Most recently the USTR indirectly called out the Shenzhen QVOD Technology Co., creator of QVOD, a technology designed to enable businesses to distribute their content online using BitTorrent, P2P, and streaming technology.

Earlier this year the company indicated it was taking steps to stop its service being used for the transfer of protected content after the National Copyright Administration said it was infringing. Just just days later, however, QVOD was raided by the police. Adding to its woes, in May the company was found guilty of allowing the distribution of pornographic content via its service.

But despite its overtures towards licensed content, QVOD now has a sizable copyright-related headache to contend with. Following a hearing earlier this month, an authority in Shenzhen hit QVOD with a record-breaking fine equivalent to $42m after finding the company guilty of distributing local movie and TV show content online without rightsholder permission.

“According to our investigation [QVOD] earned 86.7 million yuan ($13.83m) from illegal practices. The fine levied amounts to three times the illegal gains, an amount the law allows,” a spokesman for the Shenzhen Market Supervision Administration said.

After being formally served on QVOD yesterday, the company was given 15 days to pay the fine. Any delays doing so will prove costly, with the authorities adding an additional 3% ($1.26m) to the fine for each day beyond the deadline.

The company does have the right to appeal the decision, either via administrative review or directly to the court within 90 days, but in the meantime QVOD has been ordered to pay the $42m fine. However, local media reports that the company is intending to mount a legal fight back to avoid paying up as required.

QVOD says it will appeal on three points – that the penalties are “unreasonable”, that the company “caused no great harm to society”, and that the company’s video player had no ads or subscription fees to generate profit from users.

A company insider, who spoke with local media on condition of anonymity, said that accepting the fine would mean not being able to pay 400 to 500 employees.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

Chinese companies such as Baidu have been fixtures in the USTR’s reporting for many years, but changes to its operations in 2011 meant that it was able to stay off the list, although at home it is still the subject of various legal clashes. Now, just two months after the USTR published its 2013 Out-of-Cycle Review of Notorious Markets, another Chinese company is hoping to please both local and US interests by ditching its pirate reputation.

In its last publication, sandwiched between KickassTorrents and MP3Skull, the USTR called out a site called Kuaibo. The company behind that site is the Shenzhen QVOD Technology Co. It’s the creator of QVOD, a technology originally designed to enable small and medium sized business to distribute their content online using BitTorrent, P2P, and streaming technology.

With an estimated userbase of 25 million (100 million on its mobile app) the company’s player software is undoubtedly popular. However, many of its users are now using QVOD to share unauthorized content via what appears to be a Popcorn Time-style P2P streaming feature.

“QVOD has become a leading facilitator of wide-scale distribution of copyright-infringing content and of other content considered illicit in China,” the USTR wrote, referring to pirate movies/music and pornography.

However, in an announcement this week, Shenzhen QVOD Technology Co reported that it had taken steps to stop the unlawful distribution of both copyright-infringing and adult content via its software. All illegal content will be blocked and the company will move to a commercial and fully-licensed footing.

“From now on, the previous ‘fast play mode’ [of QVOD’s Nora Player) will come to an end,” a company spokesman said. “Nora is willing to work with counterparts to jointly promote the development of the genuine video industry.”

The motivation for “going legal” appears to be financial. Analysts quoted in Chinese media say that its become increasingly difficult for QVOD to get advertisers who are happy for their brands to appear alongside infringing content. Since the company is pledging to spend more than $16m on licenses it needs money quickly, but whether its millions of pirates are ready to spend is far from clear.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.