Yahoo China loses music piracy case

A court has ruled against Yahoo Inc.'s China arm in a lawsuit that accused it of aiding music piracy, the company and a music industry group said Tuesday.

The ruling came amid U.S. pressure for Beijing to stop rampant copying of music and other goods.

The lawsuit filed by the International Federation of Phonographic Industries accused Yahoo China of violating copyrights because its search engine linked to sites that carried 229 pirated songs. It was filed on behalf of 11 recording companies including Sony BMG, Warner Music, EMI and Universal Vivendi.

"We're very pleased with the outcome," said Leong May Seey, Asia regional director for the federation. "We think it is a step in the right direction in creating a legitimate online music service in China."

The ruling Monday by the No. 2 Intermediate People's Court ordered Yahoo China to pay 210,000 yuan ($27,000) in damages, the official Xinhua News Agency said. Court employees declined to confirm the report or release any other information.

Leong said she did not know the exact damages awarded but said they appeared to be well below the 5.5 million yuan ($700,000) sought.

"We are considering our options with the damages, whether we will appeal or not," Leong said.

Yahoo China said it would appeal and stressed its respect for intellectual property rights.

"We will appeal this decision because we believe Yahoo China's music search service both meets and exceeds the relevant legal standards for intellectual property protection," a company statement said. "An important principle is at stake in this case _ search engine operators should not be held liable for content posted on third-party Web sites."

Yahoo China is operated by Sunnyvale, Calif.-based Yahoo's local partner, Alibaba.com, China's biggest online commerce site.

The IFPI filed a similar lawsuit last year against China's most popular search engine, Baidu.com Inc. A court ruled in Baidu's favor in November. The IFPI is appealing.

Leong said the IFPI has filed administrative complaints with the Chinese government against other music-linking services and might pursue more lawsuits.

"We will be taking further action in other cases," she said.

China is one of the world's biggest sources of illegally copied products ranging from Hollywood movies and designer clothing to sporting goods and medications.

Beijing has increased penalties for product pirates and launched repeated crackdowns. But illegally copied music, software, designer handbags and other goods are widely available.