Microsoft’s (MSFT) big launch of the new Windows 7 operating system on Friday in Beijing was much like its launches around the world: a huge, boisterous demonstration of new features such as being able to share music across multiple computers in one home. With one big difference: the emphasis that executives put on the benefits of “genuine” Windows 7 over pirated versions, showing that piracy remains a huge concern in China, the world’s second largest market for personal computers.

“It’s very important to make sure that people are understanding the benefits of running genuine Windows over pirated copies,” Microsoft Vice President of Windows Platform Strategy Mike Nash told an audience of mostly Chinese reporters. “I look at all of you as great witnesses to explain that to all of China.”

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The French National Assembly on Tuesday approved a draft “three strikes” law that would allow authorities to cut off Internet access to piracy offenders.

The measure, which France’s Senate passed in July, was narrowly approved by the parliament with a vote of 285 to 225, and is viewed as a compromise to a similar law that was rejected for being too harsh. The current provision would slap offenders who ignore an email warning and a registered letter with a fine of up to 300,000 euros (about $440,000) or a jail sentence, and would even fine parents for their children’s illegal downloading.

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Hong Lei and his partners were the biggest pirates of Microsoft Corp. (MSFT) software in China, but since his arrest last December, the 30-year-old creator of a popular Chinese clone of Windows called Tomato Garden Window XP has become something of an Internet hero.

The phenomenon underscores the challenges faced by Microsoft and other technology companies as they battle rampant piracy in China, despite official efforts to crack down.

Users of Mr. Hong’s software have launched fan sites, including one where they swap stories about how they “grew up” using his software, recognized by a cartoon icon of a smiling tomato wearing sunglasses. A survey of 184,000 people on Chinese Internet portal Sina.com, asking about the detentions, found that 80 percent of respondents supported Tomato Garden and only 4.4 percent supported Microsoft. Online forums are full of Mr. Hong’s supporters.

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File-sharing, to the (very large) extent that it involves copyright infringement, has affected the music business. But, as a pair of academic researchers happily point out in a working paper they’ve posted online, copyright law was never meant to protect the music business in the first place—instead, it is intended to foster creative production in the arts, which happen to include music.

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It’s a well-known story by now: Europe, the US, and plenty of other countries have made it generally illegal to circumvent DRM, even when users want to do something legal with the content. Sure, it sounds bad and Ars complains about it all the time, but come on—do anticircumvention laws really prevent real people in the real world from doing real things with their content?

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In March, an unfinished copy of 20th Century Fox’s film X-Men Origins: Wolverine was stolen from a film lab and uploaded to the Internet, more than a month before its theatrical release. The studio investigated the crime, and efforts were made to limit its availability online. Still, it was illegally downloaded more than four million times.

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It’s the jewel in the crown of Internet piracy, but is the verdict against Pirate Bay a pyrrhic victory?

Pirate Bay’s four co-founders face one year in prison and a $905,000 fine each.

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As revenues from sales of traditional media have plunged, the music business has been looking for alternate ways of making money from its products, including a variety of subscription services, ad-supported streams, and blanket licenses. The focus of these efforts has largely been on how to ensure that revenue gets collected by the industry in general instead of disappearing into the black hole of piracy, but there’s a related issue that doesn’t receive as much attention: how that money gets distributed once it’s collected.

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Back in 1993, the Knight-Ridder newspaper chain began investigating piracy of Dave Barry’s popular column, which was published by the Miami Herald and syndicated widely. In the course of tracking down the sources of unlicensed distribution, they found many things, including the copying of his column to alt.fan.dave_barry on usenet; a 2000-person strong mailing list also reading pirated versions; and a teenager in the Midwest who was doing some of the copying himself, because he loved Barry’s work so much he wanted everybody to be able to read it.

One of the people I was hanging around with online back then was Gordy Thompson, who managed internet services at the New York Times. I remember Thompson saying something to the effect of “When a 14-year-old kid can blow up your business in his spare time, not because he hates you but because he loves you, then you got a problem.” I think about that conversation a lot these days.

