An apparatus used in video encoding comprising: a processor configured to: receive a video frame which comprises a compound video; select at least one region containing text and/or graphics in the video frame; bypass a quantization step in encoding of the at least one region; for a current block in the at least one region, generate a prediction block; subtract the current block by the prediction block to generate a residual block; selectively bypass a transform step in encoding of the residual block; and encoding another region containing natural-view content in the video frame using a lossy mode; wherein the residual block comprises a plurality of residual values; and wherein the processor is further configured to: if the transform step is bypassed, perform entropy encoding on at least a portion of the plurality of residual values to generate encoded residual values; otherwise, transform the residual block to a transform matrix comprising a plurality of transform coefficients; and perform entropy encoding on the plurality of transform coefficients to generate a plurality of encoded transform coefficients; and the processor is further configured to: transmit the encoded at least one region in a bitstream; and add region indication information to a syntax of the bitstream, wherein the region indication information identifies the at least one region; wherein the apparatus is characterized by that the processor is further configured to: set at least one transform bypass flag for the current block; perform entropy encoding on the at least one transform bypass flag to generate at least one encoded transform bypass flag; and add the at least one encoded transform bypass flag to the bitstream; and wherein performing entropy encoding on the at least one transform bypass flag includes using three context models for each of the at least one transform bypass flag, wherein the three context models are selectable via an index equal to a sum of a first transform bypass flag belonging to an upper block of the current block and a second transform bypass flag belonging to a left block of the current block. a processor configured to: receive a video frame which comprises a compound video; select at least one region containing text and/or graphics in the video frame; bypass a quantization step in encoding of the at least one region; for a current block in the at least one region, generate a prediction block; subtract the current block by the prediction block to generate a residual block; selectively bypass a transform step in encoding of the residual block; and encoding another region containing natural-view content in the video frame using a lossy mode; receive a video frame which comprises a compound video; select at least one region containing text and/or graphics in the video frame; bypass a quantization step in encoding of the at least one region; for a current block in the at least one region, generate a prediction block; subtract the current block by the prediction block to generate a residual block; selectively bypass a transform step in encoding of the residual block; and encoding another region containing natural-view content in the video frame using a lossy mode; generate a prediction block; subtract the current block by the prediction block to generate a residual block; selectively bypass a transform step in encoding of the residual block; and encoding another region containing natural-view content in the video frame using a lossy mode; if the transform step is bypassed, perform entropy encoding on at least a portion of the plurality of residual values to generate encoded residual values; otherwise, transform the residual block to a transform matrix comprising a plurality of transform coefficients; and perform entropy encoding on the plurality of transform coefficients to generate a plurality of encoded transform coefficients; and transmit the encoded at least one region in a bitstream; and add region indication information to a syntax of the bitstream, wherein the region indication information identifies the at least one region; set at least one transform bypass flag for the current block; perform entropy encoding on the at least one transform bypass flag to generate at least one encoded transform bypass flag; and add the at least one encoded transform bypass flag to the bitstream; and