Microsoft Corp. signed on April 12 a three-year, $250 million licensing agreement with China's Founder Technology Group Corp. on the heels of a Chinese government decree that strengthened the country's intellectual property rights.

The agreement with China's second-largest PC manufacturer follows similar licensing announcements last week between Microsoft and Chinese PC makers TCL Group and Tsinghua Tongfang Co. Ltd. to allow the sale of PCs with pre-installed, licensed Windows operating system software.

Lenovo Group Ltd., China's largest PC maker, is also expected to unveil on April 17 a licensing deal for Windows, the ubiquitous operating system found on more than 90 percent of all PCs, said a Microsoft executive.

The Chinese government issued a decree on March 31 requiring PC manufacturers to install a licensed operating system before the machine leaves the factory gates in an effort to address the thorny issue of piracy before President Hu Jintao visits the United States.

Hu is expected to tour the Microsoft campus on April 18 as the first stop on his visit before a dinner that evening at the home of Microsoft Chairman Bill Gates.

The protection of intellectual property rights is one of the contentious issues in U.S.-China trade relations and Microsoft, the world's largest software maker, has said it loses significant amounts of money from the sale of pirated software in China.

"This is a breakthrough," Timothy Chen, a Microsoft corporate vice president and the company's top executive in greater China, said at a news conference announcing the agreement with Founder.

"The China government tried to figure out the most effective way to manage this situation."

Prior to the government order, Chinese PC manufacturers faced a price disadvantage when it sold computers with pre-installed software versus selling a "naked" PC , which the user can later load with cheap, pirated software, Chen said.

"This will set a level playing field for everybody," said Chen, noting that PC manufacturers will be free to pre-install any software they choose, including open-source operating systems that rival Windows.

Chen said over 99 percent of China's PC run Windows, but not all those users may have acquired the software legally.

"The usage is not the issue. The issue is whether people would purchase the legal one," said Chen.

Tsinghua Tongfang, China's No. 3 PC maker, said it planned to pay Microsoft licensing fees of $120 million over three years, while TCL said it would pay $60 million in the next three years.

Founder, TCL and Tsinghua Tongfang all said the agreements show that they are committed to protecting intellectual property rights.

China, the world's fastest-growing major economy, has called on state-owned companies to take the lead in using only licensed software as the country seeks to bolster intellectual property rights.