A Hangzhou-based instrumentation company sues Baidu and a rival company for infringement. Baidu claims that it has neither the obligation nor the ability to review the keywords submitted by its clients.
Mengkong Company states that "Pangu Recorder" is not a trademark but a type of product. When signing a promotion cooperation agreement with Baidu's Zhejiang agent, Mengkong selected several keywords including "Pangu Recorder", "Oulu Recorder", "Yokogawa Recorder", and "Dahua Recorder". These names are all domestic manufacturers of similar products, which are also Mengkong's competitors.
Similar to Mengkong, Baidu's legal representative emphasized that the links on Baidu’s promotion webpage were not intentionally arranged by humans but automatically generated by the system.
The lawyer stated that Pangu Company's trademark consists of graphics, letters, and Chinese characters. The Chinese character "Pangu" only occupies 1/6 of the entire trademark, so there is no legal basis to claim that using the two characters "Pangu" constitutes an infringement of Pangu Company's trademark rights.
When entering "Pangu Recorder" in the search bar on Baidu, the first result leads directly to "Hangzhou Mengkong Instrument", and the subsequent website links also point to Mengkong Instrument's website. The problem lies here: Pangu Recorder is the flagship product of Pangu Company, where "Pangu" is not a model number of the recorder but the trademark of Pangu Company. Both Pangu and Mengkong are competitors in the same industry, yet Baidu binds them together. Subsequent tests with other similar keywords like "Pangu Paperless Recorder" yielded the same results. Clicking on the search result link led directly to Mengkong Company's website, introducing Mengkong's recorders.
Both Hangzhou Pangu Automation System Co., Ltd. (hereinafter referred to as: Pangu) and Hangzhou Mengkong Instrument Technology Co., Ltd. (hereinafter referred to as: Mengkong) specialize in industrial automation instruments and are both competitors. On the morning of June 21, Binjiang District People's Court held a trial regarding Pangu Company's accusation of trademark infringement against Mengkong Company and Beijing Baidu Netcom Science & Technology Co., Ltd. (hereinafter referred to as: Baidu).
This search result is marked as a "promotional link," meaning that payment was made for Baidu's promotional service. Senior management at Pangu Company felt uncomfortable, believing that Baidu prioritized money over integrity. More frustratingly, if others think Pangu Recorders are Mengkong's products, this situation would constitute an infringement.
Pangu Company has been an old customer of Baidu for seven years. Vice President Yang Jie said that they just need to pay Baidu's promotion fee, and whenever netizens search for terms related to "recorder," Pangu Company will appear among the top few results. This ranking reflects Baidu's primary profit model.
When asked about this business, sales personnel from Baidu Promotion's 400 hotline introduced that keywords can be set independently or recommended by salespeople. Users pay for these keywords, and their rankings in search results are determined based on how much they pay and the network's comprehensive judgment of these keywords. However, the keywords must pass Baidu's review.
Since April 2003, Pangu has continuously advertised on Baidu, investing around 160,000 yuan in advertising fees. The company's reputation grew, and its flagship product became a domestic leader. They decided to stop advertising at the end of last December. In January 2011, Yang Jie habitually searched for "Pangu Recorder" on Baidu to see how their ranking would change without advertising. He was shocked to find that not only had Pangu Company sunk to the bottom of the search results, but the first result had become their competitor Mengkong, who had "hijacked" Pangu's trademark.
Suspected infringing links, claiming compensation of 200,000 yuan.
"The websites of companies not participating in Baidu's promotion business can still appear on the web pages. At that time, Pangu's website was located three places below Mengkong's." Baidu's legal representative believes that this field is relatively narrow, and their customers can make their own judgments.
"Baidu provides only a search engine service to its clients. We do not have the ability or the right to review every keyword submitted by our clients." The lawyer stated that currently, apart from filtering sensitive words mandated by the state and protecting trademarks and well-known trademarks complained about by all right holders, Baidu does not conduct any reviews on other keywords.
Lawyer Songtao Chen from Zhejiang Fengguo Law Firm, representing this case, said that Pangu is suing both Mengkong and Baidu. Mengkong pays, and Baidu acts as an accomplice, openly infringing and causing unfair competition. They demand an apology, elimination of influence, and compensation of 200,000 yuan.
Recently, when the reporter tested again, entering "Pangu Recorder" on Baidu, the headline link related to Mengkong disappeared. Lawyer Chen said that fortunately, they had notarized the earlier search situation. This dispute stems from the suspected "Baidu Promotion" advertising model, which involves paying to define keywords and improve the company's search position.
"We are an old company, and our products enjoy high recognition and good reputation within the industry, holding exclusive rights to the registered trademark 'Pangu.'" Pangu Company believes that Mengkong uses Pangu's trademark in product sales advertisements and deliberately describes itself as a "professional manufacturer of Pangu Recorders," misleading consumers and infringing on Pangu's trademark rights.
After receiving the complaint on March 22, Mengkong has voluntarily deleted the keyword "Pangu Recorder" from Baidu's backend.
Mengkong denies infringement and has already deleted related keywords on Baidu.
"Baidu allows Mengkong to publish similar advertising information on its website, which also infringes on Pangu's trademark rights." Pangu's legal representative said.
Searching for one's own company's product leads to the name of a competing company as the producer.
Reporter's experiment shows that the search results are "mistaken."
Regarding this statement, Yang Jie disagrees somewhat. According to his experience, the review process is not that strict, and phenomena like "piggybacking on famous brands" (when netizens search for leading enterprises in an industry, smaller companies that pay show up prominently in the search results) often get through. "If the review were strict, would Mengkong's direct hijacking of our trademark happen? And the customer service wouldn't possibly not know we're an old customer."
When contacting the phone number published on Mengkong's website, the staff said they were unaware of this matter.
On March 23, 2011, the Binjiang District People's Court of Hangzhou officially accepted the case of the domestic leading enterprise in industrial recorders - Hangzhou Pangu Automation System Co., Ltd. - suing Baidu for infringement. The accusation is that Baidu indulges and helps competing enterprises infringe on its trademark rights. It sounds professional, but the issue is simple: it's about Baidu searches, specifically about "buying search rankings" - Baidu's core profit model.
The court will announce the verdict on another day.
Case Review:
Before the dispute occurred, Pangu had just stopped paying the "promotion fee" to Baidu.
Pangu Company claims that in January this year, when searching for keywords such as "Pangu Recorder" on Baidu, the top results in the search list were all "Professional Manufacturer of Pangu Recorders Hangzhou Mengkong Instrument," and directly linked to Mengkong's company website.