Microsoft loses China intellectual property rights battle over fonts
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Trademark owners must carefully adhere to any license agreements with Chinese companies. Kathrin Hille, Taipei correspondent for the Financial Times reported from Beijing that on November 18, a Chinese court ruled that Microsoft infringed a Chinese software maker's intellectual property rights. Microsoft’s use of two Chinese fonts developed by Zhongyi Electronic, a Beijing-based software company, was not covered by a license agreement between the two, the Beijing No 1 Intermediary People's Court said in a verdict. Once the ruling takes effect, Microsoft must stop selling all PC operating systems that use the fonts including the Chinese language editions of the second edition of Windows 98, Windows 2000, Windows XP and Windows Server 2003.
Hille reported that Zhongyi said the verdict had highlighted that every Chinese-language Windows operating system included Chinese intellectual property rights because the Chinese character database and Chinese language input system were developed by locals. "It can be said that the support from the Chinese character database and the input system are a pillar for the windfall profits Microsoft is extracting from China. Microsoft, which has always presented itself as a forceful protector of intellectual property rights and blamed the Chinese people for 'piracy', has actually been infringing Chinese intellectual property rights," Zhongyi said.
Aaron Back of Dow Jones Newswires reported that Microsoft spokeswoman Joanna Li didn't directly comment on whether the company had halted sales of the operating systems in China, but said, "we do not expect the ruling to impact product sales." Microsoft plans to appeal it. "We believe our license agreements with the plaintiff cover our use of the fonts," Microsoft said in the statement.
Hille further commented that Microsoft has a long history of fighting for the protection of its own intellectual property rights in China as the lion's share of the operating systems used on the country's computers are pirated versions. But the company has also struggled to balance the need to fight piracy with the risk of upsetting notoriously fickle consumers. It stopped using an anti-piracy tool that blackens the screens of computers using counterfeit Microsoft programs last year following an outcry from angry consumers.
While the vast majority of IPR disputes in China see foreign rights holders sue local defendants over alleged infringements, Chinese groups have started going after foreign rivals as well. CPA Global Limited reported that Schneider Electric agreed to pay a record $23m earlier this year in a settlement of a patent dispute.
