Judgment on Unfair Competition Dispute between Baidu Online Network Technology (Beijing) Ltd. Co. and Beijing 3721 Technology Ltd. Co

By Li, Pengyue | Pacific Rim Law & Policy Journal, January 2007 | Go to article overview

Judgment on Unfair Competition Dispute between Baidu Online Network Technology (Beijing) Ltd. Co. and Beijing 3721 Technology Ltd. Co


Li, Pengyue, Pacific Rim Law & Policy Journal


I. TRANSLATOR'S NOTE

On October 20, 2003, Baidu Online Network Technology (Beijing) Ltd., Co. ("Baidu"), a Nasdaq-listed company known as the "Google of China,"1 filed a suit against its competitor Beijing 3721 Technology Ltd. Co. ("3721")2 in Beijing Chaoyang District Court for copyright infringement and unfair competition. The case is regarded as China's first copyrightinfringement dispute involving website search-engine technology. Legal experts, the Chinese media, and the Supreme Court of China have paid close attention to the case, especially as it is related to China's ongoing legislative effort to improve protection of intellectual property. The translation below is the appellate opinion in this case issued by Beijing No. 2 Intermediate People's Court in April 2004.

A. Summary of the Case

Beijing-based software company 3721 provides Internet search services with a focus on address bar searches in the Chinese language. 3721 first released its address bar search software "3721 Network Real Name" in 1998 and has updated it many times since then. In June 2003, 3721 added a "cnsminkp" file to its software, which appeared to block the downloading and installation of Baidu's tool bar search software "Baidu SoBar."

Appellee 3721 claimed that this was only a common software conflict, and that it had continuously informed the users about the problem. However, Baidu believed that 3721 maliciously used the software to prevent Baidu users from accessing and downloading "Baidu SoBar" from its website, which infringed upon its copyright over "Baidu SoBar" and constituted unfair competition.

The People's Court of the Chaoyang District rejected Baidu's copyright infringement claim for lack of evidence. However, it held that 3721's conduct constituted unfair competition, because it reduced Baidu's business opportunities. According to the trial court's judgment, 3721 must stop interfering with the normal installation of "Baidu SoBar" by "leftclicking" and compensate reasonable litigation fees incurred by Baidu. However, the trial court did not grant Baidu's request for damages in the amount of RMB3 500,000, nor did it grant the request for a public apology.

Both parties appealed. Baidu believed that the trial court erroneously applied the law by not granting its request for damages. It also pointed out that notwithstanding the fact that the search engine software was free, 3721 made enormous profits through its monopoly status in the market, as it maliciously prevented Baidu from entering the market. Moreover, although the judgment concluded that the conduct of 3721 resulted in unfair competition, it was not strong or specific enough to deter 3721 from further infringement. On the other hand, 3721 believed that it did not engage in unfair competition and that the trial court did not understand the nature of the technology involved in this case. 3721 also claimed that, in the absence of any statutory requirements, there should not be an obligation for software providers to make their products compatible with those of others. Overall, 3721 believed the trial court's decision would negatively influence the development of China's information technology industry.

Baidu asked the appellate court to order 3721 to stop its interference with the downloading and installation of "Baidu SoBar" in any manner, not just the interference with the normal way of downloading "Baidu SoBar" by left clicking the download button on its website. It also asked the court to grant damages and a public apology. 3721 requested the court to overrule the trial court's judgment and order Baidu to bear the litigation fees.

The appellate court, Beijing No. 2 Intermediate People's Court, upheld the trial court's decisions as follows: (1) Baidu is the copyright owner of the "Baidu Sobar" software; however, it failed to prove that 3721's software infringed upon its copyright; and (2) Baidu and 3721 are competitors, and 3721's conduct constituted unfair competition. …

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