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Copyright Infringement Fine Sparks Debate

A landmark court decision forcing the New Oriental Education Group to pay 10 million yuan (US$1.21 million) in compensation for copyright and trademark infringements to two United States plaintiffs has caused controversy and debate in China.

"The amount awarded to the two US firms is relatively high for copyright infringement cases in China, which are rarely won by foreign companies and if won, are awarded nominal compensation," the Agence France-Presse (AFP) said.

But, "the fine is not high at all," said Zhang Chu, an expert Intellectual Property Rights (IPR) law, in a telephone interview with Xinhua.

"New Oriental has earned much more than the amount it was ordered to pay."

"Many local enterprises lack of awareness of IPR and have ignored issues on patent and copyright for years." said Zhang.

In January 2001, the US-based Educational Testing Service (ETS) and the Graduate Management Admission Council (GMAC) accused New Oriental, China's biggest private English language training institute, of infringement of copyright and trademark, asking for 30 million yuan (about US$3.63 million) compensation.

New Oriental denied the validity of "copyright of test questions" in that all test questions in its books, which have been used in past tests, have been used by students all over the world, and were only used for teaching and training.

The judge told the Beijing Morning Post, "Although there is no clear regulation prescribing 'copyright of test questions' in Chinese law, there are some related parts in Law On Copyright of the People's Republic of China."

But professor Zhang said copyright law in China is complete.

"China should enforce penal punishment to make its law on IPR valid," said US law experts at a US-China conference on Internet law in July.

"The case also shows how China is attempting to use the courts to enforce copyright law, both to give teeth to its claims of rule of law and to dull foreign businesses' complaints of rampant fakery," the Associated Press (AP) reported.

New Oriental was ordered to hand over all illegal copies of ETS and GMAC materials and publish an apology.

Since its establishment in 1993, New Oriental has gained huge profits from using and selling books, involving test questions for TOEFL, GRE and GMAT, and their trademarks, which have been registered by ETS and GMAC respectively.

"We are sincerely repentant and apologize for our past mistakes," New Oriental announced after the sentence.

"China has been under increasing pressure by other countries to crack down on piracy after it joined the World Trade Organization in 2001," reported the AFP.

In 1997, local industry and commerce administration officials confiscated the illegal copies of ETS and GMAC test questions produced by New Oriental. But it continued to do business, using the illegal copies later.

"Companies should do business over the long run," Zhang said.

"You may make money in the short term, but are doomed to pay if you use the copyright of patents registered by others."

This is a warning and a tough question for Chinese companies that are still adopting mainstream technology without their own patents.

New Oriental Education Group has established branches in 12 major cities of China and in Toronto, Canada, gaining half of the Chinese training market for students going abroad, and training over 400,000 students annually.

The education group has registered trademarks of "New Oriental" and the corresponding Chinese version in China.

On Sept. 1 this year, New Oriental announced officially its trademarks and brands by law in its website, www.neworiental.org.

Xu Xiaoping, a spokesman for New Oriental, said the verdict was unfair and the company would appeal to a higher court.

(China Daily October 2, 2003)

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