In a statement on their website, Zhongyi Electronic said that the agreement signed with Microsoft permitted the use of their Chinese character fonts in Windows 95 only; Microsoft clearly disagreed with that.

Microsoft immediately announced they would appeal the ruling.  "Microsoft respects intellectual property rights," the company said in a statement.  "We use third party IPs only when we have a legitimate right to do so."

We have yet to see whether this ruling will affect the small but significant number of sales of Chinese Windows versions in other parts of the world.

"By winning this case against an internationally well-known company like Microsoft, it shows that China, although still a developing country, is taking positive steps to protect intellectual property rights," Zhongyi's lawyer Ling Xinyu told Reuters.

For many years, China has been considered a copyright 'backwater,' where scant heed was paid to such niceties.  However, China is a signatory to the two primary international agreements of copyright - The Berne Convention and also The Agreement on Trade Related Aspects of Intellectual Property Rights (which guarantees copyright holders exclusive control over their works for their lifetime plus 50 years).  As a signatory, China has begun to take a much stronger and internationally accorded stance on the issue.

Like Taiwan, China has moved from a defensive position where domiciled organisations were the recipients of such legal actions to a more proactive posture where they are the clear owners of intellectual property and are prepared to defend those holdings.

The case was first filed in April 2007 and represents a very significant impact upon Microsoft's activities in China. 

Zhongyi is still studying the ruling and has yet to decide whether to pursue monetary compensation from Microsoft, spokesman Lan Fei told Agence France-Presse.