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A group of Chinese online video providers, including Tencent Holdings Ltd. and Inc., recently accused Baidu (BIDU - Snapshot Report) of having infringed copyrights by providing access to pirated content.

China has been in the news for its weak intellectual property legislation. It is only recently that the Chinese government has taken some stern measures regarding the protection of valuable intellectual properties. Due to this weak IP legislation, it had entered into innumerable disputes with the United States in the past.

Baidu, which is China’s largest search engine, has been investing funds in an attempt to build its video business. It now appears that the company feeds copyrighted content into its own web and mobile video services. The video search also leads users to places where they can download pirated material.

The conglomerate of Chinese Internet firms, supported by the Motion Picture Association of America (MPAA), is seeking 300 million yuan ($49.2 million) as compensation for damages from Baidu and QVOD for copyright violation.  They are claiming that some unauthorized content is available on Baidu’s video search, Baidu Yingyin, Baidu Video App and Baidu TV Stick. They are accusing Baidu of using an automated process to obtain this content from other companies.

Baidu maintains that it is against piracy, but according to a Reuters report, the company refused to negotiate with Sohu until QVOD agreed to stop pirating videos. QVOD denied any wrong-doing, saying that it was just a video player and did not provide content.

Baidu, Inc. provides Internet search services in Chinese. It also offers a Chinese language search platform for businesses to reach their customers. Baidu earned 3.25 billion yuan in advertising in the third quarter and is estimated to create 16.2 billion yuan in sales next year.

Currently, Baidu has a Zacks Rank #2 (Buy). Other stocks that offer an attractive investment option this season are Facebook Inc (FB - Analyst Report), Jarden Corp (JAH - Snapshot Report) and Microchip Technology Inc (MCHP - Analyst Report). All these stocks carry a Zacks Rank #2.

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