Among the far-ranging agreements secured during Chinese President Hu Jintao's state visit to Washington this week was a commitment to crack down on the sale and distribution of pirated software and other intellectual property violations that U.S. firms have long pinned on China.
But for one of the leading anti-piracy lobbies, the Business Software Alliance, China's assurances were at best a hopeful first step toward curbing a multi-billion criminal racket.
"Software industry goals have been very specific -- to lower piracy rates and increase sales and exports for the software makers whose products are currently being used but not paid for," BSA President and CEO Robert Holleyman said in a statement. "The incremental measures announced today do not go far enough in ensuring legal software use."
Intellectual property rights (IPR) were just one item on a laundry list of issues where the United States and China agreed to improve cooperation, ranging from nuclear proliferation to climate change, human trafficking to cybersecurity.
But in the area of piracy, Chinese officials committed only to reassessing the government's procurement and use of software, including publishing audits of the technology used on state systems. For the private sector and state-owned businesses, China agreed to "promot[e] the use of licensed software ... through software asset management programs," according to a fact sheet released by the White House.
"The United States welcomed China's agreement to hold accountable violators of intellectual property on the internet, including those who facilitate the counterfeiting and piracy of others, and to strengthen IPR protections in China's libraries," the White House said. "China has also agreed to clarify the IPR liabilities of relevant third parties, like landlords, managers and operators of markets that sell counterfeit products."
The BSA said China's commitments to combat software piracy represented "incremental progress," but warned that as the country's appetite for information technology continues to balloon, the economic losses from pirated software are soaring.
In a study conducted with research firm IDC, the BSA concluded that 79 percent of the software installed on PCs in China was not paid for in full, a symptom of either direct piracy or abuse of a product's licensing terms. The group estimates that the commercial losses associated with software piracy in China grew from $3.9 billion in 2005 to $7.6 billion in 2009.
"We appreciate the commitments China has made in recent trade negotiations to move government agencies to the use of legal software," Holleyman said. "But at the end of the day, we will only know China is buying legal software when we see it reflected in software companies' sales figures. Today, we are not seeing an increase."
U.S. concerns about intellectual property in China could have had a hand in filling out the guest list at last night's state dinner at the White House. Among the more than 200 invited guests were Microsoft CEO Steve Ballmer, and Rep. Howard Berman (D-Calif.), who serves as ranking member of the House Committee on Foreign Affairs and sits on the Judiciary's subcommittee on Subcommittee on Intellectual Property, Competition and the Internet. In the last session, Berman launched a campaign to crack down on global piracy, and has long pressed for stronger intellectual property protections.
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