On November 8, 2004, Tang Yong reported his findings on Huanqiu. (Subsequently, Fang Zhouzi accused Tang Yong for plagiarism by using Fang's contents without citation.)
In early December, even the top level authority became aware of this issue. In a news conference, the Spokesperson of the Ministry of Education (MOE), Wang Xuming (王旭明), said specifically:
... As we are aware, the report on Los Angles Times was a paid advertisement. The so-called "USA Fifty State Higher Education Union" does not exist. There was never such an organization. The paper had informed concerned people in China (中方有关人士) that the piece was a paid advertisement, not a news report. If anyone engages distorted propaganda using the Los Angles Times, the Paper will seek legal actions against them.It was not clear whether the MOE Spokesperson based his information on Fang Zhouzi and Tang Yong's reports or had independent sources of their own.
The "official" pronouncement not withstanding, Xi'an Fanyi's President Ding Zuyi sued Tang Yong and a local paper which carried his report in January, 2005. In May, the Chang'an District Court in Xi'an decided that Tang Yong had written his report without learning all the facts and therefore was guilty of libel and defamation. He and his paper were ordered to apologize.
At the same time, Fang Zhouzi, New Thread, and other media received letters from Xi'an Fanyi's lawyers to remove related contents and apologize. In defiance, Fang Zhouzi reiterated the Xi'an Fanyi fraud case in a column published in Beijing Science and Technology (BST) on July 27, 2005. In the article, he cited the MOE Spokesperson that the ranking news and its sponsoring institution are "non-existent" (子虚乌有).
On August 30, 2005, Ding Zuyi and Xi'an Fanyi filed a lawsuit against Fang Zhouzi and BST for defamation. More than a year later, on November 10, 2006, the case was heard in the Chang'an District Court.
The Court apparently ignored Fang Zhouzi's plea that the passage in his article was a direct quote from the MOE Spokesperson and not his own and proceeded the case against Fang. The defendants provided copies of the Los Angles Times, which clearly showed that the "news" in question was a paid advertisement, as well as results from State of California registry showing the registration date of the so-called "USA Fifty State Higher Education Union" and its current defunct status. The court ruled that these evidences inadmissible since they haven't been properly notarized by the Chinese Consulate in the US.
Without any other evidences, however, on November 14, the Court declared that it had verified that on October 4, 2004, Los Angles Times had published a news article on the ranking of "most respected" universities in China. That the defendants did not have sufficient evidence to prove the report was a paid advertisement. Nor could the defendants prove the "non-existence" of the "USA Fifty State Higher Education Union". Therefore the defendants had based their criticisms of Xi'an Fanyi on falsehoods and were guilty of defamation.
The Court decreed that
- Within 10 days, Fang and BST must publish an open apology to Xi'an Fanyi, reviewed by the Court
- Within 10 days, Fang and BST must pay Xi'an Fanyi 150,000RMB ($18,750) for economical damage
- Within 10 days, Fang and BST must pay Ding Zuyi 10,000RMB ($1,250) for psychological damage
On October 22, BST published an open apology to Xi'an Fanyi and Ding Zuyi, fulfilling it's part of the court obligation. It was not clear if the paper had paid for the damage fine. Fang Zhouzi, however, continued to choose defiance. He is appealing to the Highest People's Court of the nation.