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Baidu, Chinese Authors Fail to Reach Agreement

Beijing Business Today, 3/25/11

The first round of talks between Chinese internet company Baidu (Nasdaq: BIDU) and a coalition of Chinese authors fell apart yesterday as the Beijing Municipal Copyright Bureau said that document sharing platform Baidu Wenku clearly abused the "safe harbor principle" and may constitute an illegal form of publishing. The Bureau will issue a draft version of its "Guidance on Dissemination of Copyrighted Material over Information Networks" in mid-April to curtail this kind of activity.

In yesterday's meeting, the coalition of Chinese authors placed four conditions on Baidu: make a public apology, pay compensation and cease all IPR infringement; cease providing Baidu Wenku content for Baidu and Chinese consumer electronics maker Aigo's EB800 e-reader; have Baidu Wenku hereafter focus on protecting the rights of copyright holders; and implement a pirated content pre-screening process approved by both Baidu and the coalition.

Baidu rejected the coalition's demand for RMB 100 mln in compensation, and said it had spent the last four months developing a "content DNA analysis technology" to identify pirated content, which it will deploy on April 11. Baidu added that it has essentially met its commitment to delete pirated content within 48 hours, and said the Beijing Copyright Bureau will mediate further discussions between Baidu and the authors coalition on March 25.

According to China's General Administration of Press and Publication (GAPP), the Beijing Copyright Bureau has submitted its "Investigative Report Concerning Baidu Wenku's Operations" to GAPP. The report reveals that Baidu Wenku is one of China's ten largest document sharing websites in terms of daily traffic volume with users uploading content daily, inevitably leading to a large community engaged in IPR infringement.

Han Zhiyu, head of the Beijing Copyright Bureau's copyright protection department, said that Baidu's argument that under the "safe harbor principle" Baidu has no legal responsibility for user-uploaded content, since it simply provides an online storage and file sharing platform, is "an abusive mis-reading of the principle." Baidu has not obtained an internet publishing license in accordance with GAPP's "Provisional Regulations on Supervision of Internet Publishing," and as such Baidu Wenku may be considered an illegal publishing operation.

The Beijing Copyright Bureau's "Guidance on Dissemination of Copyrighted Material over Information Networks" proposes specific regulations regarding file sharing websites and user uploads, requiring file sharing websites post a prominent notice on their homepages stating that users must not upload content copyrighted by other parties, and must submit their real name, contact information, website URL, and other details, in effect implementing a real name ID system. The proposed regulations would also require users to submit proof that they hold the copyrights to uploaded content, including for long-form video content such as films and TV series, published, copyrighted, or trademarked written works; television or online live broadcasts; and works by well-known artists or companies.

Han warned that Baidu's senior management has not shown good judgment in the current situation, adding that, "We can recommend that GAPP subject one or two IPR-infringing video, music or document sharing websites to administrative penalties, but even worse offenders will be face criminal charges."

Baidu VP Zhu Guang said the company will resolve these problems through technical means, and will soon issue 600 priority management accounts to publishers and authors to address copyright infringement on Baidu Wenku. Baidu is also exploring advertising revenue models for the document sharing platform, and plans to offer copyright holders a substantial revenue share.

Editor's Note: For more background on this topic, please see "Baidu, Chinese Authors Discuss Copyright Infringement" MD 3/24/11 issue, and Aigo, Baidu Release E-Reader," MD 2/23/11 issue.

Keywords: scandal Han Zhiyu online advertising online search Zhu Guang Internet Internet publishing license IPR infringement Baidu copyright Beijing Municipal Copyright Bureau Aigo GAPP revenue share BIDU Baidu Wenku document sharing e-book real name system piracy regulation law

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