Yahoo settles lawsuit with Chinese dissidents

SAN FRANCISCO -- Yahoo yhoo has settled a lawsuit filed by families of two dissidents imprisoned in China after the Internet giant turned over incriminating information to Chinese government authorities.

Terms were not disclosed. But Yahoo suggested in a statement Tuesday that family members would receive money for attorney fees and other expenses.

The case had brought widespread negative publicity to Yahoo at a time when CEO Jerry Yang is trying to restructure the company after taking the top job in June. Yang apologized last week to family members at a congressional hearing before the House Foreign Affairs Committee, which has been investigating the case.

"After meeting with the families, it was clear to me what we had to do to make this right for them, for Yahoo and for the future," Yang said in today's statement. "Yahoo was founded on the idea that the free exchange of information can fundamentally change how people lead their lives, conduct their business and interact with their governments."

Yahoo said it is "working to provide financial, humanitarian and legal support to these families." The company also said it is creating a separate humanitarian relief fund to provide support to other political dissidents and their families.

The families sued Yahoo in April in U.S. District Court for the Northern District of California. The lawsuit was filed on the families' behalf by the World Organization for Human Rights USA in Washington. The complaint said Yahoo handed over Internet user information identifying Chinese journalist Shi Tao in 2004 and pro-democracy dissident Wang Xiaoning in 2002.

Both men are serving 10-year sentences under the charge of "subversion of state power," Human Rights USA says. Morton Sklar, the group's executive director, says Chinese authorities beat Xiaoning to extract his confession.

Rep. Chris Smith, R-N.J., a member of the Foreign Affairs Committee, commended Yahoo for settling. "As I said during our recent hearing," he said in a statement, "settling this case in a manner that is generous to the victim's families would be a positive gesture from Yahoo, and will hopefully bring some comfort to the families of Shi Tao and Wang Xiaoning for Yahoo's part in the incarceration of their loved ones."

Smith is pushing a bill, the Global Online Freedom Act, which would ban companies from disclosing to governments such as China information identifying individual Internet users. Exceptions would be allowed when the U.S. Justice Department says such a disclosure is for a "legitimate law enforcement purpose."

Sklar said his group would have preferred that the settlement's details be made public. But Yahoo refused, he said. The families agreed to keep the settlement details private in order to get faster relief, he said.

"The reality was it would take four or five years of continued litigation to produce those results, and the detainees and the detainees' families could not wait that long," Sklar said. "The settlement was the only way that good positive results would take place much, much faster."

Yahoo and the families mutually agreed to keep the settlement details confidential, the company said.