Qvod Vs China Government: RMB 260 million Punitive Fine for Copyright Infringement?

qvod(By You Yunting) Introduction to the Case:

Plaintiff: Shenzhen Qvod Technology Co., Ltd (the “Qvod”)

Defendant: Market Supervision Administration of Shenzhen Municipality (the “MSA”)

Court of first instance: Shenzhen Intermediate People’s Court

The MSA filed a case with the Shenzhen Intermediate People’s Court, and claimed to cancel the punitive fine of RMB 260 million from the MSA. On 30th of December 2014, the Shenzhen Intermediate People’s Court held the trial as the case is still on that trial.

On 26th of June 2014, the MSA issued a punitive fine of RMB 260 million to Qvod. After the receipt of the punitive fine, the Qvod put forward an administrative review but was rejected by the Copyright Bureau of Guangdong Province. The Qvod filed a lawsuit asking the court to cancel the most expensive online copyright administrative punishment. On the 30th December 2014, the court held a trial.

The Qvod claimed, it only provided search, links and other services for such television shows as the Beijing Love Story and the Song of China but did not know any more whether the linked works constituted infringement. After the Ten cent sent its notices of infringement, it immediately adopted deleted measures, which shall applied the principle of safe harbor, thus exempting from administrative punishment (the principle of safe harbor” means that, where the network service provider only provided information storage services without making the content of its links, if the network service provider is informed of deleting the links, the network service provider thus shall be undertake the liability to delete the links and any later deletion shall constitute infringement. If the infringed contents did not exist in the server of the network service provider and the right holder did not inform of detailed infringed content, the network service provider shall not be liable of infringement) .

The Qvod also held that on the ground that this case shall be civil infringement, the MSA had no right to punish the Qvod and the fine of RMB 260 million is irrational. As for the determination that the average prices of 13 works added up to RMB 86.716 million, the Qvod thought that using the determination as a punishment criteria is unsuitable. Furthermore, as the National Copyright Administration once made an administrative fine of RMB 250000, the fine of RMB 260 million issued by the MSA shall belong to repeatable punishment.

Lawyer’s Comment:

Are the government entitled to impose a fine against the Qvod? Pursuant to the Implementing Regulations of the Copyright Law, in respect of any infringement of copyright, with injury to the social and public interests and illegal business, the copyright administrative departments may impose a fine equal to an amount not less than 100% and not more than 500% of the amount of illegal turnover. With regard to the determination dependent on the average price of 13 works, it appears tenable.

But on closer consideration, questions will be found. Even though there are millions of money in Qvod’s accounting, most of which are received from copyright piracy, victims shall be the intellectual property right holder of the works and thus it is those victims that shall get it back in theory. At the same time, the Qvod also owed its employees’ salaries, labor compensation for illegal dismissal, which shall be paid to its employees. When those creditors are struggling to protect their rights, the MSA that had pretended never to have heard of copyright piracy turned out and issued a fine which took all the benefits of Qvod in the past years. Is it fair?

Look again at the determination basis of the MSA, the average price of 13 works may be indeed RMB 80 million. However, how much are the infringement judgment of Shenzhen courts? According to current judicial practice, average price of a work shall be compensated not more than RMB 100000, a quite low compensation. Why is the average price of a work valued at about RMB 80 million? It seems that punishment performed under the guise of legitimate acts robbery.

Lawyer Contacts

You Yunting86-21-52134918  youyunting@debund.com/yytbest@gmail.com

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