China to Crack Down on Software Piracy

Chinese government officials on Tuesday committed to increased protections for intellectual property such as software, saying they will step up criminal enforcement for software and entertainment piracy after talks with U.S. trade officials.

China will conduct seven special enforcement operations against intellectual property (IP) pirates during 2006, and it will open infringement reporting centers in 50 cities, Chinese Vice Premier Wu Yi said during a press conference in Washington, D.C.

China will also accelerate the transfer of piracy cases from administrative to criminal enforcement bodies, she said following a day of U.S.-China Joint Commission on Commerce and Trade (JCCT) talks. That announcement seemed to address U.S. software vendor complaints that China does not adequately enforce IP laws.

U.S. officials praised the progress on trade issues during the daylong talks, saying the IP and other agreements move toward addressing a trade imbalance between the two countries. In 2005, the United States imported about US$202 billion more in Chinese goods than China imported from the United States, according to U.S. figures.

“We have made progress,” said Carlos Gutierrez, U.S. secretary of commerce. “There is still work to do.”

During a presentation about the results of the talks, Wu emphasized the Chinese government’s ruling, announced Monday, requiring all computers sold in the country to include a preloaded, licensed operating system. “This is an important measure taken by the Chinese side to address this issue at the very root,” she said.

Asked if the Chinese commitments on IP protection were “modest,” Gutierrez said the two countries had made “important progress.”

“As with everything else, numbers will ultimately tell the story,” he said.

China also promised to crack down on consumer markets selling pirated software, CDs and DVDs, and promised to “vigorously pursue” individual IP cases, according to a press release from the Office of the U.S. Trade Representative.

The Business Software Alliance (BSA), a trade group based in Washington, D.C., praised the move by the Chinese government to mandate preloaded software. But the mandate won’t fix a major problem at Chinese businesses, where the vast majority of software remains unlicensed, said Robert Holleyman, BSA’s president and chief executive officer.

“That is only part of the bigger challenge,” Holleyman said of the Chinese preloading mandate. “That doesn’t necessarily mean [businesses] are going to add PCs with legal applications.”

An estimated 90 percent of software used in China was unlicensed in 2004, according to a study by IDC.

Microsoft in November signed a deal with Lenovo Group for the top computer seller in China to use only licensed versions of the Windows operating system. Microsoft announced similar deals with two more Chinese PC vendors this month.

Early Tuesday, before the JCCT talks were concluded, Holleyman said he was cautiously optimistic about the potential for progress on intellectual property protections in China. During BSA meetings in Beijing earlier this month, Chinese officials seemed receptive to the trade group’s calls for tougher enforcement of copyright laws, Holleyman said.

However, Chinese officials made no concrete commitments to the BSA, Holleyman said. The Chinese government said it has fixed copyright violations within the federal government, but Holleyman said he has seen no audits to back up that claim.

“We think they’ve made some progress,” he said. “But I haven’t yet seen data to say, ‘Here is exactly what they’ve put into this effort.’ “

Also announced after the JCCT talks concluded: