CHINA: Google should help prevent China piracy

Motion Picture Association asks web giant urge its new Chinese partner to prevent illegal downloads

Korea Herald
Thursday, January 11, 2007

Google Inc., owner of the world's most-used internet search engine, should urge its Chinese partner to prevent users from downloading pirated videos, the Motion Picture Association said.

Shenzhen Xunlei Network Technology Ltd., in which Google bought a stake last week, provides software that some people use to download pirated films, Matthew Cheetham, the association's director of operations for Asia, said in an e-mail. He declined to comment on potential lawsuits against Xunlei or Google.

The association won three infringement cases in China last month against companies including Sohu.com Inc., the nation's third-biggest internet portal. Xunlei's site includes access to movies such as Time Warner Inc.'s "Flags of Our Fathers." Google is counting on Xunlei's 120 million users to help it gain market share in the world's second-largest internet market.

"We're going to see more lawsuits involving online copyright infringements because internet companies are making more money and more people are using the internet," Jasper Zhang, a partner at Zhong Lun Law Firm in Shanghai, said. "Laws and regulations aren't going to stop piracy overnight."

Google in November paid $1.65 billion to buy Youtube.com, a company that lets users post videos on its web site for others to watch. Mountain View, California-based Google said at the time that the acquisition could expose it to infringement lawsuits.

"We're very serious about respecting copyright," Marsha Wang, a Beijing-based spokeswoman for Google, said by phone. She declined to provide details of the company's investment in Xunlei.

Jackson Zhang, a Shenzhen-based spokesman for Xunlei, said his company only provides a download tool and doesn't post videos on the internet. Movies, music and other files come from Xunlei's users and partnerships with other companies, he said, declining to comment on discussions with Google.

Online piracy in China cost film companies more than $94 million of losses in 2005, the Motion Picture Association said. Sohu was ordered by a Beijing court to pay members of the association 1.1 million yuan ($141,000) for posting unlicensed copies of films on its Web site for download in 2004 and 2005.

Alice Yang, a Sohu spokeswoman in Beijing, declined to comment on the case.

Google, as an investor in Xunlei, is unlikely to be at risk for an infringement lawsuit, Peter Wang, a Shanghai-based partner at U.S. law firm Jones Day, said by phone. "They're pretty well insulated as long as they're not running the site," he said.

Xunlei provides file-sharing, or peer-to-peer, software that helps users download files stored on individual users' computers, rather than from a Web site or sever networks. The technology was developed by music-swapping site Napster Inc., which was forced into bankruptcy in 2002 by music industry copyright lawsuits.

Movies currently available for download using Xunlei's software include Sony's "The Pursuit of Happyness" and General Electric Co.'s "Children of Men." The association's Cheetham declined to comment on the copyright status of specific films.

"It's our hope that Google, entering this important market, will implement a policy at Xunlei that respects and affirmatively protects copyrighted materials," Cheetham said by e-mail Jan. 8, declining to comment on the copyright status of specific films.

Xunlei is China's most-used website for downloading movies, Hao Tao, an analyst at Shanghai-based research company IResearch, said. The nation was home to 132 million internet users at the end of last year, the official Xinhua news agency reported.

Internet piracy resulted in $2.3 billion of losses worldwide for the film industry in 2005, according to the Motion Picture Association. Movie companies lost $1.2 billion in Asia that year due to all forms of piracy including online downloads, while the film producers lost $1.3 billion in the United States, the association said.

Baidu.com Inc., China's most-used search engine, won a lawsuit last November filed against it by EMI Group Plc., Sony BMG Music Entertainment and other record companies on claims the website violated music copyrights.

A Beijing court ruled Baidu didn't infringe on copyrights as it helps users find illegally copied music on nonaffiliated sites through links and doesn't offer direct downloads of music. The International Federation of the Phonographic Industry, which represents the music companies, said it would appeal the ruling.

An internet company could still be sued and lose an infringement case in China for providing links because the nation's legal system is not based on case law and legal precedents, Zhong Lun's Zhang said.

Tom Online Inc., a Beijing-based internet company that agreed to take over EBay Inc.'s China operations last month, was sued last October by the Beijing News on claims the company infringed copyrights by posting articles from the newspaper on its website.