Xunlei Loses Copyright Lawsuit Filed by Hollywood Studios

A Shenzhen court found online video site Xunlei Ltd. guilty of copyright infringement and ordered it to pay 1.4 million yuan ($210,000) in damages, more than two years after it was sued by the industry group representing the major Hollywood studios.

As part of its decision, the court in Shenzhen’s Nanshan district also ordered U.S.-listed Xunlei to pay litigation costs of 162,400 yuan, according to the Motion Picture Association of America (MPAA), which represents the six top studios.

Shares of Xunlei fell 5.2% after the decision was announced.

“We are heartened that the court in Shenzhen has found in favor of strong copyright. The legitimate Chinese film and television industry has worked hard to provide audiences with a wide range of legal options for their audio-visual entertainment — a marketplace that has flourished because of the rights afforded to copyright owners under the law,” said Mike Ellis, Asia Pacific director for the Motion Picture Association. “We will continue to work with our local partners in China to help promote and protect the legitimate marketplace for films and television content.”

A Xunlei spokesman could not immediately be reached for comment.

The MPAA filed its initial complaint in 2015 in Shenzhen, the boomtown bordering Hong Kong that is home to many high-tech firms and which is gaining a reputation as one of China’s most advanced for intellectual property protection. Once a hotbed of piracy, China is placing increasing focus on such protection as it tries to nurture more homegrown creators of video content and other intellectual property.

Xunlei, which is backed by local smartphone maker Xiaomi Inc., had previously reached agreements with the MPAA in 2008 and again in 2014 to stop trafficking in pirated material on its sites, but the MPAA was ultimately dissatisfied with those previous efforts.

China is home to one of the world’s most vibrant online video sectors, which offers a wider range of programming and viewing options than traditional state-owned TV operators. Xunlei is one of the few remaining independents following a period of consolidation that has seen most major players become units of China’s leading internet companies: Alibaba Group Holding Ltd., Tencent Holdings Ltd. and Baidu Inc.

Contact reporter Yang Ge (geyang@caixin.com)