Eight New York writers and video producers had accused Baidu of creating search engine algorithms, at the behest of China, to block users in the United States from viewing articles, videos and other information advocating greater democracy in China.
The plaintiffs said this kept Baidu users from seeing their work, unlike users of other search engines such as Google and Microsoft's Bing. They sought $16 million in damages for violations of their civil and equal protection rights.
U.S. District Judge Jesse Furman in Manhattan, however, concluded that the results produced by Baidu's search engine constituted protected free speech under the U.S. Constitution, warranting dismissal of the May 2011 lawsuit.
"The First Amendment protects Baidu's right to advocate for systems of government other than democracy (in China or elsewhere) just as surely as it protects plaintiffs' rights to advocate for democracy," the judge wrote.
Furman likened a search engine's "editorial judgment" to that of a newspaper editor who decides which stories to publish.
He also said there is a "strong argument" that the First Amendment immunizes search results from "most, if not all" kinds of civil liability and government regulation.
"To allow plaintiffs' suit to proceed, let alone to hold Baidu liable for its editorial judgments, would contravene the principle upon which our political system and cultural life rest: That each person should decide for himself or herself the ideas and beliefs deserving of expression, consideration and adherence," the judge said.
Stephen Preziosi, a lawyer for the activists, said his clients will appeal.
"The court has laid out a perfect paradox: That it will allow the suppression of free speech, in the name of free speech," he said in an interview.
Preziosi also criticized Furman's newspaper editor comparison, calling Baidu "more analogous to a town square, where pretty much anyone can go and say what he wants."
Baidu and its lawyer did not immediately respond to requests for comment.
A spokesman at the Chinese embassy in Washington declined to comment, saying: "This is a commercial case. We suggest that you seek comment from parties involved."
The lawsuit had been filed one year after Google pulled its search engine out of China after hitting censorship problems. China has also blocked Google's YouTube service, and social networking sites such as Facebook and Twitter.
In March 2013, Furman had dismissed the lawsuit on procedural grounds but later allowed the case to resume.
The case is Zhang et al v. Baidu.com Inc, U.S. District Court, Southern District of New York, No. 11-03388.
© Thomson Reuters 2014