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The photo caption accompanying this article has been changed to give the correct name of attorney Gregory Fayer’s law firm. Three Chinese companies will have to defend themselves in U.S. courts against a copyright infringement case brought by a California software company, a federal judge has ruled. U.S. District Judge Josephine Tucker in Los Angeles denied five motions on Aug. 1 to dismiss a $2.2 billion lawsuit filed by Solid Oak Software Inc. against Haier Group Corp., a computer manufacturer, and two software firms backed by the Chinese government, Zhengzhou Jinhui Computer System Engineering Ltd. and Beijing Dazheng Human Language Technology Academy Ltd. “It’s a significant decision for American companies because it means that if Chinese companies or foreign companies in general take a U.S. company’s intellectual property, and knowingly misappropriate it, they can in fact be expected to be hauled into American courts and answer for the claims against them,” said Gregory Fayer, a partner at Fayer Gipson in Los Angeles who represents Solid Oak. Calls were not returned by lawyers for the three Chinese companies: Richard Kendall, a partner at Los Angeles-based Kendall Brill & Klieger, who represents Zhengzhou Jinhui; Jinshu “John” Zhang, a Los Angeles partner at Reed Smith who represents Danzheng; and Haier’s attorney, Elizabeth Rader, of counsel in the Menlo Park, Calif., office of Alston & Bird. Solid Oak filed suit on Jan. 5, 2010, against the Chinese government, the two software firms in China and seven foreign computer manufacturers, including Haier, for misappropriation of trade secrets and copyright infringement. Solid Oak alleges that nearly 3,000 lines of code were stolen from its CYBERsitter software program for use in Green Dam Youth Escort software, which was distributed to millions of people in China. CYBERsitter, which costs $39.95, blocks children from viewing pornography and other inappropriate content on the Internet. Critics accused the Chinese government of using Green Dam to block its citizens from viewing political and religious Web sites that the government deemed objectionable. The Obama administration warned China that requiring all manufacturers to bundle Green Dam software into any computer sold in China after July 1, 2009, could violate free-trade agreements. The mandate was dropped. Solid Oak has reached confidential settlements with three of the defendants: Toshiba Corp., Sony Corp. and Acer Inc. Remaining in the case are ASUSTeK Computer Inc., BenQ Corp., Lenovo Group Ltd. and the three Chinese firms. Sony settled after Tucker denied its motion to dismiss based on forum non conveniens–that is, the doctrine that the lawsuit should not be heard in the United States but in China’s courts, if at all. Beijing Dazheng brought a similar motion on June 8. Beijing Dazheng, joined by Zhengzhou Jinhui in its motion, argued that California is an inconvenient forum because witnesses, evidence and the defendants are in China. Tucker rejected that argument, citing her earlier decision on Sony’s motion. Beijing Dazheng, Zhengzhou Jinhui and Heier each brought additional motions to dismiss based on lack of personal jurisdiction, arguing that Green Dam software was for the Chinese market alone and that none of the companies has a physical presence in California. “On the contrary, Defendants’ alleged actions were intentional, tortuous, and aimed at Plaintiff in California,” Tucker wrote. “The key on that part of the court’s finding was that intentional misappropriation of intellectual property is by its nature directed at the company or individual whose intellectual property you are taking,” Fayer said. Haier brought another motion to dismiss based on Solid Oak’s failure to join a necessary indispensible party: the People’s Republic of China, which, under the Foreign Sovereign Immunities Act, cannot be sued. Tucker ruled that the Chinese government was not immune, citing an exemption of the law that deals with commercial activities. Earlier, on Feb. 16, Tucker found that Solid Oak Software had provided sufficient reasons why the Chinese government was ineligible for immunity under law, which generally immunizes foreign countries from U.S. lawsuits, and granted a default motion against the People’s Republic of China. A trial in the case is scheduled for March 27, 2012. Amanda Bronstad can be contacted at [email protected].

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