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Pirated Goods Swamp China

Pfizer has protested the Chinese government's July decision to revoke its patent on its popular impotence drug, Viagra. Fake versions of Viagra have been widely available in China ever since the drug's release. The government's decision clears the way for Chinese companies to make the drug legally. Zhang said Pfizer's patent was beset by technical problems.

In recent months, the Bush administration, facing pressure to address the United States' $124 billion trade deficit with China, has accused Beijing of unfair business practices. The United States has claimed that China maintains its currency at an artificially low value to make its exports cheaper while subsidizing major industries. Intellectual property has been a particularly frequent talking point. In visits here, Commerce Secretary Donald L. Evans has upbraided Chinese officials for failing to crack down on the trade.

Despite crackdowns, music and movie piracy is still rampant in China. Sidewalk merchants sell CDs for less than $1. (Greg Baker -- AP)

_____Digital Rights_____
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Chinese officials have held their ground on the currency issue while dismissing claims that their country's growing stature in manufacturing has been gained unfairly. But intellectual property has been the lone area in which Beijing has consistently promised to do more. In April, during an official visit to Washington, Vice Premier Wu Yi pledged that the government would undertake stringent efforts to shut down sales of pirated software, movies and brand-name goods.

Since then, several high-profile busts have been trumpeted in the official Chinese press. In early July, authorities in Shanghai shut down a DVD export ring, arresting six people, including two Americans, while seizing more than $83,000 in cash and more than 200,000 DVDs, according to state press accounts.

But intellectual property experts said the recent activities have been more political theater than a genuine shift in market activity in an effort to give the Bush administration something it can use to declare progress in an election year.

Samuel D. Porteous, China country manager for Kroll Risk Consulting, which works for brand-name companies on anti-counterfeiting campaigns, said seizing fake CDs has no impact on the trade and amounts to the cost of doing business for those who lose the discs.

"They have to go much deeper into the problem," Porteous said.

The Motion Picture Association of America estimates that piracy cost its industry some $178 million in lost sales last year. Michael C. Ellis, the association's regional director in Hong Kong, said the problem worsened last year.

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