The chief executives of 12 software companies — angered by what they say is China's failure to fight software piracy — are meeting with lawmakers and Obama administration officials in hopes of persuading them to pressure China to crack down on the illegal copying. China — long a center of pirated movies, music and software — had been making some progress in stopping illegal copying, said the Business Software Alliance, which estimated that 79 percent of China's computers last year ran on pirated software. “We were seeing progress over a number of years … but that has essentially stalled and the (piracy) rate has been roughly flat for the last three years,” said BSA President Robert Holleyman.
Software companies also worry about China's proposed “indigenous innovation” policies, which favor Chinese companies. They particularly oppose policies that would compel a transfer of intellectual property as a condition of winning a sale. Microsoft's Steve Ballmer, Shantanu Narayen of Adobe, Carl Bass of Autodesk and Enrique Salem of Symantec are among the chief executives meeting with Treasury Secretary Tim Geithner, Attorney General Eric Holder, Office of Management and Budget Director Peter Orszag. The executives are also meeting with lawmakers like Senate Majority Leader Harry Reid, Representative Howard Berman, chair of the House Foreign Affairs Committee, and Representative Eric Cantor, the Republican whip. Microsoft, which has continued doing business with China despite the piracy, recently won a lawsuit in Shanghai against a local insurance company that was running 450 copies of pirated Microsoft software. U.S. officials need to make software piracy a higher priority in relations with China, in addition to focusing on an undervalued Chinese currency that makes it harder for U.S. goods to compete, the BSA's Holleyman said.
Using pirated software worsens the situation by lowering the Chinese companies' cost of production, he said. The BSA is asking the Chinese government to ensure that government offices and businesses use only licensed software and to pledge to refrain from compelling intellectual property transfers as the cost of doing business, in addition to other steps. Tom Adams, chief executive of Rosetta Stone and an expected participant in the meetings, said his company cannot do business in China, which he calls a “kleptocratic society.”