By: Susan Ning and Shan Lining
On 20 December 2010, the Beijing Second Intermediary People’s Court (the Court) issued a first instance ruling on an Anti-Unfair Competition Law dispute between Baidu (the largest Chinese search engine provider) and 360 (a large security software provider). The Court ruled in favor of Baidu, ordering 360 to pay damages amounting to RMB385,000.
At the time of writing, we were unable to obtain a copy of the first instance judgment – thus, this article sets out the facts of the case, based on public or press reports:1
- Beijing Baidu Netcom Science and Technology Co., Ltd and and Baidu Times Network Technology (Beijing) Co., Ltd. (owners of Baidu, China’s largest search engine) launched an action against Qizhi Software (Beijing) Limited (owner of the 360 security software line) and Beijing San Ji Wu Xian Internet Technology Limited (operator of www.360.cn). Baidu alleged that 360 breached the AUCL.
- Specifically, Baidu alleged that in March 2010, 360 identified to users, two of Baidu’s software (the Baidu-Toolbar and the Baidu-Addressbar) as being a form of "virus" software which might compromise the security of users’ computer and operating systems. Baidu also alleged that 360 had advised its security software users to remove the above mentioned Baidu software, in order not to "jeopardize" their computer systems;
- Baidu sought damages of RMB10 million for the above mentioned acts;
- 360 denied that it did anything wrong;
- In its first instance ruling, the Court found that 360’s acts (of identifying Baidu’s software as being a form of "virus" software; inducing users to remove Baidu’s software; and posting baseless negative descriptions of Baidu’s software on www.360.cn) constituted conduct in breach of the Anti-Unfair Competition Law (it is not clear, from press reports, which Article within the Law was being breached);
- The Court ordered 360 to pay RMB385,000 in damages to Baidu.
It is likely that Article 14 of the Anti-Unfair Competition Law was being breached. Article 14 of the Anti-Unfair Competition Law prohibits entities from fabricating or spreading false facts, resulting in damage of the business reputation of a competing entity. If, indeed this provision was being breached by 360, then Baidu must have managed to prove that both Baidu and 360 are "competing" entities.
1.See for instance: http://news.sina.com.cn/o/2010-12-21/133921680905.shtml