UPDATE 1-Yahoo settles case over Chinese dissident e-mails

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By Eric Auchard

SAN FRANCISCO, Nov 13 (Reuters) - Yahoo Inc (YHOO.O: Quote, Profile, Research, Stock Buzz) has settled a lawsuit alleging it aided China's prosecution of several dissidents, in a case that prompted criticism of the company for cooperating with an authoritarian government.

Terms were not disclosed in a joint court filing on Tuesday by attorneys for Wang Xiaoning, Yu Ling, Shi Tao and other unnamed parties and defendants Yahoo and its Chinese affiliates.

The plaintiffs agreed to withdraw their suit in the U.S. federal court for the Northern District of California after the families of Wang and Shi reached a deal with Yahoo, the Internet company said in a statement.

"Plaintiffs and defendants hereby jointly stipulate to dismissal with prejudice of all claims made in this action, based on a private settlement understanding among the parties," the court filing stated. Yahoo agreed to cover legal costs.

The suit, advanced by the Washington D.C.-based World Organization for Human Rights USA, maintained that Yahoo had benefited financially by working with Chinese authorities. China is the world's second-largest Internet market.

The advocacy group said that in settling the case, Yahoo and its co-founder and chief executive, Jerry Yang, had bowed to stinging criticism of the company at a televised congressional hearing held in Washington D.C. on Nov. 6.

"While technologically and financially you are giants, morally you are pygmies," Rep. Tom Lantos, a California Democrat and chairman of the House Committee on Foreign Affairs, told Yang as he testified before Congress last week.