China Aomei, a computer game operator, has been ordered to apologize for damaging the reputation of the Shanghai Shanda Networking Co Ltd, the largest online game developer on the Chinese mainland after it had alleged that Shanda had infringed its copyright at a news conference.

On April 26, 2006, China Aomei Network Co Ltd filed a lawsuit against Shanghai Holdfast Online Information Technology Co Ltd, a subsidiary of Shanda, to the Shanghai No. 1 Intermediate People's Court, charging it infringed the copyright of its five network games and asking for 100 million yuan (US$14 million) in compensation.

Aomei said it had obtained exclusive rights to run the games on the mainland in October 2005.

Holdfast, Aomei alleged, used loopholes in the game software to let players play online at its site (www.cga.com.cn), and even allowed them to use pirated versions of the game software.

On May 9, Aomei held a news conference in Beijing, claiming that "Holdfast had long violated its copyright" but "Holdfast and its parent company Shanghai Shanda waved aside its warning and continued the violation more crazily."

Since Shanda is a listed company on Nasdaq, Aomei threatened to inform the "illegality" to the US securities supervisor. Aomei also described Shanda as "a rascal" and "a robber."

Reports about the news conference were published in the newspapers and Websites.

But Aomei lost the copyright lawsuit and Shanda, as a result, sued Aomei for tarnishing its reputation.

Aomei argued that it knew nothing about Shanda when the news conference was held. The "Shanghai Shanda" it mentioned in the news conference was Shanda Entertainment which is also listed in Nasdaq.

But the court didn't accept that argument and said Aomei, as a company in the information technology industry, shouldn't have confused Shanda Networking with Shanda Entertainment.

(Shanghai Daily March 20, 2008)