Eleven recording companies affiliated with four top recording groups sued Yahoo China for a damage of 5.5 million RMB over Yahoo's music downloading service that infringes their copyrights.  The Infringement by Alibaba was established at first instance by Beijing Second Intermediate People's Court on April 23.

The 11 companies claimed that Alibaba, Yahoo China's parent company began music listening and downloading service of their rightful phonograms, namely 223 Chinese and English songs in 47 labels, to the public at www.yahoo.com.cn from April 10, 2006.  The plaintiffs believed their rights of reproduction, information network distribution and royalty acquisition over these songs were infringed by Yahoo since the management of the web site abetted, joined and assisted others to provide listening and downloading service by editing and offering relevant information of the songs such as lyrics and ring tones.

Alibaba rebutted that the service it provides is merely a hyperlink service rather than downloading.  Users may access third party web pages only by clicking searched links.  For that, Yahoo China has fulfilled its legal obligation.