced by the final penalty, according to Li.

Zeng Yaodong, director of the regulation department of the market supervision bureau, said the penalty was decided within legal framework and the company’s ability to afford it won’t be taken into consideration.

Shenzhen-based Tencent, China’s Internet giant, was seen at Tuesday’s hearing. It is the first company to complain to the market watchdog about Qvod’s illegal businesses.

Tencent asked Qvod to stop streaming 24 programs, such as popular TV dramas, via its mobile phone app three times in form of official letters between January and February. Tecent has the exclusive rights to disseminate these works on the Internet. However, Qvod turned a blind eye to the request, so Tencent complained to the market watchdog.

The exclusive rights cost Tencent 430 million yuan, the paper said.

Reportedly Qvod generated a substantial portion of its profits by offering other video products on its player without the consent of the producers, while also allowing pornographic websites to access the player.

Last year Qvod was fined 250,000 yuan for copyright infringement by the National Copyright Administration.

Editor: 王凯
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