Yahoo! Inc's China unit has been ordered to pay compensation to 11 music companies for copyright violations. Its website, operated by Alibaba.com Corp, must delete links to 229 songs on non-affiliated sites and pay 210,000 yuan in compensation to companies including EMI Group, according to the Beijing Second Intermediate People's Court ruling, which was posted on the website of China's Supreme People's Court yesterday. [AP]

Yahoo! China has lost a lawsuit filed by 11 major record companies in which it stood accused of playing music illegally and allowing netizens to download tracks free of charge.

The Beijing Second Intermediary Court on Tuesday ordered Yahoo China to pay 200,000 yuan (about 27,200 U.S. dollars) in damages to the 11 companies which include EMI, Warner Music, Sony BMG Music Entertainment and Universal Music Group. It also told Yahoo China to delete the links to the free download websites.

The record companies launched the court proceedings in early January, saying that the music had been played or downloaded without their permission, and demanded 5.5 million yuan (about 712,000 U.S. dollars) in damages.

Yahoo China insists that, as a search engine, it only provides links in its music search results and should not be held responsible for the content of third-party websites.

The company issued a statement on line on Tuesday, saying the company treats intellectual property rights protection very seriously, and has always abided by Chinese law.

It also said search engines are used to quickly access and present information that users need, and search engine operators cannot foresee and control the content to which they provide links.

It said the company will appeal for protection of its own legal rights and also for the development of the whole industry.

Xu Yang, Yahoo China's publicity director, said "Baidu.com was cleared of similar charges last year. If any mistake has been made, Baidu made the same one. The argument in both cases is essentially the same."

Last November, Baidu.com, one of China's largest internet search engines, was found not guilty in a similar lawsuit launched by seven companies that accused it of helping users to download music illegally. The case was led by the International Federation of the Phonographic Industry (IFPI).

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.

The record companies appealed to a higher court after losing the lawsuit, but the ruling has yet to be made.

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

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

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

Chinese online auction sites operator Alibaba took over Yahoo Inc's China business in 2005, and Yahoo bought a 40 percent stake in Alibaba.

(For more biz stories, please visit Industry Updates)