By Wayne Ma
BEIJING -- Chinese search giant Baidu Inc. was once a scourge of
Hollywood and the U.S. music industry, which accused it of being a
pipeline for pirated content.
Today when Baidu is involved in a copyright infringement case,
chances are it is the one casting the blame.
Baidu's about-face in the copyright fight reflects its emergence
as a creator and buyer of content, a transition that continued
recently when the company struck a deal to license original shows
from Netflix Inc. Other Chinese media companies are undergoing
similar transformations, upending how entertainment is protected in
the world's second-largest economy, legal analysts say.
"One of the old rationales for copyright protection...is that it
provides an incentive to invest. We are seeing that in play here in
China," said Mathew Alderson, a partner and entertainment lawyer at
Harris Bricken in Beijing. "Copyright is no longer something
imposed on China by the U.S. It is now a tool in Chinese
hands."
One way to measure the change is by the escalating flood of
lawsuits aimed at protecting intellectual property.
Nearly 87,000 copyright-related cases were filed in China last
year, according to data compiled by China's Supreme People's Court,
a 15-fold increase from 2006. These cases include claims of illegal
distribution, or unauthorized reproduction, of written content,
videogames, movies and TV shows.
One of the companies filing suits is iQiyi.com Inc., the
video-streaming service owned by Baidu that struck the April 25
deal with Netflix to bring shows such as the paranormal
coming-of-age drama "Stranger Things" and the science-fiction
series "Black Mirror" to the mainland.
Last year, iQiyi was the plaintiff in 133 copyright cases, up
from 80 a year earlier, according to data provider IPHouse.
In addition to lawsuits, iQiyi sent takedown notices to more
than 1,400 websites and apps last year -- at one point sending more
than 1,000 notices in a single day -- to defend the licensed and
original content it owns, according to Wang Yan, senior director of
legal affairs at iQiyi.
Not that long ago, Baidu itself was the target of lawsuits by
both the music industry and Hollywood film studios for using their
content without permission.
"Baidu almost single-handedly eroded the value of music [in
China]," said Neil Turkewitz, former vice president of
international at the Recording Industry Association of America.
For nearly a decade, Turkewitz said, Baidu's search engine
allowed users to find and play unlicensed songs directly from its
web portal for free.
The internet giant was sued in 2008 by major record labels
Warner Music Group, Universal Music and Sony BMG Music
Entertainment for violating music copyrights. At the time, the
International Federation of Phonographic Industry estimated that
record companies were receiving less than 5% of the estimated $700
million in potential annual revenues in China's mobile music
space.
Baidu in 2011 announced it had struck a licensing deal with all
three, effectively ending the lawsuit. That year, Baidu recorded
its first line item for content costs: $9 million.
In 2013, Baidu was sued for violating video copyrights, this
time by a group of Chinese entertainment companies supported by the
Motion Picture Association and major Hollywood studios, which
sought $43 million in damages.
The group accused Baidu of running four services on desktop
computers and smartphones that they said allow users access to
Western and Chinese TV shows and movies licensed to other
companies. The plaintiffs added that in some instances, Baidu
linked to sites that hosted pirated content.
Baidu lost some of those lawsuits, but ended up paying modest
penalties.
A spokeswoman for Baidu declined to discuss how it has gone from
being a defendant to a plaintiff in copyright cases.
Through its iQiyi streaming service, Baidu has become one of
Hollywood's best customers, striking licensing deals with major
studios such as 21st Century Fox, Warner Bros. and Paramount
Pictures. It spent more than $1 billion on content last year,
according to company statements.
21st Century Fox and Wall Street Journal-parent News Corp share
common ownership.
For Hollywood studios, striking deals with Chinese partners is
much easier than trying to defend their copyrighted content on
their own, said Eric Priest, a University of Oregon School of Law
professor who researches copyrights and the Chinese entertainment
industry.
"If you're a content producer with an office in Hollywood, you
aren't going to be familiar with where Chinese netizens are getting
unlicensed content," Mr. Priest said. "You won't be familiar with
the shadowy set-top manufacturers who are installing apps that
people buy that allow direct access to unlicensed content. You're
going to be much better off with a partner in China that can do
that."
(END) Dow Jones Newswires
May 21, 2017 07:14 ET (11:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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