China rules Microsoft violated intellectual property rights

A Beijing court has ruled that Microsoft violated a Chinese company's intellectual property rights in a case over fonts used in past Windows operating systems, state media said Tuesday. Microsoft plans to appeal the case, a company representative said in a statement. The Beijing Number One Intermediate People's Court this week ordered Microsoft to stop selling versions of Windows that use the Chinese fonts, state broadcaster CCTV said. The ruling comes as Barack Obama visits China for his first time as U.S. president.

A U.S. business association this week appealed to Obama for further efforts to protect intellectual property rights in China, where pirated copies of DVDs and computer software including Windows are widely sold on streets and in bazaars. The visit has brought renewed focus on tensions over piracy and the trade of high-tech products between the countries. Microsoft originally licensed Zhongyi's intellectual property more than a decade ago for use in the Chinese version of Windows 95, according to Zhongyi. Microsoft agrees with the court that the key in the two cases is a dispute over the scope of licensing agreements, the Microsoft representative said. Zhongyi argues that agreement applied only to Windows 95, but that Microsoft continued to use the intellectual property from Windows 98 to Windows XP. The court reportedly also ruled that Microsoft's use of a Chinese input system from Zhongyi did not violate any licensing agreements. But it disagrees with the ruling on the coverage of the agreements, which it believes also include its use of the fonts, the representative said.

Pirated versions of Windows 7 were on sale in one Beijing bazaar weeks before the software officially went on sale last month. Windows XP is the most widely used OS in Chinese offices and homes, but countless users run pirated copies. Microsoft offers Windows 7 in China for a lower price than in developed markets, and often labels its software "legal" to differentiate it from the pirated versions common in the country. Windows 7 Home Premium costs 699 yuan (US$103) in China, compared to $199.99 in the U.S.