A group of international record companies has lost a case against Chinese search engine Baidu over allegations about illegally downloaded music. A Chinese court has ruled in Baidu's favour.
Seven international companies, including the big four – Sony BMG, Warner, Universal and EMI – lost a case in which they accused Baidu of conducting illegal downloading and playing music owned by the companies without permission.
The No. 1 Intermediate People's Court ruled in Baidu's favour, saying that although the company provides links to music files, there was no infringement by Baidu itself because the music files are downloaded from a third party website.
The record companies had demanded compensation of $216,000 and a public apology from Baidu, as well as a suspension of its download service.
The recording industry body the International Federation of the Phonographic Industry said that it would back the labels in an appeal if they choose to appeal to a higher court.
"If the music companies had won, the whole search engine sector would have ground to a halt," a Baidu spokesman told the Shanghai Daily newspaper.
The case overturns an earlier ruling in EMI's favour, in which Baidu was ordered to pay an EMI distributor $16,000 for infringement.
Baidu operates sub-domains through which users can search for music files, and the company is believed to receive 15% of all its traffic on the mp3.baidu.com sub-domain.
Traditionally China has been the home of massive music and film piracy but the Government says it is trying to eradicate the problem. The IFPI is reported to have also begun proceedings against China's second biggest search engine, Yahoo China. That search engine is run by Alibaba, which is 40% owned by Yahoo.