• Reuters, Friday, April 20, 2007 10:30 AM

Legally speaking, it may not amount to much, but bad publicity isn't something Yahoo needs. On Wednesday, a day after its stock plummeted 11% due to poor earnings, a Chinese couple sued the Sunnyvale, Calif. giant and its affiliates for providing the Chinese government with information that led to the husband's imprisonment for his writings on the Web.

Last year, Wan Xiaoning was sentenced to 10 years in prison for what the Chinese government describes as "incitement to subvert state power." Under pressure from Beijing, Yahoo coughed up emails the man sent to electronic journals advocating free speech and a multi-party system. Xiaoning's house was searched in 2002; the couple was then subjected "to torture and cruel, inhuman or degrading treatment, including arbitrary, prolonged and indefinite detention...for using the Internet to communicate about democracy and human rights matters," the suit claimed.

Xiaoning's wife Yu Ling is suing Yahoo in U.S. District Court in Northern California, but is there any material basis for this lawsuit? Legal experts say no, but Ling has some hefty support from the World Organization for Human Rights, which claims that Yahoo benefited financially by working with authorities. Yahoo, for its part, said it was upset about the consequences, but that, "Companies doing business in China must comply with Chinese law or its local employees could be faced with civil and criminal penalties." It called on the U.S. government to lobby for Xiaoning's freedom.

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