China orders Microsoft to stop some sales of Windows

A Chinese court ordered Microsoft, the software maker in the world, stop selling versions of its Windows operating systems including fountains designed by a local company, citing a violation of license agreements.

The ruling, signed Monday by the No. 1 Intermediate People's Court of Beijing, is a setback for Microsoft, which intends to increase its market share in China, which is already struggling with rampant piracy problems.

The ruling said that Microsoft violated the license agreements between the company and a Chinese technology company, Zhongyi Electronic, designing fonts for Chinese characters.

Microsoft will have to stop selling Chinese versions of its Windows 98, 2000, 2003 and Windows XP, according to the court. It is unclear when the decision will be effective or how many copies will be affected.

The U.S. company said it would appeal the ruling.

"Microsoft respects intellectual property rights. We use the intellectual property of others when we have a lawful right to do so," the company said in a statement.

Zhongyi Electronic said on its website that the agreements signed only allowed to use their IP in Windows 95, but the U.S. giant's technologies used in subsequent versions of its Windows operating systems.

China has long been the target of foreign firms seeking to protect its intellectual property, but the situation is turning as Chinese companies mature and become more aggressive in protecting their own designs.

"By winning this case against a well known international company like Microsoft, shows that China, while a developing country, is taking positive steps to protect intellectual property rights," he told Reuters Xin Ling Yu, a lawyer for Zhongyi .

In fact, they expect more lawsuits with Chinese companies, according to Michael Vella, head of intellectual property rights and litigation in China in the Morrison & Foerster law firm.

"(Chinese companies) are going to think of China as a place to have its own litigation strategy, I think it is a trend that is coming," said Vella.

"We saw it in Taiwan. At first, the Taiwanese companies were always on the defensive, and in recent years we have been initiating litigation," she said.