Baidu, Beijing 3721 file court appeals
By Liu Li (China Daily)
Updated: 2004-03-04 11:06

Baidu Co, China's biggest search engine, and Beijing 3721, a leading Chinese software developer, yesterday filed an appeal against an earlier ruling in a dispute between them at the Beijing No 2 Intermediate People's Court.

The plaintiff, Baidu, and the respondent, Beijing 3721, were unhappy with the judgment made by the Beijing Chaoyang District People's Court.

At the first hearing of the appeal yesterday, no ruling was made.

Baidu, which was awarded a compensation of 5,000 yuan (US$600) from Beijing 3721 by the district court, is seeking 1 million yuan (US$120,000) - the same amount it had asked for earlier - from Beijing 3721 for the latter's alleged infringement upon its copyright and unfair competition.

"The court decision for first instance has erroneous application of law," Baidu said in its appeal.

Beijing 3721, in its turn, is pleading that the earlier ruling be quashed.

The district court ruled that Beijing 3721's Chinese search engine had a file that did not allow users to download or run the search software offered by Beijing-based Baidu, one of its biggest competitors; and ordered Beijing 3721 to stop any interference with the installation and operation of search software developed by Baidu.

"The judgment of the first instance did not uncover the true reason for using the involved technology in the case," said Yang Anjin, the lawyer representing Beijing 3721.

"No software provider has the obligation to make its software compatible with other software as there is currently no compulsory State requirement on this matter," he said.

"When two operating systems, like Windows and Linux, cannot work on the same computer, can we say they are violating each others' interests? It is just a technological restriction," the lawyer said.

Beijing 3721 also believes that the earlier court decision would negatively influence the development of the information technology industry.

Baidu obviously disagrees with its competitor. "Although the Chinese search engine software is free, Beijing 3721 still makes enormous profits through its monopoly status in the market as it maliciously prevented Baidu from entering the market," the legal document provided by Baidu said.

Baidu claimed that the software brings in Beijing 3721 an illegal profit of over 150 million yuan (US$18 million) every year.

"So it is unreasonable for the Chaoyang District court to decide that there is no need for 3721 to compensate our economic losses," the Baidu document said.

"Although the initial judgment confirmed that the behaviour of 3721 resulted in unfair competition, it could not stop the illegal behaviour of 3721," the petition said, explaining the reason for the appeal.

Media commentaries had said the district court judgment threw up no real winner.

The search engine service is widely regarded as a profitable service at Internet companies.

For example, Yahoo Holdings (Hong Kong) in November signed an agreement with Hong Kong-based 3721 NSC, a technology provider for Beijing 3721, under which Yahoo will pay as much as US$120 million over two years for the acquisition of 3721 NSC. The deal is expected to be sealed in the first quarter of this year.

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