Baidu vs. NYC Dissidents: Why This Case Sucks

May 20, 2011

Unfortunately, I still don’t have a copy of the complaint in this case, so I’m kind of flying blind here and going by attorney quotes and comments from the press. Annoying, but I don’t: a) work for a law firm that needs regular access to US federal court cases, or b) work for a news agency.

Anyway, two ways to approach this case. First, there are some legal arguments that are quite interesting, although I think they are extremely difficult for the plaintiffs. Second, even though the plaintiffs aren’t going to win this case, it’s worth looking at the practical implications of a victory.

Okay, there are two main legal issues here that might be fun to look at:

1. Jurisdiction — How is it that a federal district court in New York has jurisdiction over Baidu, a Cayman Islands company with its principal place of business in China? (Note: Baidu has a US subsidiary, but to my knowledge, its commercial presence is minimal. Obviously, the more actual business Baidu does in the US, the more likely it is that a court could assume jurisdiction over it.)

Jurisdiction issues are difficult, technical, and should be left to experts. I’m not one of them, so take my comments here as more of an attempt to raise issues than provide definitive answers. It would be nice to hear from some real litigators who know what they’re talking about.

The plaintiffs have several possible arguments here. First, Baidu is an Internet company with a platform that is accessible in the United States. Whether a court may assert jurisdiction over a Net firm in this manner has been tested in US courts before, and the decision usually comes down to the nature and quality of the commercial activity of the company over the Net in the jurisdiction at issue. It is my understanding that the level of Baidu’s commercial activity in the United States is minimal, so that might be a loser.

If a Net firm enters into agreements with users, that might be sufficient for jurisdictional purposes, but again, I don’t think that’s particularly relevant to this case.

Second, Baidu is a publicly-traded company, listed in New York. Is this sufficient for jurisdiction? Well, courts will generally look at the totality of the circumstances, so I have to be careful here. That being said, I’m not sure what else we have here besides the listing itself. This is not a securities fraud case, no one from the Baidu investor relations office (if they have one in NY) is alleged to have done anything wrong, nor is there any indication of Baidu having used an agent in New York to commit an unlawful act. Again, I don’t know what their US subsidiary does, if anything.

Third, under general tort law, the place where the harm occurred is often appropriate for court action. Perhaps the argument here is that the plaintiff’s right were violated in the US because censored search results were available in the US? Again, I don’t know what’s in the complaint in detail, but this would be another rehash of the Net jurisdiction issue I mentioned above. Just being able to access web content in a given place is generally insufficient for asserting personal jurisdiction over the operator.

At the end of the day, I don’t have a lot of confidence that this case could survive jurisdictional challenges (and there would be several). This is very fact-specific, though, so it ultimately comes down to what Baidu is up to in the US. If nothing else, I bet Baidu’s lawyers could tie this thing up in the motions phase for a long time on jurisdiction issues alone.

2. Public accommodation — because of its special role as a search engine, should Baidu be considered a ‘public accommodation’ under US law?

This is cute, if unpersuasive. The idea of a place of public accommodation is defined in the Americans With Disabilities Act (ADA) and basically says that certain private entities, if open to the public, may not discriminate with respect to certain things, like folks with disabilities.

Why is this being brought up at all? Well, one of the problems with this case is that Baidu is a private company, and yet the complaint asserts constitutional violations. In many instances, private firms and individuals are allowed to engage in discrimination of constitutionally-protected groups, even when the same action would be a clear violation if it was done by a governmental entity.

Under the ADA, this notion of public accommodation is meant to bring private actors within the scope of the law. So if you operate a hotel, you have to follow some of the same anti-discrimination rules as does the government.

Since Baidu is a private company, they will argue that they can violate the First Amendment, with respect to free speech, all they want.

But wait, says the complaint, “”an Internet search engine is a public accommodation, just like a hotel or restaurant.” If a court buys into this, then the plaintiffs would be able to assert that Baidu was obligated to abide by some/all U.S. constitutional protections. That opens up a lot of other legal issues, of course.

