Software Patent/Copyright Issues in the PRC (People’s Republic of China)

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Software Patent/Copyright Issues in the People's Republic of China

Introduction

This paper is an analytical essay on global ethical issues on software intellectual property in China. It will focus on the software patent and copyright issues that are prevalent in the PRC (People’s Republic of China, including Taiwan (R.O.C. – Republic of China), and Hong Kong). The paper will include personal experiences encountered in this region of the world. In addition, it will include an in-depth analysis on the topic with industry and academic references to defend a particular moral/ethical position, in which software piracy may seem a part of the Chinese culture but is clearly ethically unacceptable.

Background

Information technology is a key driver in the globalization and growth of the world economy. The total worldwide package software market has been estimated at over $135 billion [1]. Piracy causes significant loss internationally. According to the Software Publishers Association (SPA), the worldwide revenues of business-based PC applications were over $17.2 billion. The piracy rate in China ranked amongst the highest at 96 percent. Software has the distinctive characteristics of digital goods – it is expensive to produce for the first copy (high-fixed costs) and inexpensive to reproduce and distribute for subsequent copies (very low, approaching zero, variable costs). These characteristics make it similar to a public good in that sharing it with others does not reduce the consumption utility of the product.

One of the main causes for software entertainment copyright issues in China is that there is a huge imbalance between the people’s demand for filmed entertainment and its constrained “legitimate” supply. The government quotas severely limit import and distribution of films and television shows, cable television offers a sparse selection of entertainment programming options, and modern cinema screens are in short supply. Hence, the black market has emerged to meet this need that would otherwise go largely unfilled. [9] In addition, software piracy is big business with a lot of money at stake. Selling pirated goods at huge volumes make piracy highly profitable. And in a job-hungry economy, piracy creates hundreds of thousands of jobs that the government may be reluctant to threaten with more rigorous anti-piracy measures. [9]

Personal Experience

In the last five years, I have had the opportunity to travel to China, Hong Kong, and Taiwan, three times. Sure enough, a common theme in all three of these geographies is being able to buy pirated goods for cheap.

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