Crackdown In China: U.s. Eyes Baidu Copyright Suits

China's willingness to enforce infringement laws that protect the music industry's copyrights is being put to the test—and the U.S. copyright czar is watching.

On Sept. 19—the first business day after the Commerce Department Coordinator of Intellectual Property Enforcement Chris Israel completed his first trip to China—a Beijing judge found the operators of China's largest Internet search engine liable for deep-linking to unlicensed music files. Baidu was ordered to stop the downloads of certain tracks and pay EMI Group-affiliated label Shanghai Busheng Music Culture Media more than 68,000 yuan ($8,405) in damages.

Unlike such search engines as Google that merely provide links to Web sites, Baidu offers an MP3 search that lists links to music files. Clicking the link triggers a download from a remote site while the user remains on Baidu.

Baidu continues to link to many unlicensed tracks. A Sept. 21 search on the site led to hundreds of links to recordings by such acts as Coldplay, U2, Beyoncé and Eminem.

Yet seven more suits by major labels and their affiliates against Baidu are scheduled for hearing Sept. 26 in another Beijing District Court.

The Baidu decision is not the first of its kind. In January 2003, a District Court in Norway found Frank Allan Bruvik liable for copyright infringement. His napster.no site linked to—and promoted—"free" file sharing of unlicensed music. As with Baidu, a click initiated downloads from other sites.

Although an appeals court reversed the judgment against Bruvik, the Norwegian Supreme Court in January 2005 changed that decision. It found Bruvik liable for "aiding and abetting" infringement.

Earlier this year, the Federal Court of Australia held Web site operator Stephen Cooper liable for "authorizing" copyright infringement. His mp3s4free.net site offered links to unlicensed MP3 music files. Again, clicking on a link would initiate a download from another location.

The court held that Cooper designed and organized his site to knowingly permit or approve infringement by users. Although his site included a disclaimer that downloading would be legal only with the copyright owner's permission, the court said that was not enough to avoid liability.

The Australian court also held the Internet service providers and their individual owners liable, for failing to have a policy to terminate accounts of repeat infringers. European, American and Australian laws protect ISPs from liability if they set up and enforce such policies.

There have been similar cases in Belgium, Sweden and Denmark, says Lauri Rechardt, deputy general counsel for the International Federation of the Phonographic Industry.

In China, 90% of available music and movies are pirated copies. When U.S. Commerce Secretary Carlos Gutierrez appointed Israel to the new position of copyright czar in July, he said their first focus would be China. Israel met with China's Ministry of Commerce the week before the Baidu decision, demanding that officials show tangible results from their ramped-up anti-piracy efforts.

Whether the court decisions will have any real effect on piracy remains to be seen. Baidu plans to appeal the decision, and the damage award pales in comparison with the $109 million Baidu reportedly raised in August from its initial public offering. ••••