A few days ago, the Beijing Intellectual Property Court concluded an unfair competition dispute over the time-sharing rental of VIP accounts on video websites. The court concluded that the “play now” APP operator’s time-sharing rental of iQiyi VIP accounts was not justified. It constitutes unfair competition and should compensate the iQiyi company for economic losses and reasonable expenses totaling three million yuan. The final judgment rejected the appeal, and the original judgment was upheld.

The Beijing Intellectual Property Court held that, first of all, from the perspective of technical means, the two companies use streaming technology to enable users to receive iQiyi VIP video services without paying iQiyi, and restrict certain functions of the iQiyi APP. It hinders the normal operation of the network services legally provided by iQiyi.

Secondly, from the perspective of subjective faults, the two companies, as operators in the Internet industry and VIP paid members of iQiyi, should be aware of the VIP payment system of iQiyi, but they still carry out the alleged infringement and send them to iQiyi. After the infringement notice, the location of iQiyi video in the involved APP was adjusted many times and gradually became concealed, and the subjective maliciousness was obvious.

Thirdly, from the perspective of behavioral accountability, iQiyi Company clearly restricts the use of iQiyi VIP paid members in the "User Agreement" and "VIP Agreement", and prohibits the use of VIP accounts for the purpose of commercial operations such as renting, borrowing, transferring or sales, the two companies’ behavior of renting out iQiyi VIP accounts on a time-by-time basis obviously undermines the restrictions imposed by iQiyi on their VIP accounts based on the right to operate independently, and is not based on the use of new network technologies to provide new products and services to the society to promote the new development of the industry. Therefore, it is improper and should be punished.

Finally, from the perspective of improperly seizing trading opportunities, the accused behavior not only directly damages iQiyi’s operating income, but also, in the long run, will gradually reduce market vitality, disrupt the order and mechanism of competition, and hinder the normal and orderly development of the Internet video market, and would ultimately result in the loss of consumers’ welfare.

According to the provisions of Article 12, Paragraph 2, Item 4 of the Anti-Unfair Competition Law, business operators shall not use technical means to hinder or disrupt the normal operation of network products or services legally provided by other business operators by influencing users’ choices or other means. The behavior of the accused act was improper, violated the above-mentioned legal provisions, and constituted unfair competition.

Regarding the amount of compensation, the court of first instance comprehensively determined the compensation amount based on factors such as the huge number of downloads of the app involved in the case, the popularity of iQiyi videos in the app involved in the case reach multiple millions, the degree of subjective fault of the infringer, and the loss of the income of the rights holder's members and user traffic. The compensation amount of three million yuan is not inappropriate.

In summary, the Beijing Intellectual Property Court made a second-instance judgment: dismissed the appeal and upheld the original judgment.