The Beijing No. 2 Intermediate People's Court on Dec. 20 rejected an appeal by Yahoo China against an April ruling that found it guilty of copyright violation due to its practice of providing "deep links" to Web sites offering unauthorized content such as mp3 downloads, lyrics and ringtones.

"The ruling against Yahoo China is extremely significant in clarifying copyright rules for Internet music services in China," said IFPI chairman/CEO John Kennedy in a statement. "By confirming that Yahoo China's service violates copyright under new Chinese laws, the court has effectively set the standard for Internet companies throughout the country."

But Kennedy expressed regret that on the same day the Beijing No. 1 Intermediate People's Court, in a similar case, found Beijing-based Web portal Baidu not guilty of copyright infringement. The court confirmed that Baidu participated with and assisted third-party sites in transmitting infringing music, but said Baidu was not liable because the IFPI had brought the case against Baidu under previous Chinese copyright law.

"We are disappointed that the court did not find Baidu liable, but that judgment was about Baidu's actions in the past under an old law that is no longer in force," Kennedy said. "The judgment is irrelevant, since it has effectively been superseded by the Yahoo China ruling. Baidu should now prepare to have its actions judged under the new law. We are confident a court would hold Baidu liable as it has Yahoo China."

Kennedy said China could be "a fantastic digital music market" if Internet companies like Yahoo China and their owners respected copyright and protected creators and producers.

Yahoo China spokesperson Porter Erisman said, "We're pleased to move beyond the lawsuit and hope to jump-start our partnership discussions with the major record labels to develop a licensed music service for the China market."

Baidu could not be reached for comment at press time.