Passive Baidu Limits Liability for Piracy 百度被判定对盗版侵权承担有限责任
A new court decision in a piracy case against search titan Baidu (Nasdaq: BIDU) is throwing a spotlight on a painful reality that has seen China’s fledgling music and publishing industries undermined by poor organization and a lack of support from Beijing. The reality is this: While big Western publishers and music labels have home governments and their own powerful industry groups lobbying on their behalf, Chinese authors, musicians and other makers of copyrighted products lack such groups or support from Beijing to promote their cause. Thus the Chinese content producers are virtually powerless to stop the piracy of their material on big-name sites like Baidu, which facilitate trade of illegally copied material through file swapping services.
The reality was on stark display in a Beijing courtroom this week, where a judge ruled that Baidu’s Wenku literature platform had violated the copyrights of a group of authors calling themselves the Writers Legal Rights Protection Coalition. (English article; Chinese article) But the same judge then ordered Baidu to pay a meager 145,000 in damages, equal to about $23,000. That was a sharp reduction from the 1.81 million yuan the group had been seeking, which in my view represented an equally paltry $287,000 for a case involving a major company like Baidu, which earns hundreds of millions of dollars in profit each quarter.
Baidu successfully convinced the judge that its liability was limited in the case because Wenku is simply a passive platform for people to trade literature, and thus Baidu is not responsible when people post pirated material. Baidu makes a similar argument for a popular music sharing service it operates, where users often trade pirated songs among each other while Baidu simply provides a platform for the illegal activity.
While these illegal activities take place on Baidu’s platforms, the company itself loves to tell the world — especially outside China — how much it is doing to clean up piracy from its sites. It specifically likes to point to the fact that it was removed from a US government list of “notorious” piracy sites when the list was last published late last year. Baidu’s removal from that list is certainly a accomplishment for which the company can be proud.
But that said, such a development could never have happened without a strong lobbying effort by Baidu in Washington, which almost certainly included support from a powerful US recording industry that had complained for years about the trading of pirated music on Baidu’s site. The US recording industry finally changed its tune after Baidu signed a series of agreements with several major US record labels last year to offer legal copies of their songs over a new music service. (previous post)
In a similar move, Chinese e-commerce leader Alibaba is spending big money and making a major effort to get its Taobao platform removed from the same “notorious” list, whose latest version could be published by the end of this year. (previous post)
First Baidu’s and now Alibaba’s big campaigns to be removed the US “notorious” list both reflect the fact that the big Chinese Internet firms that facilitate piracy on their sites are responding to pressure from big foreign companies, which have their own strong industry associations and the backing of their home governments to promote their campaigns. By comparison, Chinese authors and music companies lack such organization and thus often find their complaints receiving either little or no attention from the big Chinese Internet names.
Adding to the problem, China’s legal system limits penalties for copyright violators at levels that are so low that any fines have little or no deterrent effect, even when a company is found guilty in court. All of this is good for China’s Internet giants in the near term, as they will face little or no liability for continuing to allow domestically produced pirated songs, books and other copyrighted material on their sites. But over the longer run, it will ultimately stifle China’s domestic creative industries, putting them at a distinctive disadvantage to their better organized foreign rivals that receive strong government backing.
Bottom line: Lack of organization and government support will make Chinese content producers easy prey for piracy on the country’s major Internet sites for the foreseeable future.
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