Baidu, operator of China's largest search engine: http://www.Baidu.com/ , is suing domestic security vendor 360 ( http://www.360.cn/ ) for unfair competition alleging a version of 360's security software flags both Baidu Toolbar and Baidu Address Bar as malware.

The software tells users the plugins must be removed, Baidu said. The suit, which was filed late last month, demands that 360 cease with its unfair practices. Baidu is also suing the company for 10 million renminbi (US$1.4 million) and is requesting that 360 issue public apologies on its websites as well as on several major news sites in China.

Baidu declined to comment, but confirmed that the suit was accepted by Beijing Second Intermediate People's Court.

360, a major software security provider in China, responded to Baidu's claims in a statement on Friday. The company highlighted how search engines are sites for "swindling" and that they provide avenues for online threats to reach users. "In providing search results, Baidu has made no obligation toward protecting its users. Baidu is not a security company," 360 said.

Whether or not Baidu's toolbars were flagged as malware is decided by user vote, the company added. "Baidu should check to see if these two software programs are operating correctly," 360 said.

This is not the first time that 360 has faced a lawsuit for unfair competition. In the past, it has also seen trouble with Yahoo China and other domestic companies.

360 was founded by Zhou Hongyi, who was originally the general manager of Yahoo China. Following his departure, Yahoo China sued Zhou's new company in 2006, alleging that 360's security software was identifying Yahoo Toolbar as malware. Yahoo China later won the case.

"This is a very old battleground," said Mark Natkin, managing director of Beijing-based Marbridge Consulting. "You will see a plethora of suits between different companies, not just in the anti-virus malware field, but also in types of toolbars. If you install one company's toolbar, it will disable the other company's toolbar."

(PCW)