China has seen a flow in foreign-related intellectual property rights (IPR) court cases since joining the World Trade Organization (WTO) in 2001. The number of cases are the prove of how inefficient is the law regarding the protection of intellectual property rights, for that reason multinational companies like Microsoft are threatened to withdraw its businesses from China.
The IPR law is so weak due to the legislative system which has two dimensions, concerning parties at a public international law and private international law level and also because of its impact on economic sectors. This essay will examine those issue in depth and will try to explain reasons behind why Microsoft is planning to withdraw its businesses form china. Microsoft vs. China Microsoft is the largest personal computer software company in the world, with products like Windows, MS Word or MS Excel it has conquered 90 percent of the computer market users around the world.
One of Microsoft’s international strategy is to expand its activity into mainland China, were almost 3,2 million computers were sold in 1997 and is expected to grow higher by a million every year, the importance of the Chinese market is significant to Microsoft, its predicted revenue since entering the market in 1994 to 2000 was estimated of over $100 million, however a serious obstacle in form of software piracy is stopping it from the aimed sum.
An estimate of 96% of software used by people in China is pirated, and Microsoft is its prime target of activity. A huge number of Microsoft’s products appearing on the market are illegal copies, the Chinese government is blamed for such high numbers and is believed to be the worst offender . Chinese judicial authorities which do not enforce their own law is thought to be the main cause, according to the Microsoft officials.
The system was found flawed when Microsoft was trying to sue a software pirate with the Chinese judicial system. The outcome of the dispute found the company guilty of infringement, was fined only $3,000 and Microsoft was compensated with $2,600, where as the requested payout in damages caused was $20million (Aswathappa A. 2006 p. 93) Faced with government actions like this and with rampant piracy of its products, Microsoft has little power to respond legally, IDC’s Peterson pointed out.