China Takes Action to Stop Software Counterfeiting

REDMOND, Wash., and BEIJING — May 16, 2012 — The Chinese government has dealt a strong blow against intellectual property crime, penalizing counterfeiter Shang Yajun for copyright infringement and the sale of illegally manufactured registered trademarks. The 1st Intermediate People’s Court of Beijing upheld the Haidian District Court’s decision that sentenced Shang to seven years and six months imprisonment, representing the longest-ever criminal sentence in China for selling and distributing counterfeit software products.

In its July 2011 raid of storage facilities belonging to Shang, the Haidian District Public Security Bureau in Beijing confiscated more than 360,000 partially finished certificates of authenticity (COAs). Although product names and product identification had not been added yet, it is estimated that when finished and packed, their worth would be approximately 513.5 million RMB, or $79 million (U.S.).

Also during this raid, law enforcement discovered counterfeit products and finished COAs valued at approximately 10.4 million RMB, or $1.6 million (U.S.). This included 4,400 Channel OEM and OEM products for Dell, HP and Lenovo, including Simplified Chinese and English-language versions of Windows XP Professional, Windows 7 (Home, Professional and Ultimate), as well as Windows Server 2008 Standard, Windows Server 2003 Standard and Windows Server 2003 Enterprise. In addition to packaging equipment and materials, approximately 200 finished Windows XP Professional Simplified Chinese COAs and 200 finished Windows Server Standard COAs were seized.

“Shang Yajun was no casual counterfeiter; he ran a large-scale, sophisticated criminal enterprise,” said David Finn, associate general counsel, Worldwide Anti-Piracy and Anti-Counterfeiting at Microsoft Corp. “Microsoft is encouraged by the successful resolution of the case and appreciates the help and support of the Chinese government.

Wang Changlin, the deputy prosecutor general of Haidian District, directly guided the prosecution of this case.

“This case proved the efficiency and effectiveness of the Procuratorate of Haidian District’s innovative approach of having one single department to handle intellectual property rights (IPR) cases from arrest to prosecution, and reflected the full-fledged efforts of our dedicated IPR crime prosecutors,” Wang said. “Moving forward, we will ramp up judicial efforts to protect IP rights and deter IP crimes.”

“This case has set a precedent and an exemplary role for similar cases, demonstrating the fact that judicial authorities in China have been increasing the penalties for piracy,” said Huang Jingping, executive director of Criminal Law Research Center of Renmin University of China and vice president of China Criminal Law Society. “The law must deal a harsh hand to those who pirate, as it hinders fair competition, disrupts the order of market economy and stifles innovation.”

Microsoft is committed to assisting law enforcement with their investigations of suspected pirates. Since 2005, more than 400,000 consumers worldwide have contacted Microsoft through its How to Tell website to offer details about an inadvertent purchase of fake software that left computers infected with viruses and malware or that simply didn’t work as advertised. The installation of malicious code, which may lead to data loss, breaches of privacy and identify theft, and system instability, can be an unexpected consequence of using counterfeit software.

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