Tencent handed victory in court case

Qihoo 360, a leading Chinese antivirus software provider, lost a lawsuit filed by Tencent Holdings, China's largest Internet company by market value, for unfair competition, a Guangdong court ruled Thursday.

In a verdict handed down Thursday, the Higher People's Court of Guangdong Province said Qihoo 360 was guilty of unfair competition practices, and ordered it to pay 5 million yuan ($809,572) in damages to Tencent.

It also ordered Qihoo 360 to post a statement of apology to Tencent for its unfair competitive conduct.

The apology must be posted for 15 days on Qihoo's website, and on other websites including sina.com and sohu.com, and on the first page of Legal Daily and China Intellectual Property News for seven days.

But the court rejected other claims by Tencent and ordered it to pay 166,800 yuan in legal costs, while Qihoo 360 must pay 500,000 yuan.

Guangdong-based Tencent sued Beijing-based Qihoo 360 in August 2011 for unfair competition after it offered its users "Koukou Guard" software it developed, which could cause Tencent's QQ software to malfunction.

In a statement sent to the Global Times Thursday, Qihoo 360 expressed its regret at the ruling and said it has decided to appeal to the Supreme People's Court.

"The case is a result of Tencent abusing its market monopoly to contain and repress development of other Internet start-up companies through plagiarizing and forced bundling," the statement said.

"We believe the court applied the wrong laws and showed strong local protectionism in the ruling," it said.

In March, in another lawsuit, the Higher People's Court of Guangdong Province rejected claims made by Qihoo 360 about Tencent's abuse of its dominant market position.

In a statement sent to the Global Times, Tencent said it welcomed Thursday's ruling and believed the battle was provoked by Qihoo's malicious conduct.

"Market players should turn to the authorities and legal means to resolve their disputes instead of using vicious methods and targeting each other's application platforms and products," Lu Zhenwang, an independent IT analyst, told the Global Times Thursday.

"The ruling will provide a reference for other online competition disputes in the future," Lu said.

"The Higher People's Court of Guangdong Province has the (necessary) jurisdiction and the ruling is fair, given that the compensation is not huge," Wang Yong, a lawyer with Beijing-based JT&N Law Firm, told the Global Times.

The long-drawn-out legal battle between the two companies started in 2010.

In September 2010, Qihoo 360 accused Tencent of invading its users' privacy through QQ Doctor, a program developed by Tencent for use with its QQ instant messaging service.

The Ministry of Industry and Information Technology later ordered the two companies to apologize to Internet users and cease their conflict.