IFPI Suing Major Search Engine for $9 Million

In a bold move, the IFPI has announced that the organization is suing major search engine Baidu. A Chinese court has agreed to hear the $9 million USD lawsuit.

Wikipedia describes Baidu as, “the leading Chinese search engine that can search websites, audio files, and images. It also has an online collaboratively-built encyclopedia (Baidu Baike), and a searchable keyword-based discussion forums. Baidu offers 57 search and community services. As of March 21, 2008, it is ranked nineteen in Alexa’s internet rankings.”

The press release continues:

Baidu’s music delivery services, which are quite separate from its general search engine, “deep link” users directly to hundreds of thousands of copyright infringing music tracks. They generate substantial advertising revenue for Baidu while causing massive damage to the music industry. In April 2007 a precedent-setting ruling found Yahoo China guilty of facilitating mass copyright infringement for operating a music delivery service very similar to Baidu’s. That ruling was confirmed in December 2007 by the Beijing Higher People’s Court, the final appeals court.

The record companies’ infringement claims against Baidu are based on 127 of their own music tracks, which are just a small representative sample of the wider infringement. They seek the maximum statutory compensation under Chinese law of RMB 500,000 (US$71,000) per track. This creates total claims of RMB 63,500,000 (US$9m) but the ultimate exposure could be much greater. Baidu participates in the infringement of more than a quarter of a million tracks, which could leave the internet company faced with multi-billion dollar damages claims when further action is taken to secure maximum statutory damages on all these tracks.

China’s internet companies have so far spurned the chance to partner with the recording industry and instead are facilitating mass-scale piracy on their networks. China has great potential as a legitimate digital music market, with more broadband connections than the US and a huge music-buying demographic. However, over 99 per cent of all music online in China infringes copyright, frustrating efforts to develop a legitimate music market.

The bulk of this online music piracy is accounted for by services that are run by hugely profitable companies such as Baidu. In February, the internet search engine announced fourth quarter 2007 profits of RMB 219.8 million (US$30.6m), an increase of 79 per cent over the same quarter in 2006.

A loss on the search engines behalf could mean bad news for other search engines that can be connected to in China. If merely linking to copyrighted music is an infringement, at least in China, it’s doubtful that any other search engine would be safe from liability. An example of this is Google where a user last year showed how one could find music on the search engine:

Clearly, this is a case that no search engine wants to lose anywhere in the world, but the good news for search engines is the fact that the company the IFPI is suing is a multi-million dollar company.

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