Qihoo Loses Yet Another Lawsuit, But No One Cares 奇虎败诉不足为戒

By newsdoug on May 18, 2011

China really needs to add some teeth to its legal system for settling corporate disputes, or risk seeing the ecosystem surrounding its most promising private companies degenerate into chaos. My comment comes in response to yet another meaningless judgment against Internet security software maker and troublemaker supreme Qihoo (NYSE: QIHU). In the latest of a series of meaningless judgments against this company, the Chinese courts have fined Qihoo a mere 300,000 yuan, or just $46,000, for its unethical actions that caused a rival product from Kingsoft (HKEx: 3888) to lose 90 percent of its users. (English article; Chinese article) This latest court action follows equally meaningless judgments against Qihoo for similar unethical actions that caused major business disruptions to China’s two biggest net No justice for Kingsoft in Qihoo judgment giants, Tencent (HKEx: 700) and Baidu (Nasdaq: BIDU). Investors are clearly getting the message here, that no one needs to fear lawsuits in Chinese courts, with Qihoo shares actually rising 7 percent in New York trading after results of this latest lawsuit were announced. If China doesn’t add some teeth to its legal system soon, it could face the very real danger that others in China’s private sector will begin to engage in similarly unethical behavior to get an edge over their rivals, causing the entire business climate to sink into chaos.

Bottom line: The latest judgment by China’s courts against Qihoo is as toothless as previous ones, boding poorly for the future role of China’s legal system as arbitrator of corporate disputes.

中国应加强解决企业争端的法律体系，否则民营企业生态系统可能恶化，甚至陷入混乱。近日，北京市中级人民法院认定奇虎360<QIHU.N>对金山软件<3888.HK>商品信誉诋毁及卸载等行为构成不正当竞争，判令奇虎停止不正当竞争行为，并赔款30万元。此前奇虎就曾因对百度<BIDU.O>和腾讯<0700.HK>等实施不正当竞争而陆续败诉，但这些判决都没什麽惩戒意义。投资者得到的讯息是：在中国不用怕官司。最新判决结果出来後，奇虎股价甚至还上涨了7%。如果中国不尽快完善法律体系，其他民营企业也会采取类似的不正当竞争行为，导致整个行业陷入混乱。

一句话：法院对奇虎最新判决，跟以前的判决一样没有惩戒意义，法律体系在企业争端解决过程中的作用不容乐观。

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