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Yahoo! China has not been formally told that it will be sued by the international recording industry. The company told OUT-LAW that it only learned of the case through the press.

The firm also said that it wants to work with labels to create a legal music download service on its site, and that it has not broken any laws.

The International Federation of the Phonographic Industry (IFPI) said this week that it had begun legal proceedings against Yahoo! China for breach of its members' copyright. Any case will claim that Yahoo! China breaks the law by providing links to sites which contain unlicensed music for download.

But Yahoo! China has not even been told of the case. "We have read the press reports, but have not been informed of any such lawsuit being filed," Yahoo! China spokesman Bruce Shu told OUT-LAW.

The IFPI had previously said that work on the case had already begun. "IFPI is taking the preliminary steps required by Chinese law for filing a lawsuit," said a statement from the lobby group earlier this week.

"Yahoo! China has been blatantly infringing our members’ rights," IFPI chief executive John Kennedy said in that statement. "We have started the process and as far as we're concerned we're on the track to litigation. If negotiation can prevent that, so be it."

Yahoo! China says that it has not broken any laws. "What I can say in general is that Yahoo! China's current practices comply with the relevant laws," said Shu.

The company also revealed that it is planning a legal music download service, and wants the record labels to co-operate. "The company is looking for ways to work with the major record labels to develop a licensed music download service," said Shu.

Yahoo! China is owned by Alibaba.com, China's largest e-commerce company. Yahoo! Inc signed the brand name over last year when it also bought 40 per cent of Alibaba for $1bn.

Speaking at the China International Forum on the Audio Visual Industry in Shanghai in June, IFPI's Kennedy said that 90 per cent of recordings in China infringe copyright, and that the illegal music market there is worth £216m.

The IFPI said it was Chinese copyright law which was being infringed. "Yahoo China is infringing IFPI members' rights by facilitating the streaming and downloading of copyrighted music without authorisation of the copyright holders. These are activities over which IFPI's members have exclusive rights in China and elsewhere.

"These rights are provided under the Chinese copyright law, by judicial interpretations of the law and by the State Council Regulations on the protection of right of communication over information networks," an IFPI statement said.

Copyright © 2006, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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