The International Federation of Phonographic Industries (IFPI) is planning to sue the Chinese version of Yahoo unless it cooperates with record companies over digital piracy. 

The IFPI has sent a written warning to Alibaba.com, which runs Yahoo China, telling the company that it must remove links to music tracks that breach copyright laws. 

Yahoo owns a 40 per cent stake in Alibaba.com. 

IFPI chief executive John Kennedy said that his organisation had started a process that would eventually lead to litigation, but that he hoped negotiation could prevent the dispute reaching court.

Yahoo China responded by claiming that it is acting within the law. A spokesman claimed that the company has a process for removing anything on its site that infringes intellectual property rights.