Beijing New Picture Film Co, copyright holder for hit Chinese movie "House of Flying Daggers" have filed a suit against Baidu for allowing its user to download the film on a pay-per-view basis.
Last month, a near identical lawsuit was filed by a music company for a similar use of 53 songs without permission.
Downloads of video and MP3 material is a core part of Baidu's business model, and wranglings over copyright have put a dark shadow over Baidu's ability to generate revenue for prospective investors ahead of its IPO. Google already own 3% of the Chinese company - China's biggest search engine. Last year posted a profit of $1.5 million.
Rather more allarmingly for Baidu executives, new Chinese law now punishes such 'piracy' with as much as seven years in prison.
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