Ma Fought the Law and the Pirate Software Manufacturer Won

Posted on September 24, 2008
Filed Under China Business, China Distribution, China Law, Software Piracy |

Caijing, a great Chinese business magazine, has an article following up on the Summer Solstice software piracy caper.

Summer Solstice was a joint venture (as it were) between the FBI and the PSB to catch two men who were the distributors of counterfeit Microsoft and Symantec software. The case was a success and the men are now standing trial in Shanghai and Shenzhen.

What’s interesting about the story is an apparent change in the rules of evidence for these kinds of trials and the culpability of the manufacturers.

The first part of the article contrasts the case of an expat who sold DVDs via eBay in the US during 2004 and the 2007 case of pirate software distributors messrs Ma and Che. The standards of evidence seem to have shifted since the first case. Caijing:

…In previous domestic piracy cases, only seized pirated discs were treated as important evidence in court, allowing convicts to receive punishments that were lighter than they would have gotten if more CDs were entered as evidence.

…Zhang (CMiC: the defense attorney in both cases) said when there is sufficient evidence linked to a case, such as a case of drug trafficking, a suspect can be convicted even without material evidence. But there have been few precedents for this use of evidence in copyright cases.

For Operation Summer Solstice, although the counterfeit software has an estimated retail value of US$ 500 million, only a dozen discs were found in Ma’s home.

From what I can gather, it would seem that documentary evidence is being used in the case in lieu of material evidence. I’m not really sure what significance this has for overall Chinese jurisprudence, but as presented it’s a much more effective means of prosecution in these kinds of cases.

For prosecuting the distributor, that is. Caijing reporters Chenzhong Xiaolu and Ming Shuliang continue:

Also noteworthy about the latest cases is that only those involved in intermediate sales operations were indicted while key players – pirated products producers – were not touched.

Manufacturers of Ma’s products included Guangdong Weiya, where defendant Zhang Xiaoqing worked, and Shenzhen Ka Cheung Yuen Industrial Co. However, according to the court, Zhang was charged with “aiding production,” while the company was not even mentioned. In the Shenzhen case, pirated disc maker Shenzhen M3 Technology also was not charged.

The Web site of Guangdong Weiya claims the company oversees the Guangdong Provincial Publishing Group, a state-owned, high-tech enterprise with an annual production capacity of 80 million CDs, 6 million DVDs and 15,000 master discs. Zhang Xiaoqing said in court that the company is one of the country’s largest domestic disc manufacturers.

Shenzhen Ka Cheung is a subsidiary of Hong Kong’s Koda Group, which is registered by the Shenzhen Administration Bureau for Industry and Commerce.

Why were these companies involved in the piracy ring? According to Zhang Xiaoqing’s court statement, the suspects forged manufacturer certificates and documents, such as letters of authorization. However, were these companies totally in the dark about the illegal activity?

Some insiders say most of the pirated product lines in Guangdong Province, where Shenzhen is located, were cracked long ago, leaving only legal companies. In Ma’s case, it was found than an original production line at Shenzhen Ka Cheung was used for pirated products.

The defendant, Mr. Ma, is facing up to seven years in jail. One of Guangdong Weiya’s employees is in the dock on a lesser charge of aiding production. And the companies who actually made the disks? They’re not part of the case and, as Caijing notes, “…market demand and high profits for pirated products will fuel the business.”

It looks like Summer Solstice was not quite anti-piracy bacchanal it was celebrated as.