Watch, handbag, DVD? Buy here! Rolex? You look, just look, no buy. Come back, just look! Anyone who has run the one-block stretch of Huaihai Road in Shanghai, or hit the Silk Market in Beijing (where they don't sell much silk but have plenty of fake watches, purses and golf clubs), knows why the United States slapped China with a couple of piracy complaints at the World Trade Organization last week.

After years of niceties--and millions of DVDs sold--the United States wants to see real action to thwart the widespread piracy of American movies, music, books and software in China. No more $1 Harry Potter DVDs, no more $10 Microsoft Vista, no more fooling around.

This will be a fun one. Even in the showcase cities, Shanghai and Beijing, you can't spit without hitting a DVD hawker. It'll be interesting to see how China handles the WTO complaints, especially given its odd-couple trade relationship with the States, where both partners aren't really happy but just can't seem to part ways.

The thing to watch is whether the spat blooms into a full-blown trade war. If it does, just about every company doing business in China will feel the fallout.

To its credit, China's chip industry assigns intellectual-property protection a higher priority than some other sectors do. Of course, it'd be pitiably naive to say zero piracy of systems and chip technology occurs (reverse engineering is an art form). But the country is more likely to bootstrap itself up by developing such technologies than by churning out the next straight-to-DVD Chinese comedy or luxury watch. So protecting those latter items, for better or worse, is a priority that often gets kicked down the road.

I'm glad Uncle Sam is grabbing the dragon by the tail. Even some improvement on the piracy front would cheer IP stakeholders--Chinese as well as Western. It could also foster innovation in China.

Whether or not the WTO complaint yields action, tech players will have to keep a tight lid on the family jewels. In China, it's always good to take the offensive. Do your homework. Apply for local patents. And make sure the customer has an interest in keeping your IP safe.

Most foreign tech companies already operating in China have experience swimming among the sharks. And the newcomers usually catch on fast. It's either that, or end up in the Silk Market.