Major music companies are preparing to sue Yahoo China over complaints the popular search engine violates copyrights by linking to websites that offer pirated music.

John Kennedy, chairman of the International Federation of Phonographic Industries (IFPI), which represents the music companies, said: "Yahoo China has been blatantly infringing our members' rights.

"We are taking the preliminary steps required by Chinese law for filing a lawsuit."

The IFPI says Yahoo China links to outside sites with unlicensed MP3 downloads of hundreds of songs.

Yahoo China, operated by Alibaba.com Corp which is 40 per cent owned by US-based Yahoo Inc, is one of China's most popular search engines.

The IFPI could file its lawsuit within a few weeks, said Kennedy, who was in Beijing to meet with government officials. His group represents more than 1,400 recording companies in 73 countries, including major US, European and Asian labels.

Yahoo China spokesman Porter Erisman said the search engine is acting "within the law."

"We respect intellectual property rights," he said. "If someone sees something on our site that violates intellectual property rights, there is a process for removing it."

Erisman said the company is talking with music companies about creating a licensed music download system for China.

Kennedy wouldn't say how much money the lawsuit would ask for in damages. But he did say it would include a request for a court order to stop copyright infringement.

The IFPI's lawsuit would probably be filed in Beijing, but the group hasn't ruled out filing it abroad, said Leong May-seey, the group's regional director for Asia.

The government has been tightening law enforcement to protect its music, movie and other creative industries, which say they face heavy losses from piracy.

A new law that took effect on Saturday allows the government to fine online distributors of illegally copied music, movies or software.

Kennedy said the IFPI also is talking to Baidu.com, another popular Chinese search engine, about the engine's links to pirate websites, but hasn't taken legal action.

Baidu.com responded to complaints last year by adding a disclaimer to its website saying it "fights piracy," and promising to remove links to sites that infringe copyrights. But the site continues to link to sites that the IFPI says offer unlicensed downloads.

Baidu.com had 46.5 per cent of China's search market last year, with US-based Google Inc in second place with 26.9 per cent, according to iResearch. It said Yahoo China was the No 2 Chinese search engine, with 15.6 per cent of the market. (Source: China Daily)