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Breaking news: Santa Barbara firm sues Chinese government for $2.2B

By   /   Tuesday, January 5th, 2010  /   Comments Off on Breaking news: Santa Barbara firm sues Chinese government for $2.2B

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A Santa Barbara-based software maker has sued the Chinese government and seven big computer manufacturers for $2.2 billion for conspiring to steal its code and distribute 56 million copies of a censoring program that contained the allegedly pilfered lines.

Cybersitter, a company that makes software used by parents to block children’s access to inappropriate content, grabbed headlines back in June. The Chinese government was gearing up to implement the so-called “Green Dam” software, a censoring program designed to block pornographic as well as political content.

Weeks before the Chinese government was set to require all new computers sold in the world’s most populous country to contain the software, academic researchers discovered that Green Dam’s developers may have copied and pasted thousands of lines of code from the Santa Barbara firm.

“I knew about the Green Dam thing and thought to myself, ‘Gee, that would have been a good contract to get,’” Cybersitter founder Brian Milburn told the Business Times back in June. “I came to find out we got the contract. We just didn’t get paid.”

Now, Cybersitter has fired back with a lawsuit that alleges that the Chinese government, along with computer makers such as Lenovo, Toshiba and Sony, worked together to knowingly steal Cybersitter’s code and illegally distribute software containing it. The suit was filed Jan. 5 in federal court in Los Angeles.

Greg Fayer, an attorney representing Cybersitter, said it’s taken months of investigation to compile the 36-page complaint.

“There were companies that did a better job of things than the ones named in the complaint,” Fayer told the Business Times. “At the end of the day, we uncovered evidence in our investigation that gave us a basis for alleging an overt conspiracy.”

Officials from Lenovo, Toshiba and Sony did not immediately respond to requests from the Business Times for comment on the lawsuit.

Cybersitter may have a tough time persuading U.S. courts that the trial should happen in this country. The defendants are headquartered in China, Japan and Taiwan.

If the computers carrying the allegedly stolen software were manufactured in China and sold in China by Chinese subsidiaries, the defendants could argue that the matter should be heard in a Chinese court, Steven Sereboff, an intellectual property attorney with Westlake Village’s SoCal IP Law Group, told the Business Times in June.

“It’s definitely challenging to pursue pirates in China,” Sereboff said.
While he didn’t want to give away Cybersitter’s litigation strategy, Fayer acknowledged the challenge in holding foreign firms accountable in the case.

“U.S. courts are traditionally reluctant to take jurisdiction over foreign defendants,” Fayer said. “But there’s also an exception when foreign defendants target companies in the U.S. or take actions that do harm in the U.S.”

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