A group of leading international record companies have lost their lawsuit against Baidu.com, one of China's largest Internet search engines, for the alleged illegal downloading and sharing of their music.

The seven companies, including EMI, SONY BMG, Warner Music and Universal Music, accused Baidu.com of engaging in illegal downloading and playing 137 pieces of music owned by the record companies online without their permission.

They demanded a public apology from Baidu, the suspension of its download service and compensation of 1.73 million yuan (216,250 US dollars).

But Beijing's First Intermediate Court ruled that Baidu's service, which provides web links to the music, does not constitute an infringement as all the music is downloaded from web servers of third parties.

Baidu argued that the MP3 search engine it provided was the same as other search engines providing links to web pages, news and pictures.

"If the music companies had won, the whole search engine sector would have ground to a halt," said a Baidu spokesman.

Some web servers have put a huge amount of copyrighted music onto the Internet and offered them to millions of netizens without permission from copyright owners.

Baidu said it searched all music file formats through the Internet, such as ".mp3" or ".wav", making no distinction between copyrighted and pirated songs.

John Kennedy, chairman of the International Federation of the Phonographic Industry (IFPI), representing the recording industry worldwide, voiced his dissatisfaction at the ruling, saying the IFPI will support the music companies if they appeal to a higher court.

However, Fang Xingdong, a veteran Chinese Internet researcher, said the chances of the record companies winning the lawsuit had been very slim.

China recently conducted a three-month campaign to crack down on Internet piracy of music, movies, software, books and privately run game servers and encourage the use of legal download services.

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