Shanghai Court Awards Record IP Damages to Microsoft

Posted by Reading Time: 2 minutes

Apr. 24 – Microsoft has been awarded the largest ever amount in intellectual property damages in China after a local court in Shanghai ruled that Dazhong Insurance, a state-backed insurer, was guilty of using pirated copies of Microsoft software.

The court awarded Microsoft RMB2.17 million (US$318,000). This marks the first successful case that Microsoft has taken in China over copyright infringement of its software.

The company has become increasingly aggressive in China in recent years in both contacting and visiting companies to assess the numbers of required user licenses. Microsoft told the court that they wanted to promote the use of genuine software for large companies. Evidence used in court showed that Dazhong Insurance had used at least 450 copies of pirated software and violated software piracy laws in nine categories.

China has been awash with pirated copies of Microsoft software for years and has had problems with even mainstream computer suppliers giving pirated software, including Windows, to the end user. While taking steps to ensure that pirated copies have been removed from the corporate supply chain, Microsoft have been visiting companies who have upgraded to original software, assessing the numbers of computers used and the numbers of licenses purchased. In doing so they have gradually been able to convert most corporate businesses to full original licensed copies.

“In the early days in China it was difficult to purchase computers without pirated software. Microsoft has pursued a long term strategy of accepting the pirated base they had to work from and then gradually educate and persuade companies, especially the larger ones whose systems should not really be running pirated software, to upgrade to original licenses,” said Chris Devonshire-Ellis of Dezan Shira & Associates, the foreign direct investment firm.

“This case will become a landmark in China IP development as the defendant was a large Chinese corporation backed by the state,” he said. “It shows that the Chinese leadership themselves want Chinese companies to cease using defective and pirated products and to protect the integrity of their administration, while at the same time acknowledging Microsoft’s right to charge for that quality of service and software.”