/ciol/media/agency_attachments/c0E28gS06GM3VmrXNw5G.png)
Follow UsDerek Caney and Doug Young
NEW YORK/SHANGHAI: A Beijing court has ordered Chinese Internet search leader Baidu.com Inc. to stop directing users to music download sites, in a case that may set a precedent as China seeks to show it can enforce copyright.
Beijing-based Baidu, which aspires to become the Chinese equivalent of world search engine leader Google Inc., said it planned to appeal the case brought by Shanghai Busheng Music Culture Media Co., a joint venture between EMI Group and a Chinese partner.
China is trying to protect intellectual property rights in a country where pirated music, movies and software are available on almost all street corners.
Baidu was also fined 68,000 yuan ($8,418) in the case and faces a series of similar lawsuits brought by Vivendi's Universal Music, Sony Corp.'s Sony BMG and Warner Music Group.
Traditional peer-to-peer music services allow users to directly swap songs with one another over the Internet. Baidu offers no such service directly, but directs users to Web sites that offer peer-to-peer swapping.
"We believe that the district court order was based on a misunderstanding of the search engine technology and therefore is without merit," Baidu's lawyer Decheng Li of Beijing law firm Zhonglun W&D said in a statement.
Baidu, China's leading search engine with about one-third of the market, said in the statement that it provided search services but not downloading services.
Based on the Baidu statement, Sebastian Hughes, an attorney at the U.S. firm Jones Day, said the company might face a tough battle winning its appeal.
He said it appeared the court had the jurisdiction to order Baidu to stop providing access to Web sites offering unauthorised downloads of Shanghai Busheng's songs.
"Once Baidu was on notice, Baidu would have had an obligation to ensure that its customers are not able to access such infringing Web sites using Baidu's search engines," he said.
Precedent setting
The Baidu case could help to establish a precedent in China's fledgling legal system, where copyright infringement is still relatively common and Beijing is under growing pressure to get tougher with offenders, Hughes added.
Music search services are a key offering for Baidu, providing about one-fifth of its total search traffic, according to Internet data Web site Alexa.
"The trend in China is to protect copyrights, so these court cases could be really serious for Baidu," said Elias Glenn, an analyst at Pacific Epoch.
The company raised $109 million in its initial public offering last month, one of the most successful debuts on the Nasdaq in the post dot-com bubble era, with its American Depositary Shares more than quadrupling on their first trading day.
The film and music industries have been pushing for a crack-down on piracy, one of their largest costs.
Record companies recently won a landmark decision against Grokster, a peer-to-peer network that allowed users to download music from one another without permission from artists.
The film industry has had some modest successes on the piracy front in China over the last two years, winning several high-profile lawsuits in the local court system against producers and sellers of pirated discs.
But industry executives complain that China, while helpful in shutting down offenders, is often slow to act on its own without prodding from outside.
Baidu's shares have dropped steadily since their strong debut, amid concerns that they were overvalued.
The shares have fallen 35 percent from their first-day close of $122.54 but were still more than double their IPO price.
(Additional reporting by Juliana Liu in Singapore)