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Yahoo China is preparing to file an aggressive new lawsuit against Qihoo, a rival portal. The case will reportedly target Qihoo's founder (and former president of Yahoo China), Zhou Hongyi, by claiming "that Zhou has embezzled from Yahoo China and defrauded it."

An earlier lawsuit against Qihoo is still active; at issue is a Qihoo anti-spyware program, called 360 Safe, "that prompts users to de-install Yahoo China's toolbar," according to Fortune's Elen Wu.

That dispute became fairly ugly, with references to "personal vendettas" and "evil" tossed about by both sides. This new lawsuit isn't likely to mend relations between the two companies. Matt Marshall, who broke the story, reported on the details.

"Yahoo China will claim Zhou was already using his position . . . to steal partnership and investment opportunities away from Yahoo China, preparing the groundwork for his exodus to Qihoo," Marshall wrote.

"He also offered money to key Yahoo China staff if they left the company, the suit will allege. He even launched press releases through front PR firms, saying in one case that a Yahoo China deal with MSN had expired when in fact it hadn't, the suit will claim."

And as if all that wasn't enough, Marshall's VentureBeat article also noted that "a separate source says Yahoo's co-founder Jerry Yang is actively seeking to dissuade investors from backing Qihoo."

Yahoo China is owned by Alibaba, a Chinese company. The fate of the lawsuit will still reflect on its American counterpart, though. China has proven to be a "challenging" market for Yahoo, Google, and Microsoft.

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Doug is a staff writer for WebProNews. Visit WebProNews for the latest eBusiness news.