Chinese Internet firms sue Baidu for online piracy

By Paul Carsten

BEIJING (Reuters) - A group of Chinese Internet firms, including Tencent Holdings and Sohu.Com Inc (NSQ:SOHU), has joined a top U.S. film industry body in seeking 300 million yuan in damages from China's Baidu Inc (NSQ:BIDU) and QVOD for copyright violation.

The Joint Action Against Online Video Piracy in China, which also includes Youku Tudou Inc (NYS:YOKU), Dalian Wanda Group and the Motion Picture Association of America (MPAA), said in a statement that Baidu and others had been using an automated process to obtain content from the other companies.

Baidu, the largest Internet search engine in China, said in a statement it was committed to fighting piracy.

A spokeswoman for Shenzhen-based software company QVOD said: "We are just a video player, we don't provide content." She declined to elaborate on the piracy allegations.

QVOD's mobile and desktop video player links to the web and allows users to stream videos.

China has long been known for its weak intellectual property protection and enforcement, leading to numerous disputes with the United States.

If successful, the case could hurt Baidu's business in the online video market, which was worth 3.25 billion yuan in advertising in the third quarter and is estimated to create 16.2 billion yuan in sales next year.

Baidu shelled out $370 million to acquire PPStream in May, to merge with its own iQiyi.com video site, and in September announced the launch of a line of Smart TV products.

"We can't continue to compete in the situation because law-abiding people can't survive in a place where robbers and thieves rampage," Charles Zhang, chief executive of Beijing-based Sohu.Com, told a news conference on Wednesday.

Zhang said that efforts to negotiate with Baidu had been unsuccessful, and Baidu refused to stop violating copyright until QVOD also agreed to stop pirating videos.

Baidu said in a statement it has "always attached a great deal of importance to the issue of copyright protection in the video industry" and that piracy is a shared problem for the domestic video industry which it would continuously strengthen its efforts to fight.

"We hope to collaborate with industry partners and, through technological innovation and close collaboration, together promote the development the legalisation of the video industry," it said. (Reporting by Paul Carsten and Beijing Newsroom; Editing by Jonathan Standing)