On the day before World Intellectual Property Day, the Tianjin Intellectual Property Court released the top 10 cases of intellectual property rights in its jurisdiction. A case involving Tencent Video, one of China’s largest video-streaming services, and Tianjin-based company Long Yao attracted much attention for the staggering compensation to be fined for the latter’s trademark infringement and unfair business practices.

The Court found that the defendant Long Yao was the developer of the "Small Town on the Chain" app, where the misappropriation of trademarks owned by the plaintiff Tencent Video and the piracy of hit TV shows legally licensed by the plaintiff occurred. Users of the "Small Town on the Chain" app do not need to watch the pre-show advertisements when watching the TV shows. They can also watch them for free or at a very low price, which users of Tencent Video need to pay membership fees to access. As a result, users who originally needed to log in to Tencent Video’s website or app to access content instead chose to watch it through the “"Small Town on the Chain” app, especially when Tencent Video has a large number of exclusive film and television resources on the entire network. Under the circumstances, the actions of Long Yao will directly cause the massive loss and decline of the plaintiff’s users and traffic. At the same time, the behavior of inserting vulgar advertisements on the video playback page made users think that the vulgar advertisements were provided by the plaintiff, which adversely affected the reputation of the plaintiff.

Due to the defendant’s pirating of "Ruyi's Royal Love in the Palace", the loss of users and traffic on the part of the plaintiff can account for at least 80% of the existing users and traffic. Although the plaintiff's investment of 1.27 billion yuan was the content cost, it was also part of its expected income. In other words, if the plaintiff did not incur any losses in the play, the play would at least bring the plaintiff an expected income equivalent to 1.27 billion yuan, and this part of the expected income should include the increase in users and traffic. Therefore, the plaintiff’s expected income is inversely proportional to the users and traffic "hijacked" by Long Yao. You can refer to Long Yao improper use of the plaintiff’s content costs to determine the plaintiff’s expected loss of interest as the user and traffic loss. Based on this, the formula for calculating the plaintiff’s economic loss can be determined as follows: economic loss ≈ expected income deduction. The plaintiff’s profit rate is proportional to the number of user clicks. After Long Yao pirated the play, the number of clicks on the play was almost in both apps. The same, that is, the plaintiff's profit margin has fallen by at least 50%. The plaintiff's expected benefit loss ≈ the plaintiff's expected benefit × falling profit margin, so the plaintiff's expected benefit loss is approximately 630 million yuan.

The final judgment of this case is: Long Yao shall immediately stop the acts of infringing upon the exclusive right to use the registered trademark owned by Tencent Video and unfair business practices; Long Yao shall compensate 50 million yuan for the latter’s economic losses and reasonable rights protection expenses.