The concept of intellectual property rights (IPR) did not develop at the same time nor happen overnight in the rest of world; on the contrary, it took decades for the culture to develop and be accepted worldwide.

The ideas of copyrights, patents, and trademarks first arrived in China in the late 1800s, yet wars, rebellions, and revolutions all squashed the ability for China to develop the protection for IPR. In fact, the stealing of a book was seen as an ‘elegant’ offense within China, a forgivable offense as the person is trying to acquire knowledge—something valued by society.

With the establishment of the People’s Republic of China and the removal of private property this reversed and prevented any trends towards the development of an IPR culture. Only until the 1980s with the PRC’s acceptance of a market-based economic system did the PRC begin to establish rules around IPR.

Even with a rapidly growing software industry over the past decade in China, China’s software industry is definitively smaller and far less profitable than it should be. With pirated software accounting for over ninety percent of installed computer software, the loss in profits has been overwhelming to the domestic software industry. As such, the some firms within the industry have formed the China Software Alliance modeled on the US Business Software Alliance in an effort to promote awareness over copyright issues and push to change existing laws and policies for the software industry.

Yet, the software industry’s power is relatively small as the CSA took a very conciliatory approach and refrained from openly criticizing various government agencies responsible for cracking down on piracy and drafting the new copyright law, with much of the pressure from China came not through the domestic software industry, but by the US government through China’s joining of the World Trade Organization.

So what would be some business incentives from a pro-IPR perspective? Having copyrights on software allows companies to protect their code and the way they made the software in order to protect profits as without it other companies could directly copy the software and sell the software for cheap—like generic drugs. Other companies may make a worse software if not protected, making it seem like the original product was poor to begin with, reducing the company’s brand image. Without copyrights, companies would have few incentives to produce or charge cheaper prices if the risk of copying was extremely high.

I created a powerpoint presentation on this topic back in 2004 for a telecom class specifically on the China piracy debate.

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