Microsoft and Chinese Internet café settle differences

The owner of the biggest Internet café chain in Dongguan City, China, has agreed to use legitimate Microsoft software in its eight establishments.

Tonecan Network Communication has also agreed to compensate the software provider for the copyright-infringing software running on more than a thousand of its computers.

The case—brought by Microsoft in December 2009 at the Dongguan Intermediate People’s Court—was heard in August 2010.

Mediation led to Tonecan promising to adopt measures in cafés, which included the closure of a branch that was home to 200 computers, deleting all illegal software and purchasing 700 genuine sets of Microsoft Windows software.

Further mediation allowed the November 23 settlement to be agreed. Tonecon committed to only use legitimate Microsoft software in the future and take all necessary measures for software asset management.

Tonecan will also pay Microsoft an undisclosed amount in compensation for copyright infringement.

The software provider’s final claims included a demand to be compensated for direct economic losses of Rmb1,480,445 ($224,192) and legal costs of Rmb100,000 ($15,140).

In April 2009, the Dongguan Culture Enforcement Authority found Microsoft Windows XP Professional software illegally installed on 1,401 computers during an on-site investigation of Tonecan’s premises.

The investigation was carried out after Microsoft complained about Tonecan, under the direction of the Guangdong Province Copyright Administration Bureau.

Qu Miao, an IP litigator at King & Wood, based in Shanghai and a solicitor for Microsoft on the case, said: “This is Microsoft’s first lawsuit against an Internet café in China and the first civil case for copyright infringement of leased computer software. Therefore, this case is unique and has considerable social impact.”

The Internet café industry in China has grown, according to a report by the country’s Ministry of Culture. By the end of 2009, the total number of Internet cafés in China had reached 138,000.

Li Yingyi, associate professor at the Sun Yat-Sen University School of Intellectual Property, said: “We noticed that many Internet cafés are installing unauthorised software, which causes legal disputes. [Internet café] owners need to take more strict and regulated management measures to ensure the legal use of copyrighted products and avoid legal risks.”