Shenzhen video firm faces hefty copyright penalties

The market supervision authority in Shenzhen held a closed-door hearing on Tuesday to consider fining a local technology company 260 million yuan ($41.7 million) for an alleged copyright violation.

The company, Shenzhen QVOD Technology Co, an Internet video services provider, requested the hearing. The outcome is expected to be announced in about a week.

According to the Shenzhen Market Supervision Administration, the fine amounted to triple the gains for the company from illegal practices.

"Our investigation found that the company earned 86.7 million yuan from illegally providing TV plays and video programs online without authorization from the copyright owners," Zeng Yaodong, director of the laws and regulation department of the administration.

Given its record of repeated infringements of copyrights even after a previous fine from the administration, the company deserves a severe punishment, Zeng said.

Citing business confidentiality with respect to information about the procurement and sales practices of the copyright owner, Tencent, the administration decided to keep the hearing behind closed doors, in line with regulations, he said.

Two lawyers represented Shenzhen QVOD at the hearing, but gave no details about how the company would answer the complaint.

The company could not be reached for comment. Its offices, located in Shenzhen High-tech Park in Nanshan district, appear to be in normal operation.

The company can lodge an administrative review within 60 days of receiving a penalty notice, or appeal to the court within three months, according to the law.

Shenzhen QVOD, which developed a video-on-demand software that attracted about 300 million users, has been in the spotlight since the police raided its headquarters in late April in a national action to clean up the Internet.

In May, it was found guilty of spreading pornographic and lewd contents online, and its license to provide telecommunication services was revoked.