I am curious as to what y\'all (if any of you dabble in software or IP law) think of this...
http://www.yomiuri.co.jp/dy/business/20080919TDY01306.htmSpecifically:
Specifically, foreign companies will be obliged to disclose relevant products\' source code, or a sequence of statements written in computer programming language designed to control digital appliances and other high-tech products.
The system, whereby manufacturers will be allowed to sell their products on the Chinese market only after they pass tests based on disclosed source code and inspections by an accreditation body, is said to be unprecedented.
Products expected to be subject to the system are those equipped with secret coding, such as the Felica contactless smart card system developed by Sony Corp., digital copiers and computer servers.
The Chinese government said it needs the source code to prevent computer viruses taking advantage of software vulnerabilities and to shut out hackers.
That seems to me to be 1,000,000 levels of wrong.
Also, I think that China should focus on not killing their own babies instead of hacking software from other countries.
My dad has been in the industry for a long time and he has done a good deal of business with China. I was just emailing him about this. Here\'s his take on it:
I am surprised that people took so long to figure out that this HAS BEEN already going on. This has been standard practice in China for a while now.
They also require a "joint venture" to be setup in China and for you to manufacture the products in China. So, you must disclose all the inner workings and then build a separate company (the "joint venture") in China to manufacture the products. That company is to be staffed by nationals. It\'s common knowledge that some key ones work for the gov\'t there. Often this company is then used as a tunnel or springboard to get back into other areas of intellectual property inside the home western company.
What some companies have done to try to insulate themselves from this is to partition the product into 2 pieces -- the secret part which they do in their home western country and the other part, which they will manufacture in China. They then combine the 2 together. But, the secret part is done in a way that it is a "black box" whether it\'s software or hardware so that you can\'t see the inner workings and can\'t steal or reverse engineer (ie, figure out how it works).
So, now they are trying to take all of it.
It will be interesting to see how Intel responds to this. While they do have a plant in China to make semiconductors, they have not disclosed the secrets inside. The chinese merely turn the crank to make the microprocessors for the PC\'s. If Intel were to disclose the inner details, they will be out of business within one turn of the product cycle (ie, the time to make a new round of products). That will be 12 to 18 months.
It\'s a big technical / economic arm wrestle going on.
“The Chinese government plans to introduce a new system requiring foreign firms to disclose secret information about digital household appliances and other products starting from May. (…)
Critics worry that such a system risks seeing the intellectual property of foreign firms passed onto their Chinese competitors.
In addition, the envisaged system poses security concerns if coding technology used in digital devices developed in other countries is leaked to China, they added.
Observers say the issue could develop into a serious international trade dispute, with Japan\'s Economy, Trade and Industry Ministry and U.S. Trade Representatives expected to urge the Chinese government to drop the plan.
The Chinese government is calling the planned system an "obligatory accreditation system for IT security products," according to the sources. (…) “
http://www.yomiuri.co.jp/dy/business/20080919TDY01306.htm
Btw, the Japanese version of the article furthermore reports that the total value of products that would be subject to the new rule would probably exceed one trillion/billion yen (1-cho en).
It seems to me that this system – if introduced – will be much more than the cause of an international trade dispute; the announcement in itself may be interpreted as a conscious attempt by Beijing to rebuild the international trade system to its own advantage.
All the more reason thus, to closely follow how the Japanese (and US/EU) government will respond.
Maaike Okano-Heijmans
- Japan National Business Forum.