Chinese Search Giant Baidu Fined for Copyright Infringement

Baidu CEO Robin Li P

The crackdown comes as China tries to rid itself of the stigma of rampant piracy and establish a healthy Internet video market.

China's largest search engine, Baidu Inc., and Shenzhen-based technology firm QVOD were labeled China's top two violators of copyrighted video content in 2013 by the National Copyright Administration of China (NCAC) on Monday.

According to reports carried in the Chinese state press, both companies were subsequently fined $41,225 (250,000 yuan), the highest penalty a copyright violator can be required to pay under current statutes.

The NCAC began its investigation into Baidu's and QVOD's alleged infringements in November, after leading legitimate online video providers -- including Youku Tudou, Sohu Video, Tencent Video and LeTV, along with the MPA -- formed an alliance and jointly filed suit for infringement, seeking damages of up to $50 million (300 million yuan) from Baidu and QVOD.

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"The alliance welcomes NCAC's findings and decisions, which clearly demonstrate the government's determination to protect online video copyrights," a spokesperson from leading online video firm Youku Tudou said in a statement sent to The Hollywood Reporter and others. 

"The alliance also calls on Baidu and QVOD to stop all pirating actions in order to help build a positive online and mobile video ecosystem," the statement added.

In a related ruling in early December, Baidu was found guilty of copyright infringement and ordered to pay $78,560 (491,000 yuan) in damages to Youku Tudou.

In a statement released after this week's NCAC ruling, Baidu said it has taken many steps to combat piracy and will continue to do so.

During the course of 2013, China's online video market began to emerge as a viable new distribution channel for Hollywood content producers, with a raft of top U.S. TV series, such as The Walking Dead and Modern Family, selling to Youku Tudou and other streaming services. Insiders say the sums involved in such licensing deals remain slight and that in order for VOD to become a significant business, China will first need to get a handle on its still-rampant digital piracy problem.

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In a related piece of news, the MPA this week celebrated a separate decision in the Beijing courts, which found Chinese VOD company Beijing Funshion Online Technology Co. liable for copyright infringement in four civil complaints involving Hollywood movie titles.

In May, five of the MPAA's member studios filed 23 civil complaints against the operators of Funshion, alleging various acts of copyright infringement.

Five of those cases were resolved in a series of decisions announced by the Beijing courts in December, resulting in total awarded damages of $36,268 (220,000 yuan) and expenses of $1,957 (11,875 yuan). The MPA says it is awaiting rulings in the remaining 18 cases.

Zhu Yongde, chairman of the China Film Copyright Association, said, "China's online video industry is making great efforts to build a business model that will provide customers with a large amount of legitimate, high-quality content."

"But if we can't effectively stop rampant piracy activities on some online video websites, this will not only violate the rights of content owners, it will in turn prevent the online video industry from further development," he added. 

Said Mike Ellis, president and managing director of the MPA in APAC: "Rights holders will not stand idly by while their content continues to be infringed and will take any action under the law that they consider reasonable and necessary to ensure that films and television shows are made available to audiences by legitimate means alone."