See You In Chinese Court

Knockoff books, pirated software, black-market videocassettes--they're at the heart of the U.S. government's trade fracas with China. But as negotiators scramble to avert the imposition of sanctions on Feb. 26, some U.S. companies are quietly pursuing plans of their own.

Slowly, gingerly, they're sampling China's fledgling legal system. In the past year, American businesses including Walt Disney, Microsoft, and Harcourt Brace have filed as many as 25 copyright-infringement lawsuits in China's two-year-old Intellectual Property Tribunal of the Beijing Intermediate People's Court.

The companies expect little meaningful relief to come from this legal offensive. Nonetheless, they say, the move represents an important step outside diplomatic channels for deterring piracy. "We never had any illusions that if we spent zillions of dollars bringing cases, we could stop the piracy," says Eric H. Smith, president of the Washington-based International Intellectual Property Alliance (IIPA). "But part of our strategy is to test the system."

Eighteen of the 25 cases have been brought in Beijing by the Business Software Alliance (BSA) on behalf of Microsoft, Lotus Development, and Autodesk. The BSA says that it will file several more copyright actions within weeks in cities such as Shanghai, Shenyang, and Chengtu.

At first, results from the legal strategy were promising. Last June, following a flurry of lawsuits, 22 Beijing officials and U.S. company representatives raided six major computer-software dealers to seize evidence. Since then, the cases have "crawled along at a snail's pace," says Valerie Colbourn, Microsoft Corp.'s Hong Kong-based attorney.

PALTRY PENALTY. So far, indeed, Disney's copyright case is the only one to get a decision out of the new court. Last August, it ruled that two children's-publishing companies had illegally sold magazines featuring Disney characters. But the issue of monetary damages is unresolved.

Chinese officials say they're cracking down on counterfeiters. And a chief aim of the ongoing trade talks is persuading China to simplify legal procedures available to foreign interests. But two trademark-infringement cases lead U.S. companies to wonder how much progress they can expect. Both Disney and Microsoft have prevailed in those actions. But the actual awards, $91 and $2,600 respectively, will hardly deter future wrongdoing.

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