The penalties for software IPR infringement in China have varied significantly in terms of the size of the penalty.

For a software user, the use of unlicensed software occurs for many reasons ranging from relatively less stringent penalties to the ease of obtaining unlicensed software for use.

The following is a list of possible reasons that drive users to use unlicensed software, and a brief discussion on each.

• Perceived fair value
  The affordability of a licensed version of software can be a significant factor in a user’s decision to purchase licensed software. If a software product is priced at a higher price point than its perceived value to users, users are less likely to purchase the licensed version of this software.
  
  This tends to be more prevalent amongst the consumer segment, particularly consumers with lower income levels, but can also be a factor in purchasing decisions for small-and-medium enterprises (SMEs) and some large enterprises.
  
  Some global software companies have started campaigns to increase the awareness of the value of licensed software and the risk of counterfeit and employed country-specific pricing in a bid to address this issue.
  
  
• Level of penalties
  Consistently stiff penalties can be a deterrent to using unlicensed software.
  
  In general, countries with stiffer penalties have lower software piracy rates. More importantly, the penalties for software IPR infringement in China have varied significantly in terms of the size of the penalty.

 Comparison of penalties for infringing on software

• Ease of obtaining unlicensed software for use
  Given the accessibility of unlicensed software today, particularly online, it may be more convenient to obtain unlicensed software than to search for a legal avenue to purchase the software.
  
  This factor may be less of an issue if the software is available for purchase online. However, the perceived fair value of the software product will still come into play.
  
  
• Restrictions in genuine software
  Advanced and expert users have indicated that genuine software tends to contain restrictions such as copy protection, activation or a restricted length of license. For these users, such features that help prevent piracy are instead regarded as inconvenience. In their view, the lack of restrictions present in unlicensed software gives them greater flexibility in how they can use the software.
  
  
• Hive mentality / existing culture of unlicensed software usage
  If unlicensed software usage is relatively rampant within a user’s social circles, or a user feels that it is prevalent amongst other computer users in the society, the user may be more likely to use unlicensed software.
  
  

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Contacts

• Joe Tsang 
  Managing Partner, China North and Asia-Pacific Technology Leader


• Steve Lo 
  Asia-Pacific Telecom Leader and Greater China TCE Advisory Leader


• Edward Chang
  Partner, Advisory Services