This issue of the Net as public accommodation has been tossed around by US lawyers, but the discussion has centered on, for example, the right of folks with disabilities (e.g. the blind) to access the Net, not with anyone’s right to free speech. For example, some have argued that if a retail store’s web site is an extension of its “brick and mortar” store, then the site should also have to abide by the terms of the ADA.

There’s a huge gap between the ADA cases and saying that Baidu, as a search engine, is a public accommodation that must abide by the First Amendment. If this has ever been brought up before, much less taken seriously by a court, please let me know.

A Few General (non-legal) Comments

Okay, so jurisdiction might be iffy depending on Baidu’s US contacts, and the constitutional claims have some problems. What about the big picture?

Taking a step back, the plaintiffs here are arguing that they have the right to have their web content recognized by Baidu and allowed to come up in search results. Think about that.

They are not saying that they haven’t been able to upload content, set up a web site, access the Net, etc. The only claim is that Baidu’s search results do not include links to their content. No claims of fraud, anti-competitive activities, etc. Wow.

Look, if I wanted to start a new site called ‘Nazi Search Pig’ that omitted all blogs written by Jews (like China Hearsay) in search results, I should be able to do that. Whether Baidu is censoring porn or political speech at the behest of the Chinese government is irrelevant — the US constitution simply does not prohibit that kind of activity. However, if Baidu were to be found liable, who’s next and where does it end? What other positive requirements like this are we going to place on our platform operators?

What would be the practical implications? “Baidu, you may have to censor results in China, but this is the U.S., so you must alter your filtering for this jurisdiction.” Could the U.S. do that? Sure, and if Senator Durbin has his way, that’s what would happen.

But is it a good idea? I wonder what our Net companies would tell their helper monkeys in D.C. if we got to the point where each jurisdiction in the world asserted its own filtering rules? I don’t think the lobbyists would be happy at all.

Now I know what you’re thinking. Why is it that China requires censorship, but the U.S. can’t get into the game? Well, a lot of nations censor to some degree or another (China is extremely aggressive of course), and I don’t see that going away anytime soon, particularly for certain types of porn.

Here’s the thing: nations have the right to censor. We may not like it (I don’t), but that’s what they do. But it’s another thing entirely to say that folks have a right to certain kinds of information from private operators.

Seems to me that a government is within its rights telling private companies that they may not provide certain kinds of information to the public, because it might be harmful — this is the basic justification of censorship. However, what is the analogous argument for a government forcing a private company to positively provide certain information to the public? That doesn’t compute at all.

Last Words

Let me get in a quick rant. This case is obviously a publicity stunt. These plaintiffs are not, as I’ve read in the news, in it for the money. If that were the case, the complaint would have been written differently and the damages asked for would have been higher. For a company like Baidu, $2 million per plaintiff seems a bit low.

No, this is all about the politics of censorship. The plaintiffs are looking for free pub, and they’re getting it. Jurisdictional issues aside, I think this case has huge constitutional problems. For what it’s worth, the plaintiff’s attorney looks like a criminal law expert, whose constitutional experience is limited to things like sentencing and habeas corpus as opposed to free speech issues. I don’t think he knows anything about sovereign immunity, either; he was quoted as saying that the Chinese government runs the risk of a default judgment here.

This doesn’t look like a case anyone expects to win on the merits. The plaintiffs have already been successful getting Reuters, the Wall Street Journal, etc. to comment on it.

14 thoughts on “Baidu vs. NYC Dissidents: Why This Case Sucks

    1. Stan Post author

      I’m sure that the plaintiffs would say that they’re attacking censorship. I think they could have found another way to do so, one that didn’t involve filing dubious claims with the federal court. (I have a chip on my shoulder about stunts like this.)

  1. Robert Park

    This caused me to have an interesting thought. If Baidu wants to expand globally and become more than just a Chinese company, would it consider uncensoring results to be in its own interest outside of China? That is, to compete toe to toe with Google, Bing, and the like for western markets, would it index more content than it is currently politically able to index?

