A recent investment by US film studio Warner Brothers in a movie theater in Shanghai reflects its efforts in the war on piracy rather than a desire for immediate profits, company executives say.
Entertainment giant AOL TimeWarner has taken a 49 percent stake in Paradise Cinema for 14 million yuan (US$1.69 million), with the remaining 51 percent held by the state-owned Shanghai Paradise Corp.
The unlikely investment may signal that US studios are forging ahead with plans to get a toehold in China's potentially vast market, but the fight against piracy, which costs them hundreds of millions of dollars in lost revenues, is top of the agenda.
"We're investing as a symbol to say we want to help with the building of the infrastructure of Chinese cinemas and in the battle against piracy," said Millard Ochs, president of Warner Brothers International Theaters. "We're cooperating with the government to fight piracy by being inside, not standing outside and talking about it."
The recent grand opening of the 1,400-seat theater was followed by news that the Motion Picture Association of America (MPAA) had filed copyright infringement suits against pirates in Shanghai and Beijing.
In the first action of its kind in Shanghai, Fox Entertainment's Twentieth Century Fox Film Corp, Walt Disney Co and French-owned Vivendi Universal's Universal Studios are seeking a public apology, compensation of up to US$75,000 per film and a halt to the alleged violations, said MPAA regional legal counsel Mark Day.
The MPAA filed the suit through the civil courts on behalf of the three studios in six separate cases involving pirated DVDs sold by three Shanghai-based retailers.
Cases in Beijing, involving Warner Brothers' Collateral Damage, and Universal's A Beautiful Mind, were settled in March and April for more than US$15,000, Day said.
"In Shanghai we didn't involve the replication facilities -- that was a strategic decision because we wanted to see what happened if we took action against the retail outlet only," Day said.
As film studios explore new ways to enforce international intellectual property rights, China's admittance to the WTO has added to the pressure on authorities to deal with the problem.
"With China's entry to the WTO, the protection of intellectual property rights must be enhanced," Yang Jun, a lawyer representing the three studios was quoted as saying by the Shanghai Daily.
"If piracy is not properly combated, it could hamper the further introduction of good films from abroad and influence the development of the market."
The government has been fighting to stamp out piracy in China for many years, but it remains rampant, with copied films, music and software sold openly and largely with impunity.
Day said that piracy of movies was running at over 90 percent of titles produced.