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 at least 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, Mr. Turkewitz said, Baidu’s search engine allowed users to find and play unlicensed songs directly from its web portal 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.”
Source: Wall Street Journal by Wayne Ma