DELSTARTDELEND
By Qingshan TengA
Chinese Internet café group being sued by Microsoft for using pirated software is accusing the US firm of attempting to shore up money in its intellectual property lawsuit.
The accusation comes about two weeks after Microsoft said it would nearly triple its compensation claim in regard to the café group's use of pirated Windows operating systems, bumping the damages sought to 1.58 million yuan ($231,000).
The eight Tonecan cafés are located in Dongguan, Guangdong Province, and remain open. Their owner, Huang Peihong, has denied the accusations, saying his cafés have been using legal copies of Windows. However, he refused to disclose the purchase details of the software.
Originally asking for 600,000 yuan, Microsoft raised its claim May 11, one day before the court was scheduled to begin hearing the case. As a result, the hearing was delayed and hasn't been given a new date.
Huang, who is also the deputy director of the Dongguan Internet Café Association, subsequently accused Microsoft of being "immoral" by "making use of the copyright issue" as a means to make money.
"What Microsoft also asked us to do is install the Professional edition of the Windows system, not the Home edition. That means we have to pay twice as much, even though there would be some forms of discounts," Huang said.
Prices for the Windows XP system are no longer available on the Microsoft online store, but prices for its latest Windows 7 system vary from $79.95 to $319.99 in the US.
In China, the prices for Windows 7 range from 399 yuan ($58) to 2,460 yuan ($360).
There are more than 1,400 computers at all eight cafés combined.
But there is the potential for much farther-reaching implications from the lawsuit, and the fallout could spread throughout the entire country.
If the court rules in Microsoft's favor, the total royalties owed to the software giant could top 120 million yuan in Dongguan alone, according to reports.
Tonecan is being backed by a number of other Internet café associations in the country, with one such company saying in a letter that "We are not against installing authorized operating systems. But the prices should be reasonable so that the whole industry can accept them."
Microsoft China said in a statement Thursday to the Global Times that "We will not disclose or comment on the case due to the ongoing proceedings by the court."
The latest accusations out of China came a day after Microsoft Chief Executive Steve Ballmer said Wednesday that China's "weak enforcement of copyright laws has undermined revenues."
Only 1 percent of Microsoft's revenue comes from China, Ballmer said.
During two days of major talks between high-ranking Chinese and US officials this week in Beijing, US Trade Representative Ron Kirk said "any progress from China in IPR (intellectual property right) protection and market access barriers could be more important than yuan reforms."
The latest copyright friction also came as Microsoft's market value shrank to $219 billion and was surpassed by longtime rival Apple, whose market value stood at $229 billion Thursday, Reuters reported.
Microsoft, whose operating system runs on more than 90 percent of the world's personal computers, has not been able to match growth rates from its heyday in the 1990s, Reuters said.
Li Wenwei, a leading expert in the field of IPR protection, earlier told the Guangzhou-based Nanfang Daily that "Microsoft's latest lawsuit against Tonecan was to minimize profit losses incurred by the global financial crisis."
"The company is to expand its market share and increase business profits," he said. According to Li, Microsoft China visited him two years ago and shared the idea to him of filing lawsuits against local Internet cafés.
Huang Rendong, an IPR protection lawyer in Dongguan who is familiar with the case, told the Global Times that both sides are willing to mediate on the suit ahead of the court hearing.
"Regardless of the final result of the case, domestic companies' awareness of IPR protection has been increasing," he said. "I hope multinational companies, such as Microsoft, can respect the national conditions of China. I am expecting a win-win result for both sides."
The lawsuit against Tonecan marks another step the US software giant has taken in its beefed-up drive against priracy in China, where pirated products are thought to remain in common use.
In late April, Microsoft received 2.17 million yuan in damages from Dazhong Insurance in Shanghai for illegal use of its operating systems. And in August 2009, Microsoft also won 3 million yuan in a lawsuit against Tomato Garden, a website that provided free pirated Windows XP software.
Guo Xiushen, with the China Trademark Association's Expert Committee, told the Global Times Thursday that it would be improper for Microsoft to make use of the copyright issue in China as a means to maximize its profits.
"Spreading knowledge about the copyright issue should be the first choice rather than claiming high compensation," Guo said.
The Chinese government has made attempts to crack down on software piracy. Computers manufactured within the country have been ordered to pre-install authorized operating software systems when they leave the factory.
A research report on China's software piracy rate, released by chinalabs.com, a Beijing-based independent Internet technology consultancy company, shows that the piracy rate of operating systems dropped to 27 percent in 2009 from 81 percent in 2005.