    Then suppose that it DID do that to try to grow a global marketshare, would the Chinese government be motivated to find a way to come down hard on Baidu and make that practice illegal? Is it already illegal? The results inside of China would still be censored, it would be similar to how Google used to operate inside of China.

    Thoughts?

    1. Stan Post author

      Good questions.

      1. I don’t see Baidu doing much outside of China. Never have. They are a local company.

      2. If they tried, and their model involved uncensored results, I think Beijing wouldn’t like it.

      3. I don’t think China would need a new law, they would just informally tell Baidu to cut it the f*&# out. Similar strategy with other media controls.

      This is going to be a problem with other Chinese media firms that seek to expand overseas. Interesting issue.

      1. Fredrik

        Baidu has a major image problem in the rest of the world in that people question how much of the info they supply the company with can be viewed by the Chinese government. Just criticism or not (I won’t go into that debate) I think this is enough to hamper any international expansion in the near future.

        What’s interesting here is that the Chinese government have an enormous amount of leverage over all of the tech firms, and could really legally close them at any time simply by pointing to their corporate structures. Of course they have other options as well, but if they want something more PR-friendly this could be it.

        So the above mentioned meeting about keeping internet censorship might well be finished off with a kind reminder of the legal uncertainties that make Baidu’s existence in China possible.

        1. pug_ster

          This problem is not hurting Baidu’s image at all. The people who are trying to sue Baidu are worse than the patent trolls that we love to hate. In fact, this reduces the American court system to a spectator sport because they allow such a frivolous lawsuit to go in the first place.

      2. jdmartinsen

        Baidu launch a service aimed at the Japanese market a while back. It was far less censored than the mainland edition, and while I’m not sure what the response in Japan was, Chinese netizens were quick to cry hypocrisy (even as they made use of the site for their own porn surfing, at least until it got blocked). And that was before the anti-vulgarity campaigns of the past few years. The combination of moral standards and unequal treatment probably makes the whole thing a hands-off issue.

    2. CCT

      I personally don’t see “Baidu as overseas company” as a challenging scenario. Overseas enterprises are overseas enterprises, period. Numerous “Chinese” businesses with significant mainland operations already engage in overseas activities which would be clearly illegal and undesirable in Beijing.

      Take a look at Hong Kong and Macau, for example. Numerous businesses with mixed ownership on both sides of the internal border are producing porn, building casinos, publishing anti-Communist literature in HK and Macau. I’ve never heard of any of them given any grief in their mainland operations.

  2. ltlee

    In reality, all search engines are in the filtering business. If NYC can indict Baidu for their filtering programs. All search engines could also be accused for various trumped up reasons.

  3. Tony

    Stan,

    This isn’t the first time that Baidu’s been sued in the Southern District of New York. Actually, they’ve been a plaintiff there when they sued Register.com, after the Baidu.com was hacked by the Iranian Cyber Army.

    I tried pulling the complaint up on PACER but it isn’t available for some reason. (I’m not sure how the SDNY works, but I think they are usually up right away in the district I practice.) However, it appears the following individuals are suing Baidu — Shenqi Fu, Guang Yang, Tian Cheng Wang, Liqun Chen, Yuhong Zhang, Jian Zhang, Shuyuan Song, Wa Xue. See Zhang et al v. Baidu.Com Inc. et al, Case No. 1:11-cv-03388-LBS (S.D.N.Y.).

    I obviously can’t comment too much on the merits or substance of this case except from what I gather from this and other articles. It’s interesting that the plaintiffs allege that Baidu is being used as an arm of the Chinese government to suppress speech. Obviously, if a search engine is used by an arm of the U.S. government (or U.S. state), this could violate the 1st Amendment (via the 14th Am. if with a state government) via the state-action doctrine. But, I would think that a foreign government would be like a private actor when it comes to the 1st Amendment — but then again, I don’t know and haven’t researched this (and that’s assuming the allegations are even correct).

    Also interesting is that Google has argued the exact opposite (I believe). That is, its search results are speech and thus it has a First Amendment right to include or not include a website in its search results. I think it’s been successful with this argument, but I don’t have access to case law research at the moment to double check. If so, that would seem to make a difficult case for the plaintiffs here on the merits.

    As to personal jurisdiction–the 2nd Circuit rejects that a NASDAQ listing subjects a company to general personal jurisdiction. In fact, the Southern District of New York a few years ago dismissed another lawsuit against Baidu based on this. Stormhale v. Baidu, 1:09-cv-05273-VM (S.D.N.Y.).

    So I guess all that’s left is the internet contacts and the effects test (the Calder effects test). But as you argue, that seems pretty week because Baidu doesn’t appear to target New York. I think there’s some case law all over the place on internet contacts and jurisdiction though and I’m not sure what the law is like the in the 2nd Circuit on this point. But I agree that it doesn’t look like a particularly strong case from these limited facts.

    Finally, the plaintiffs are also suing the People’s Republic of China. Good luck with that – they’ll have to get past sovereign immunity and all of those issues.

    1. Stan Post author

      I assumed the complaint was accessible via Pacer (should have been), but I don’t have an account anyway. I received a copy from another source.

      Agree with your comments. The issue of being a foreign agent seems irrelevant to me, and I’m not sure why it was even alleged. As you said, that’s important if it’s the US government, but not if it’s any other nation. Weird claim.

  4. M

    Just discovered the blog and welcome the chance to comment. You are concerned about filing dubious claims with the federal court, and make the point that just because something is immoral doesn’t mean it’s illegal. However, are you really suggesting that “filtering” pornography, terrorist propaganda or other advocacy of violence against civilians, or even copyright violations are hand-in-glove with filtering the name of the Nobel prize winner and why he won, basic information about historical events, as well as voluminous basic information about corruption and violence perpetrated by a state? This is an argument that can be made, of course, but you seem to elide over it in a parenthetical, “(China is extremely aggressive of course)” and in response to a comment you just say “agreed” without any demonstration of the thought process.

    “Everybody does it” is an argument that must be made explicit, and it will require some fancy arguement to equate filtering content farms with complying with instructions like http://chinadigitaltimes.net/2011/04/latest-directives-from-the-ministry-of-truth-april-11-april-19-2011/. Most Americans would find the latter filtering an ongoing offense perpetrated by the Chinese communist party against its citizens, done by a profit-seeking corporation acting as its agent. It’s a violation of a right to basic information without which other political and human rights don’t make sense. That the filtering is done as the agent of a repressive one-party state may be another factor that may give judges pause. So although you may be right that on current law the plaintiffs will not prevail (I have no legal training and your analysis is probably correct) the American courts and legislature are right to consider how to respond to activity so contrary to American values by a company that raises money on the New York Stock Exchange, has a registered subsidiary here, and yes, even that offers itself as a source of information to people in America. These are weighty legal and also moral questions, and whatever the legal implications they’re not worthy of being brushed aside morally.

    1. Stan Post author

      Some big questions here. Fundamentally, I don’t agree that courts are obligated to look at important moral issues. Just because we may find something repugnant, that doesn’t mean a court necessarily has jurisdiction over that matter. In those instances where there is no jurisdiction, indeed, the court actually should brush that case aside as quickly as possible. Frivolous cases tend to reduce our faith in our justice system and rule of law.

      As to the legal question, there is no right to basic information. That’s the problem with this case. We may not like filtering, and again, I will repeat that I do not like it either. (I’m in fact a very passionate advocate of free speech.) However, just because we don’t like something doesn’t mean that there is a cause of action.

      With respect to morality, I’m hesitant to say something is “wrong” or “evil.” I would rather couch it in terms of good or bad policy. I think free speech is generally good policy, it makes societies and political systems stronger in the long run. That being said, I understand why the Chinese government censors information under the auspices of social stability — I don’t think it’s evil, just a policy choice I disagree with.

      Finally, on my “agreed” reply to that one comment, I was simply agreeing with that “slippery slope” argument. Baidu is but one search engine that filters; many others do as well. If a court found for the plaintiffs here, where would future courts draw the line with respect to permitted filtering and unacceptable filtering? It’s a reasonable (and classic) legal objection.