The problem newspapers face isn’t that they didn’t see the Internet coming. They not only saw it miles off, they figured out early on that they needed a plan to deal with it, and during the early 90s they came up with not just one plan but several. One was to partner with companies like America Online, a fast-growing subscription service that was less chaotic than the open Internet. Another plan was to educate the public about the behaviors required of them by copyright law. New payment models such as micropayments were proposed. Alternatively, they could pursue the profit margins enjoyed by radio and TV, if they became purely ad-supported. Still another plan was to convince tech firms to make their hardware and software less capable of sharing, or to partner with the businesses running data networks to achieve the same goal. Then there was the nuclear option: Sue copyright infringers directly, making an example of them.

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Meet Mark, an IT guy at a small company who occasionally has to renew licenses for the software utilized by the business. Recently, he had to activate a copy of PaperPort, the scanning and document management software from Nuance. In order to free up another activation slot, he had to uninstall the old one first while being online. Like most activation-licensed software, this doesn’t always work properly.

To resolve the issue Mark contacted Nuance’s support. To his surprise however, they didn’t want to help him straight away, instead asking him to take pictures of the CD in order to prove that the company owned a legitimate copy.

“I couldn’t believe my ears,” Mark told TorrentFreak. “After arguing with support for a while on how ridiculous it was, I still had to have the license within the day. To make a long story short I finally got them to unlock 2 licenses after 2 days of repeated calls and sending the picture of the CD multiple times.”

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Hulu caused quite a stir this week when, at the request of rights holders, it shut down Boxee’s access to its streaming video platform. While many discussed the business implications of this move, some are ready to do more than just talk about it. One reader wrote to tell us that he’s gonna stop using Hulu altogether and go back to downloading TV shows via BitTorrent. Lifehacker editor Adam Pash apparently had the same idea, given his post entitled “How to Get Hulu Content on TV Without Hulu’s Help.”

Granted, so far this is all just anecdotal evidence. Chances are the move will cost Boxee more users than Hulu in the near term. However, these aren’t the only dark clouds on the horizon of Hululand; longer ad breaks and old media conflicts could turn people off Hulu-like streaming video platforms. Piracy, on the other hand, is getting easier and easier every day, with torrent sites and other unlicensed platforms just waiting to embrace Hulu renegades. Maybe it’s time to send the following memo to Hollywood: You can still blow this thing.

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The final defendant in a five-year-old nationwide piracy crackdown pleaded guilty to criminal copyright infringement Wednesday, admitting to his role in a so-called “warez” club responsible for tens of thousands of unauthorized copies of videogames, software and digital music files.

Defendant Greg Hurley of Orlando, Fla., isn’t likely to face time when sentenced later this spring. The 18 defendants sentenced so far under “Operation Safehaven” and “Operation Higher Education”–prosecuted in the U.S. District Court of Connecticut–have received probation, attorneys involved said.

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I recently purchased a short story from Fictionwise, which was not DRM’ed, so I could easily get it into a form where I could read it on my Sony eReader. Thanks to that short story, I was introduced to an author, and a character, which I found very engaging. When I decided to find out more about the character, I found that the author had written two additional short stories, and three additional novels many years ago, but has since stopped writing any more books involving that character. Furthermore, the novels have gone out of print, and are only available from amazon.com as used books.

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In an attempt to make headway against rampant film piracy, Warner Bros. will distribute newly released films online in China. The studio struck a deal with Union Voole Technology in China to offer new movies, as well as those that have never been seen in Chinese theaters, at rental prices ranging from 60 cents to $1. The inexpensive video-on-demand service seeks to entice China’s estimated 253 million Internet users to pay for Hollywood fare rather than download illicit copies.

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If you pay any attention to the endless debates over intellectual property policy in the United States, you’ll hear two numbers invoked over and over again, like the stuttering chorus of some Philip Glass opera: 750,000 and $200 to $250 billion. The first is the number of U.S. jobs supposedly lost to intellectual property theft; the second is the annual dollar cost of IP infringement to the U.S. economy. These statistics are brandished like a talisman each time Congress is asked to step up enforcement to protect the ever-beleaguered U.S. content industry. And both, as far as an extended investigation by Ars Technica has been able to determine, are utterly bogus.

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