Wu, a golden VIP member of iQIYI, one of China's largest online video service platforms, filed a lawsuit at the Beijing Internet Court (BIC) against iQIYI for breaching the terms and conditions of its VIP membership contract. The plaintiff said the platform had charged an extra payment for "advance screening on-demand" for a popular Chinese TV drama Qing Yunian — also known as Joy of Life — in addition to its premium membership.

The BIC heard the case on June 2, 2020 and ruled that the iQIYI VIP membership service contract is partially invalid. Its updated terms and conditions on advance screening on-demand after Wu purchased the membership did not apply to Wu. iQIYI was required to continue to provide membership services to Wu that matched what he purchased.  

Wu: The advance screening on-demand model damaged his gold VIP membership rights and interests

Wu became a gold VIP member of iQIYI, on June 19, 2019. The online contract said he would always be able to watch new episodes of popular TV drams before non-VIP users.

When he was watching the TV show Qing Yunian on the platform, Wu found out that the promised automatic skipping of title commercials enjoyed by VIP members was missing. He had to manually click the button "skip" to get rid of the title commercials.

Besides, iQIYI updated a new pattern of advance viewing based on the original VIP rights. It now charged 3 yuan ($ 0.46) per episode to VIP members who wish to watch the series more in advance than a regular VIP member.

Moreover, Wu found out that the iQIYI VIP membership service contract was unilaterally changed by iQIYI. He claimed that the paid "advance screening on-demand" violated their service pattern and covertly infringed his gold VIP membership rights. The agreement breached some terms of the Contract Law of the People's Republic of China and should be invalid.

Wu therefore sued iQIYI and asked the court to confirm that iQIYI's updated terms on advance screening on-demand in its VIP membership contract were invalid. He argued that the court should direct iQIYI to automatically skip all commercials, cancel the advance screening on-demand function and make him always be able to watch new episodes of popular TV dramas, including Qing Yunian before non-VIP users, and that iQIYI should pay for the notarial fees incurred by him for the suit. 

iQIYI: No damage occurred to Wu's membership rights and interests

iQIYI argued that its terms do not deviate from the principle of fairness and are not in violation of the law. The operation mode of video service platform determines that it is not practical to inform members one by one or negotiate with members to change the contract terms one by one.

Regarding member privileges on commercials, iQIYI explained its position in the form of text and picture examples. The advertising in the title is in line with streaming industry practice and the trading habits between the parties.

As to the advance screening on-demand, it is essentially no different from paying extra money for more movies in terms of its business model and iQIYI had notified its users about this. Meanwhile, VIP members still enjoy the rights of watching popular TV dramas before non-VIP users. The other video streaming websites are promoting similar models, it added. 

The trial of first instance ruled that:

1. The model of "advance screening on-demand" has no fault itself, but it should not infringe the existing membership rights and interests.

The healthy development of business model is based on following business terms, respecting consumers' feelings and not violating relevant laws and regulations.

2. Some standard terms in iQIYI's VIP membership contract exclude the users' main rights and interests and fail to fulfill the obligation of reasonable reminders, and are thus null and void.

3. Membership exclusive recommendations do not constitute a breach of contract. Details of commercial privileges and member exclusive recommendations are specified in the contract and illustrated in the membership rights section, which are in line with the ad pushing behavior of the website.

4. The paid "advance screening on-demand" weakened Wu's membership rights. The unilateral change of contract contents is not binding on Wu.

iQIYI unilaterally changed the contract content and launched the paid advance screening on-demand during the release of Qin Yunian. It damaged the rights of its gold VIP members to enjoy the drama before other non-VIP users and significantly reduced the entertainment and satisfaction of gold VIP members in watching the drama. iQIYI's behavior in changing the contract damaged Wu's main rights and thus was null and void to Wu. 

Details of the court's judgment:

1. The iQIYI VIP membership service agreement updated on Dec 18, 2019 is declared partially null and void on the content of responsibility exemption in clause two in the preamble.

2. Clause 3.5 in the contract pertaining to the paid "advance screening on-demand" is not valid to Wu.

3. The court ordered iQIYI to provide the plaintiff Wu with the rights and interests of gold VIP membership for 15 consecutive days within 10 days of the judgment, so that he could enjoy the viewing rights of the popular TV shows updated on the iQIYI platform.

4. Within 10 days of the judgment, the defendant iQIYI was ordered to compensate the plaintiff Wu 1,500 yuan for notarial expenses.

5. Other claims of the plaintiff Wu were rejected.