Sour notes

China's leading search engine, Baidu is facing a new lawsuit just a month after it won a similar court challenge concerning alleged illegal music downloading.

China's music rights organization, the Music Copyright Society of China (MCSC) and a leading Chinese digital music distributor, R2G announced the anti-piracy action against Baidu.

MCSC filed the lawsuit, citing infringement of at least 50 songs, including the well-known Ai Wo Zhong Hua (Love China). It is seeking compensation totaling 1 million yuan and an end to alleged violations. R2G has also issued a letter threatening legal action against Baidu requesting the de-linking of all its unlicensed content. In due course, R2G will also initiate its own lawsuit, the company says.

"They (Baidu) even provide links to several Olympics-themed songs. The search engine even dares infringing in this area, when protecting the Olympic Games intellectual property is on the top of the nation's agenda," says Wu Jun, R2G's chief executive officer.

Baidu asserts it has placed great importance on intellectual property rights protection and formulated measures to safeguard the rights of intellectual property right holders.

Apart from that, the search engine claims that it has been exploring new types of commercial models to tackle copyright disputes, such as disc promotions and advertisements.

In December, the People's High Court of Beijing ruled that Baidu's music download services did not infringe music content copyright as alleged by five label companies, including Sony BMG, Warner Music and Universal Music.

The ruling, together with first and second round trials that Baidu has won since 2005, has cleared the way for the search engine to provide music search result pages that are linked to unauthorized MP3 download addresses.

"We are confident that we will win the case this time, because the timing is different," says Guo Chunfei, a partner at Beijing Professional Business Law Office, the attorney representing MCSC.

Guo explains the reason why Baidu won the last case was that the ruling was based on the Regulation on the Protection of the Right to Network Dissemination of Information, which only came into force on July 1, 2006. That regulation said that companies should take legal responsibilities if they are aware that their behavior might infringe on other parties' rights. However, the first case against Baidu was filed in 2005, before the new law went into force.

No more excuse

"This time, Baidu will have no excuses, and we have accumulated large amount of proof," Guo says.

The copyright society and R2G charge that Baidu has "camouflaged its illegal activities under the guise of search engine activities while it infringes music copyrights in order to avoid legal regulations".

"Over the past few years, blatantly ignoring music copyright laws, Baidu has also taken advantage of music publishers' relatively limited technology sophistication to stealthily provide unlicensed music streaming and downloading via their website and thus earn significant advertising revenues via its massive online traffic brought about by its music download service," says Qu Jingming, director-general of the Music Copyright Society of China.

According to Baidu's financial reports, its net profits in the fourth quarter of last year were about $30.1 million, compared with the figure of $3 million in the fourth quarter of 2005.

With Baidu's music search and download service accounting for more than 70 percent of the music search market, based on official CNNIC (China Internet Network Information Center) surveys, legal music revenues on the Internet in China are dropping at an alarming rate. The copyright society estimates that the publishing revenue in 2007 was one-tenth that of 2005. Qu notes that due to Baidu's existence, legal music providers' revenues are suffering and some may even be forced to close down.

Qu claims that many music copyright holders have sought negotiations with Baidu, but the latter's "stonewalling, delaying tactics and even distorted interpretations of the law to their benefit" have forced copyright owners to resort to litigation.

Wu Jun, says copyright holders have an uphill task as Baidu hides behind the guise of a "neutral search engine" and "employs sophisticated secret music websites" and deep links which, without requisite technology expertise, makes it almost impossible for copyright holders to detect and protect their rights by exposing Baidu's "dubious activities".

Taking the example of searching for Taiwan pop singer Jay Chou's song Qinghuaci on both Google and Baidu, the lawyer says. Google introduces links to legitimate music web sites, such as 9sky.com, which provides paid downloads; on the contrary, Baidu's engine only leads to unauthorized websites, where free songs are provided.

Besides, R2G has monitored several hundred of the hottest downloaded songs that Baidu search engine provides, and found many of them are from http://www.zpeb.net/soudog/UpLoadFiles/***.mp3. However if just visiting www.zpeb.net, you will find it is a website for an oil exploration organ of Sinopec (China Petroleum and Chemical Corporation), which has absolutely nothing to do with music downloading, Wu notes.

Also in December, Yahoo!China, a third player in the country's search market, lost its appeal to the Beijing Higher People's Court which upheld a lower court ruling in last April that the search company violated copyright laws to provide music search results.

"We believe that a fair judgment will arise from the judicial system based on the true facts," Wu says.

In the same time, MCSC and R2G will be communicating with advertisers and advertising agents to call on them to cooperate to take appropriate measures to refrain from allocating revenue to Baidu. "We will try to educate them that running ads on IPR infringing websites would harm their own reputation," Wu says.

MCSC's Qu states that the lawsuit is only the start. "MCSC and R2G, as allied partners, have assumed a stance that they will not tolerate Baidu's usual delaying tactics and refuse to engage in negotiations with Baidu unless they take down links and stop access to illegal content completely."