Protecting your software rights in China

Readers will notice the title reads ‘protecting’ rather than ‘enforcing’ your software rights in China. Much could be written about enforcing software rights through the Chinese Courts. For the businessman, however, (especially the foreign businessman) use of the judicial processes available does not represent a commercially attractive, or viable, method of rights management. While it is true legal rights for software in China have greatly improved in recent years, the Courts, for the moment at least, are unable to provide an effective remedy.

Protection of your software rights requires (1) knowing your enemy, (2) skillful preparation of legal and administrative trip wires, and (3) self-help rather than reliance upon Chinese legal intervention.

Clearly, different levels and types of infringement risks attach to different types of software. Those involved in exploiting generic business packages that can be used unmodified with only an object code copy, must appreciate piracy is endemic in China, and businesses will run unlicensed software without thinking twice. If you choose China as a market place for such software, you must rely on physical constraints (such as dongles which lock the software if not reactivated following payment of required fees) or other ‘pay as you go’ models of delivery.

If you are facing Internet piracy (with your software being made available for download at seemingly ever-changing Web sites) the prospects of rights protection would appear forlorn (as indeed they would in any jurisdiction where this happens). The position is somewhat assisted by the relatively antagonistic attitude of the Chinese authorities toward Internet Service Providers (ISPs). The Supreme People’s Court’s “Computer Network Interpretations” states ISPs will be liable to prosecution for copyright infringement to the same degree as their customers, should they fail to act on a ‘take down’ request by the copyright owner. ISPs have to act quickly in response to cease and desist letters from wronged rights-holders. Sohu was reportedly held liable to a copyright holder in 2001 when it failed to take positive action to stop hyperlinking to an infringing Web page.

It may be the person who threatens to walk away with ‘your’ software is rather closer to home. It may be the person who works for you and assisted in cutting the code for the software in question. Where a product design or computer program is created by an employee by reason of his employment in China, the right of attribution rests with the author (the employee), but other copyright rights lie with the employer. In relation to a commissioned work, (i.e. a software program developed by a software company at the request of its customer), in the absence of contractual provisions to the contrary, ownership of the copyright remains with the person commissioned to create the work. Articles 16 and 17 of the 2001 Copyright Law make it clear that these general rules are subject to contrary contractual agreement. For the sake of certainty it is most important that a contract is put in place, signing across the ownership of the software, to reflect the intentions of the parties.

Finally, don’t forget that your enemy may be someone who feels copyright laws do not apply to him. Notwithstanding improvements in the Copyright Law, the latest iteration of the law permits (1) state entities, (2) those involved in classroom teaching and (3) those involved in scientific research to use a work (including software) without permission from, and without royalty payment to, the copyright owner.

Faced with the rather meagre prospects for enforcement through China’s national courts, rights holders have to box clever to retain the upper hand. The following points are worth noting: