The International Federation of the Phonographic Industry (IFPI) sued the Chinese search engine behalf of a coalition of companies including EMI Records, Mercury Records, Sony BMG and Warner Music in January 2007.
The Beijing People’s Higher Court issued its decision in the Yahoo! China case on December 20.
But while the IFPI celebrated that win, it received a blow when the Court chose the same day to dismiss the record industry association’s appeal against a decision in another dispute with a Chinese search engine.
In November 2006, the Beijing First Intermediate Court cleared Baidu.com of copyright infringement in a case brought by music companies EMI, Universal, Warner, Sony BMG and local subsidiaries Gold Label, Go East and Cinepoly.
Both Baidu.com and Yahoo! China offered mp3 search services that allowed users to search for websites offering unlicensed music downloads. Music companies and the IFPI said that the process – known as deep linking – breached their IP rights.
“The ruling against Yahoo! China is extremely significant in clarifying copyright rules for internet music services in China,” said John Kennedy, chairman and CEO of IFPI.
Kennedy claimed that the IFPI’s failure to overturn the decision in the earlier Baidu.com case is “irrelevant”, saying that it has “effectively been superseded by the Yahoo! China ruling”.
August Zhang, a partner of Rouse & Co, the firm that represented IFPI in the Yahoo! China case through its associated Chinese firm, said that the judgment was a breakthrough because the Court held that Yahoo! China had to remove all links to infringing sound recordings, not just those provided by the music companies.
The Court described Yahoo! China’s decision to remove only the URLs provided to it by the copyright owners as an “obvious indulgence” of infringement.
Yahoo! China will now have to pay Rmb210,000 ($27,000) in damages.
Zhang said that there are two possible reasons for the different judgments in the two cases. First, the Regulations on the Protection of the Right of Communication through Information Network, introduced by the State Council in July 2006, did not apply in the Baidu case.
Article 23 of these Regulations states that a service provider “shall bear contributory infringement liabilities where he knows or should know that works, performances, or phonograms are infringed”.
Secondly, in the Yahoo! China case IFPI argued for both contributory liability and direct liability. The Court found Yahoo! China guilty of contributory liability only.
MIP Week spoke to a number of lawyers but none had seen the appeal court’s decision in the Baidu.com case. However, lawyers said that from the first instance judgment, it appeared that the IFPI had argued mainly for direct liability – an argument that the Court had rejected.
Global Law Offices acted for Yahoo! China in both the first instance case and the appeal. Kingsound & Partners also advised Yahoo! China in the appeal. Beijing Tian Wei Law Firm represented IFPI in the first instance of the Baidu.com case, while ZY & Partners handled the appeal.
