Sina Tech, 9/30/11
Chinese online security and anti-virus software company Qihoo 360 (NYSE: QIHU) has filed a lawsuit in the High Court of the Hong Kong Special Administrative Region yesterday against Fu Sheng, the former Qihoo 360 senior executive and current CEO of rival anti-virus software company Kingsoft Network Technology. The suit alleges that Fu and Conew Network Technology, the company he founded, used Qihoo 360 trade secrets to develop Conew's free anti-virus product, which resembles Qihoo 360's anti-virus product. Qihoo 360 claims that Fu violated a confidentiality agreement and actively recruited former Qihoo 360 employees, meaning that Qihoo 360 can invoke its right to reacquire Fu's 200,000 shares of Qihoo 360 stock for RMB 1.
Qihoo 360's share price closed at USD 17.09 yesterday, making Fu's holdings worth approximately USD 3.42 mln. The company is also asking the court to order Fu to terminate the employment of eight former Qihoo 360 employees, including Xu Ming, his partner from Qihoo 360, who currently serves as CTO of Kingsoft Network Technology.
Fu was awarded 200,000 shares under the Qihoo 360 stock plan. He signed a non-compete agreement upon departing the company that prevents him from joining any direct competitors to Qihoo 360 or making any disparaging remarks about the company for eighteen months, with any breach of the contact to be punished by Qihoo reacquiring its shares.
Qihoo 360 is claiming that Fu violated this agreement by founding Conew in 2005 and later engaging in direct competition with Qihoo 360. In a statement, the company said it had repurchased Fu's 200,000 shares for RMB 1, and called on the court to certify the move.
Editor's Note: For more information on this topic, please see "Qihoo 360 GM Resigns," MD 8/19/08 issue.