Copyright Owners' Rights over the Internet

The plaintiff, a company in Shanghai that produces music recordings, sued Baidu for infringement of its exclusive right to distribute its music recordings over the internet. The plaintiff demanded Baidu to immediately stop infringement, make a public apology and compensate all of its losses amounting to approximately Rmb500,000 (US$62,700). The plaintiff alleged that Baidu had, without authorization, made available for public downloading the sound recordings of over 50 songs by various artists. In September 2005, the Haidian District People's Court found Baidu liable for copyright infringement because it had engaged in dissemination of MP3 files of those sound recordings over the internet, which is a copyright owner's exclusive right.

Under the Regulations, anyone who reproduces copyrighted works (for example, by ripping sound recordings from CDs and converting them into a digital format such as MP3 files), uploads such works onto a web server or makes them available on the internet for public consumption, is required to obtain permission and pay remuneration to the copyright owner. Undoubtedly, the person who first reproduces and uploads the sound recordings onto a web server is the direct infringer of the plaintiff's exclusive rights to reproduce and distribute the sound recordings. The issue here is whether a search engine operator such as Baidu (and other ISPs who allegedly made the infringing material available on the internet) should be held liable for the direct copyright infringement caused by a third party.

On the face of it, Baidu (and/or ISPs) could be held liable for direct infringement because copies of such infringing material are stored on the hard drives of their computers for temporary periods. Moreover, even if they are unaware of the copyright status of the material in question, copyright infringement does not require knowledge or intent for liability. (The intention of the infringer may only be relevant for determining the remedy for the infringement.) Therefore, Baidu (and ISPs) may be exposed to copyright infringement liability. The result of the appeal from Baidu is still pending.

A public policy concern underlying the Regulations is that the benefits of new information technology will be lost, if the providers of new information technology are easily exposed to liability from copyright owners. Another public policy reason is that the interests of the copyright owners should be balanced against the public's interest to be able to gain access and use fairly non-infringing and copyrighted material available on the internet. In view of these considerations, the Regulations provide for situations where certain ISPs may be exempt from infringement liability if the specified criteria are met. The following 'safe harbour' provisions, modelled on the US Digital Millennium Copyright Act, shelters ISPs from monetary liability for the infringing activities of their users under circumstances where:

(i) the ISP provides automatic connecting services or transmission services for copyrighted material provided by a third party without selecting or modifying the content of the material or selecting the recipients of the material;

(ii) the ISP provides cache services, that is, temporary storage of material on its network and provides the same to users to enable quicker distribution of information;

(iii) the ISP providing host service:

a. has specified its identity and contact information;

b. does not modify the copyrighted material;

c. does not know, nor should reasonably know, that the material is infringing;

d. does not receive financial gain directly attributable to the infringing activity, and

e. removes or disables access to the material upon receiving a 'take down' notice, or

(iv) the ISP providing links or search services does not know, nor should reasonably know, that the material is infringing and removes or disables access to the material upon receiving a 'take down' notice.

When a copyright owner discovers certain infringing material on the internet, the owner may provide a 'take-down' notice to the ISP with preliminary evidence that such material infringes upon the copyrighted works.

Once notice is given to the ISP, it is required to remove or disable access to the infringing material immediately. The ISP should provide notification to the alleged infringer of the removal or discontinuation of access to the material. Generally, ISPs that follow the procedure upon receiving notice from the copyright owner will not be held liable for copyright infringement.

The Regulations permits the alleged infringer to show preliminary evidence that there is no infringement and require the ISP to re-instate the material or re-instate the linking to such material. The ISP must act accordingly if no infringement has occurred and the copyright owner is prevented from issuing another 'take-down' notice to the ISP.