Software Publishers Association Calls on China to Meet Commitments Set
Forth in Action Plan Some Progress Seen in Changing Legal Climate

October 12, 1995 (Beijing, China) - In a five day trip to Beijing, United
States Trade Representative (USTR) officials, the Software Publishers
Association (SPA), and other industry representatives are meeting with
Chinese government officials to seek improved performance under the newly
implemented intellectual property rights and enforcement practices called
for in the US-China trade agreement signed last February. The SPA reports
that some progress has been made in the six months after China agreed to
this detailed action plan, but called on Chinese authorities to make good
on their promises to take prompt legal action against CD-ROM factories
producing pirate and counterfeit software on a commercial scale-the
unauthorized copying and distribution of computer programs. 

"The software industry is still hopeful that Chinese authorities will make
good on their two promises to initiate a title verification program and
aggressively prosecute CD-ROM factories for software piracy. They promised
to take these measures seriously six months ago, but in the meantime,
pirate CD-ROMs have continued to be manufactured and exported," said SPA
Counsel Mark Traphagen. Traphagen, who was invited by the U.S. and Chinese
governments to visit Beijing as part of the industry delegation
accompanying the USTR, added, "After this week, we do feel more assured
that the Chinese will take necessary action soon."

Controlling CD-ROM factories, some of which feed a burgeoning export trade
in pirate and counterfeit software, is a priority for SPA in China.
Despite commitments by the Chinese government to investigate and prosecute
wrongdoer, the Los Angeles Times recently reported that the production of
pirate CD-ROMs in China continues unabated. Thousands of pirate CD-ROMs
smuggled from China have been seized in Hong Kong, where SPA has found
pirated and counterfeit versions of over 60 business applications,
education and multimedia titles, as well as games from over 30 publishers
-- some selling for as little as $US 8.

Last year, ineffective enforcement of intellectual property rights made
China the world's biggest haven for software piracy-the unauthorized
copying and distribution of computer programs. SPA estimated that in 1994,
the rate of software piracy in China was a staggering 98%, and that less
than US $2-a fraction of the cost of a single program-had been spent on
legitimate business software for each new computer. There were also
disturbing reports that more than two dozen rogue CD-ROM factories
manufactured pirate software on a commercial scale and that pirate
software was even widely being used by Chinese government offices. 

These findings led the USTR to threaten China with trade sanctions which
were narrowly averted last February when China agreed to a detailed action
plan for improving protection and enforcement of intellectual property
rights. That action plan committed Chinese authorities to take legal
action against distributors and manufacturers of pirate software, to
reorganize government enforcement programs, and to establish new controls
over unauthorized manufacturing and export of CD-ROM software. 

Traphagen acknowledged that Chinese authorities have made measurable
progress toward meeting other goals set by the Action Plan. "SPA commends
Chinese authorities for taking action against the retail trade in pirated
software," he said, but noted that seizures of CD-ROMs still lag far
behind those of audio and video recordings. "SPA was also pleased to learn
that sufficient funding is now being made to license legitimate software
in Chinese Government Offices and that new regulations have been set forth
that require these offices to use the legitimate version."

"These encouraging signs give SPA reason to believe the Action Plan is a
good foundation for improving intellectual property enforcement in China,"
Traphagen said. "We look forward to working with Chinese authorities in
technical assistance programs and also in creating a CD-ROM title
verification program. But for them to meet their commitments, it is
performance, not promises, that matters." 

The SPA and its partners, the American Electronics Association (AEA) and
the Telecommunications Industry Association (TIA) established USITO in
Beijing to develop a business climate for software in China and to make
Asian markets more receptive to American companies. One of USITO's primary
public policy objectives is to improve public understanding and protection
of intellectual property rights in China, and it will conduct training
programs in software asset management. 

The Software Publishers Association is the principal trade association of
the personal computer software industry. Its 1,200 members represent the
leading publishers of software in the business, consumer, and education
markets. The SPA has offices both in the U.S. and overseas. SPA press
releases are available on-line through SPA's Web site (http://www.spa.org)
and CompuServe (GO:SPAFORUM), as well as on the SPA faxback service at
(800) 637-6823 (U.S. only). 

Software Publishers Association
1730 M St, Northwest, Suite 700, Washington, D.C. 20036
202-452-1600,  Fax: 202-223-8756
 
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