A major copyright infringement case against Chinese search engine Baidu is moving forward, as Beijing's No.1 Intermediate People's Court has agreed to hear claims brought forward by three of the Big Four record labels. The International Federation of the Phonographic Industry announced this morning that the three labels were seeking maximum damages of 500,000 yuan (roughly US$71,000) per track on at least 127 tracks, totaling 63,500,000 yuan (US$9 million) in damages. But that could just be the minimum, as the IFPI says Baidu may face damages in the billions.

The three music labels—Universal Music Ltd, Sony BMG Music Entertainment (Hong Kong) Ltd., and Warner Music Hong Kong Ltd.—began legal proceedings against Baidu in February. The move represents a second attempt to hold Baidu responsible for what the IFPI and the labels consider widespread support of piracy. The labels say that Baidu is guilty of "deep-linking" to MP3s on servers throughout the country (many of which are pirated) directly from its web site, alleging that the search engine has become popular largely due to these links.

The first case against Baidu was thrown out in December, but the IFPI filed again after it won a similar case against Yahoo China. Last year, Beijing's Higher People's Court ruled that Yahoo China was also liable for copyright infringement after it "deep-linked" a number of pirated MP3s. The IFPI hopes that the new case against Baidu will be judged according to the same copyright laws that granted victory against Yahoo China.

The IFPI says that the $9 million in damages this time around is only the tip of the iceberg, as it claims that Baidu "participates in the infringement of more than a quarter of a million tracks." If the record companies seek maximum statutory damages on every single song, Baidu could be held liable for billions of dollars. Of course, this is merely speculation on IFPI's part, as the companies will need to index and identify those quarter of a million tracks in order to realize such damages.

Baidu is also being targeted by the Music Copyright Society of China for copyright infringement. The group filed a lawsuit earlier this year for (again) deep-linking MP3 files, and seeks about 1 million yuan (roughly US$140,000) for linking at least 50 songs. "Baidu is not the only search engine involved in infringing music copyrights, but currently it is the largest," Music Copyright Society of China director Qu Jingming said at the time. "We can only 'capture the ringleader first in order to catch all the followers.'"

IFPI CEO John Kennedy agrees. "Baidu is China's largest violator of music copyrights, generating huge revenue by deliberately providing access to illegal content," he said in a statement today. "The record industry wants partnership with China's internet companies, but one that is based on respect of copyright and the law. It is totally wrong that internet giants like Baidu should build a fortune by abusing the rights of artists, songwriters and record producers."