Monday, October 12, 2009

US Company Sues Over Infringement by Chinese Filtering Software

So just when you thought that the story of China’s attempt to mandate Internet filtering software on all new PCs had ended, we learn that U.S. software maker Solid Oak Software has sued ZDNet China, for helping the Chinese government distribute a filtering application incorporating stolen code. The Chinese application, called Green Dam-Youth Escort has been accused of copying almost 3,000 lines of code from Solid Oak’s 14-year old website blocking software CyberSitter. Independent analysis by researchers from the University of Michigan confirmed the inclusion of CyberSitter code in the Green Dam software.

So if we don’t dispute the legitimacy of the accusation — although I’m sure that both the Chinese government and the two Chinese software companies, Zhengzhou Jinhui Computer System Engineering Ltd. and Beijing Dazheng Human Language Technology Academy Ltd., would dispute it — the real question is why Solid Oak has chosen to sue ZDNet China. Well it’s important to first learn that ZDNet China is a subsidiary of CBS Interactive Inc. , which we in the US call a “deep pocket.”

Solid Oak claims that since ZDNet China allowed visitors to link to the free-download, it willingly participated in the “largest case of software piracy in history.” The specific accusation is detailed below from the complaint:

“[Solid Oak's software program was disseminated to] tens of millions of end users in China and elsewhere with the willing participation of Internet sites such as CBS Interactive, Inc.’s ZDNet China. CBS participated in this Chinese government-led initiative to proliferate the pirated program amongst the Chinese-speaking population by offering the program for free download on its website. CBS did so in order to promote its website, generate web traffic and advertising revenue, and gain increased access to the vast Chinese-speaking market.”

Solid Oak is asking for $1.23 million in damages. This calculation is based on the 31,000 downloads attributable to ZDNet China’s website and the retail cost of $39.95 for a copy of CyberSitter program.

Although I’m not a lawyer I do agree with CBS that this suit is without much merit (angry comments are welcome) since Solid Oak never legally proved that the Green Dam software violated its right so that it could request an injunction on its distribution. The fact that it may subsequently be shown to be true does not prove that ZDNet abetted piracy at the time that it made the download available. In fact, the lawsuit filed against CBS Interactive names the Chinese government and the two software firms as being behind the violation but does not name them as defendants in the suit. In effect Solid Oak doesn’t think it can successfully make a case against the Chinese companies but faults CBS for not just independently agreeing with their assertion that the software violated their rights and should not be distributed.

“We’ve reviewed the complaint and believe the allegations against CBS are without merit. As is evident from the complaint, this is a dispute between Cybersitter, the two Chinese companies that allegedly copied their filtering technology, as well as the Chinese government that backed these companies and the distribution.”
– Sarah Cain, Spokeswoman, CBS Interactive.

It’s clear to me that Solid Oak feels like they had their IP violated but now they are just looking for a company in the US to sue. The idea that the free downloads of the Chinese product had any impact on sales of CyberSitter — has anyone in China ever purchased the product? — is ridiculous. PLUS, in terms of damages, maybe they could sue CBS for the revenue it took in that can be attributed to ads on the free download page. Since there were only 31,000 downloads then it is likely that at any CPM we are talking about hundreds of dollars not millions.

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Jason Kiwaluk

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