Recently, the Beijing Intellectual Property Court concluded an unfair competition dispute in the second instance concerning the use of Ads blocker to watch a paid video.
Summary of the case
Shenzhen Wankaida Technology Co., Ltd. developed an APP called "TV Control", which can project the phone’s display onto the TV for viewing. It can block the pre-roll of videos in "Youku" when projecting the video onto the TV, and the user may also watch the paid videos by using this App. Hence, Youku sued Wankaida to the court.
The Beijing Intellectual Property Court ruled that the defendant's actions would reduce Youku's advertising revenue and VIP subscription fees, both of which are important revenue sources for video websites. Once losing these two revenues, it will cause the company operation difficulties. Finally, the court maintained the judgment of the first instance that Wankaida Company constituted unfair competition.
As a general consumer, "TV Control" apps may help reduce the time to watch ads and access to paid videos for free. Should it be supported? Is there any discriminatory behavior in the court decision? The answer is obviously no.
"Youku" has its business value.
The common websites on the Chinese market are Tudou, Youku, Iqiyi, Bilibili, Tencent video, Mango TV, etc., when we looking for videos, we will find the corresponding websites according to their self-definition. Different video producers will also upload their videos to the matched channels based on different websites' definitions. We can see that the video website has the value of reducing search time consumption and providing display channels.
Secondly, the current website companies also invest and produce web dramas and documentaries to hold exclusive broadcast, providing irreplaceable videos in a more precise way. For such videos, the consumers need to pay for subscription fees. Comparing with the traditional way to play a show on a TV station at a set time, it is more reasonable for consumers to pay a subscription fee in exchange to remove ads and watch on whenever they want.
"TV control" made Youku lost advertising and subscription revenue but attracted more downloads for itself, which constitutes infringement.
In the business model of video websites, they earn from the advertising and subscription revenue from the users. In this case, the "TV Control" APP allows consumers to watch videos by skipping pre-roll advertisements set by Youku, nor paying subscription fees of paid videos to Youku. It reduces Youku's vested benefits but pushes more consumers to download its APP, which would generate a subsequent profit after becoming famous. One gain while another one lost, it is unfair and unreasonable.
“Making work pay” is the most basic mechanism of society. The website company invested a lot to set up its definition, and to collect, make videos to provide them to consumers, it has the right to profit in specific ways (but with the precondition of not to break the law). Considering that one’s profit is based on damaging another party's legitimate rights and interests, the courts often rule such cases as unfair competition.