Yahoo China Slammed Again For Piracy

December 25, 2007 0

IFPI has sued Yahoo China over allowing users to search for, play and download pirate music without leaving its website…

“The International Federation of the Phonographic Industry (IFPI) hailed a recent Chinese court ruling that held Yahoo China responsible for acts of copyright infringement in the most populous country in the world…”

Shanghai — Yahoo China lost another round in a legal battle as a court in Beijing upheld a ruling that the company is infringing on copyright laws by allowing pirated music to be downloaded, according to the industry group suing Yahoo China.

Yahoo China illegally linked users to sites where they could download pirated music, a service that created “a huge drain on efforts to develop a legitimate music market in China. Despite enormous market potential, music sales in China totaled $76 million in 2006, less than 1 percent of the global recorded music market,” the International Federation of the Phonographic Industry said.

While Internet freedom advocates questioned the propriety of the decision by the Beijing Higher People’s Court, the UK-based International Federation of the Phonographic Industry, which brought the case, praised the ruling.

“The ruling against Yahoo China is extremely significant in clarifying copyright rules for Internet music services in China,” John Kennedy, chairman and CEO of IFPI, which aims to combat piracy and promote copyright laws, said in a statement Thursday.

“Officials at Yahoo China could not be immediately reached for comments.”

“By confirming that Yahoo China’s service violates copyright under new Chinese laws, the Beijing court has effectively set the standard for Internet companies throughout the country.”

Beijing-based Yahoo China, owned by the Alibaba Group, in which Yahoo Inc. USA has a 40% stake, operates Chinese language services including Web search, e-mail, finance, sports, lifestyle and entertainment information was accused earlier this year by music industry behemoths including Warner Music Group Corp. for alleged copyright infringement involving more than 200 unlicensed songs, seeking damages of 5.5 million yuan ($747,100).

The IFPI, which represents the music industry, filed the lawsuit in January 2007 on behalf of several recording studios, including Warner Music Group, Sony BMG, and Universal Vivendi.

In the suit, IFPI accused China Yahoo of violating copyrights because it allows links between its search engine and Web sites that have illegally copied songs from artists such as U2 and Destiny’s Child.

The IFPI said that Yahoo runs an operation enabling users to search for, play and download pirate music without ever leaving its website.

The Beijing Higher People’s Court upheld the April ruling on Thursday, under new Chinese copyright laws which entered into force in 2006, the IFPI said in a statement.

Beijing’s No. 2 Intermediate Court said in April that Yahoo China, part-owned by Yahoo Inc, one of the world’s biggest Internet companies, should bear some responsibility for the copyright infringement, although the music was downloaded from servers of third-party Web sites.

“Yahoo China appealed the decision, arguing that it should not be liable for content found outside its Web site.”

The court ordered Yahoo China to delete links to free Web sites offering music downloads and to pay about 200,000 yuan for facilitating distribution of unlicensed songs by other sites. Yahoo China then said it would appeal against the verdict.

The IFPI, which represents the world’s music companies, estimates that about 85 percent of all music consumed in China is pirated. More than 99 per cent of all music downloading in China infringes copyrights, the statement said.

China “could be a fantastic digital music market if Internet companies like Yahoo China, and their owners, commit themselves to respecting copyright and protecting creators and producers,” Kennedy said.

The IFPI’s member companies “seek partnership, not conflict,” with Internet companies in China, Kennedy insisted. However, any partnership must protect the intellectual property rights of artists, he said.

Separately, the court also upheld a ruling on a similar case against Internet Company Baidu. A lower court in November 2006 had found that Baidu had facilitated copyright infringement. But because this case was filed under older Chinese copyright laws in 2005, the company was not liable for copyright infringement, the IFPI said.

“We are disappointed that the court did not find Baidu liable, but that judgment was about Baidu’s actions in the past, under an old law that is no longer in force. Baidu should now prepare to have its actions judged under the new law. We are confident a court would hold Baidu liable as it has Yahoo China,” commented Kennedy on Yahoo and Baidu cases.

China is viewed as one of the biggest sources of pirated music and movies, as well as counterfeit goods. And the IFPI, along with other companies and trade organizations, has been taking legal action to stem the flow of this content out of China. Recent reforms in Chinese law have helped, but experts say piracy still runs rampant.

While the music labels and artists are happy about the China ruling, Enderle Group Principal Analyst Rob Enderle found the case laughable, asserting that China should focus its energy on the factories that continue to flood the world market with pirated CDs, DVDs and other items.

“I think this reflects on the pre-Olympics efforts by the Chinese government to address their out-of-control piracy problem by looking like they are aggressive on piracy,” Enderle said. “It probably would be vastly more successful if they focused on the actual pirates a little more.”

Despite the fact that IFPI’s estimates indicate that 86% of the music listened in China is pirated, Liu Guoxiong, director of China Audio and Video Association, is confident that the local music market will reach 12.7 billion by 2010.

According to CAVA authorities will this year draft, formulate and revise 14 laws, regulations, rules and administrative measures on trademark, copyright, patent and customs protection as well as 7 judicial interpretations and guidelines.

Still, music labels see huge potential in China, and they have been willing to work with Chinese companies to ensure that music can be distributed legally and without violating copyrights.