Recording Industry steps up campaign against internet piracy in China

• New legal proceedings brought against Baidu
• Copyright infringement actions against Sohu and its associate company Sogou
• Yahoo China in breach of copyright violation judgment

Beijing, 4th February 2008

The recording industry today announced a series of new steps to try to develop a music business in China based on respect rather than blatant violation of copyright laws.

After months of fruitless negotiations, legal proceedings have been filed today against the country’s biggest internet company, Baidu. Separate actions have also been brought against Sohu and its associate company Sogou. Meanwhile, Yahoo China faces fresh proceedings following its refusal to comply with a landmark ruling in December confirming it violated Chinese law by committing mass copyright infringement.

All of the Chinese companies involved operate similar services based on delivering music to their users via “deep links” to hundreds of thousands of infringing tracks on third party sites, with the aim of driving their own advertising revenue. Such services have been confirmed as in breach of copyright by the December judgment of the Beijing Higher People’s Court. Each of them is a driver of copyright abuse in China, where the huge potential for the online music sector is being stymied by copyright theft.

John Kennedy, Chairman and Chief Executive of IFPI, which represents the recording industry worldwide, said: “The music industry in China wants partnership with the technology companies - but you cannot build partnership on the basis of systemic theft of copyrighted music and that is why we have been forced to take further actions.

“China’s internet companies have a unique opportunity to demonstrate respect for copyright, take a stand against piracy and engage in responsible partnership with music companies. It’s a matter of great regret that, despite the clear precedent laid down by the Yahoo China judgment, those internet companies are instead choosing blatant violation of copyright, with the inevitable and unwanted litigation that follows in its wake.”

China has potentially the largest online music-buying public in the world with as many broadband connections as the United States. Currently, however, more than 99 per cent of all music files distributed in the country are pirate and China’s total legitimate music market, at US$76 million, accounts for less than one per cent of global recorded music sales.

Today’s actions follow in the wake of a decisive judgment against Yahoo China in December 2007 by the Beijing Higher People's Court. The court’s finding that Yahoo China’s music delivery service is illegal under Chinese law sets a precedent for cases against similar operations in China.

Three record companies have now filed proceedings against Baidu. The new claims have been filed with the Beijing No. 1 Intermediate People's Court by Universal Music Ltd, Sony BMG Music Entertainment (Hong Kong) Ltd and Warner Music Hong Kong Ltd. The three companies are asking the court to order Baidu to remove all links on its music delivery service to copyright infringing tracks that they own the rights to.

Action is also being taken today against Sohu and its associate company Sogou, which operates a similar service. Sogou makes profits through advertising that appears on the service and through sponsorship. Sogou also actively induces and encourages copyright infringement by means of recommendations and charts, while Sohu provides deep linking services through its associate company.

Sohu is the official sponsor of internet content service (ICS) for the Beijing 2008 Olympic Games.

The legal action is being brought by four record companies: Universal Music Limited, Gold Label Entertainment Limited, Sony BMG Music Entertainment (Hong Kong) Limited and Warner Music Hong Kong Limited. The cases were also filed at the Beijing No.1 Intermediate People's Court. They follow four prior notices that were sent to both companies from July 2007 onward.

The claims against Baidu, Sohu and Sogou will be served on the respective companies by the court after the Chinese New Year.

Meanwhile, Yahoo China has still not complied with the December ruling made against it by the Chinese appeal court. As a consequence, the plaintiffs in that case have now filed execution proceedings against Yahoo China, asking the court to force Yahoo China to comply with the earlier judgment.

IFPI last month wrote to the officers and directors of Yahoo Inc in the United States, which has a 44 percent stake in Yahoo China and a representative seat on the company’s board. The letter urges Yahoo Inc, which is a partner of the recording industry in many territories, to use its influence to stop Yahoo China’s continuing breach of copyright law.