Tencent: Popularity brings profit - and infringement

Intellectual property protection not only plays an important role in the real world, but is also a crucial part of the Internet, dramatically changing people's lives over the past few decades.

China's Tencent Holdings Ltd, the world's second-largest Internet company by stock market value - next to Google - now has the most users in the nation.

"Although intellectual property protection is not the only means to promote development in the industry, it is very significant for companies to achieve success," said Chen Yidan, one of Tencent's founders and its chief administrative officer.

According to Tencent's annual report, the company's revenue totaled 12.44 billion yuan in 2009, a 73.9 percent increase from the previous year. Net profits hit 5.16 billion yuan last year, up 85.2 percent from 2008.

Chen said that Tencent has long been building its core competency through independent innovation and has established a compound protection system that covers domain names, copyrights, trademarks and patents.

To date, the company has applied for more than 2,000 patents and has been granted 500, raking it with the biggest Web companies in the world, Chen said. Its number of approved patents is expected to surpass 1,000 this year, said Wang Huotao, director of Patent Group in R&D Management Department of Tencent.

The company also has more than 1,000 trademarks at home and abroad. Its instant message application QQ, now a household word in China, was certified as a well-known trademark by the State Administration for Industry and Commerce last year, Wang added.

On March 5, QQ hit 100 million simultaneous users, a first worldwide. The service now has 1 billion registered domestic and foreign users, more than half of them active.

But with such popularity comes the potential for abuse.

"A few companies infringe on Internet IP by technical means, such as making pirated online games or game plug-ins," Chen said.

"Free software is in particular vulnerable to patent and copyright infringements," Chen said, noting that one of Tencent's competitors changed some functions and without authorization, launched a QQ-based tool to make profits.

Tencent and Zhongnan University of Economics and Law, a well-known institution for intellectual property instruction and research in China, have jointly established bases for postdoctoral research and innovation education in intellectual property, the first of its kind in the country.

China Daily

(China Daily 03/24/2010 page17)