BEIJING (Reuters) - A small Chinese high-tech firm is suing Microsoft Corp because it says the software giant has stolen its creation that allows Internet users to type Chinese characters, but Microsoft countered the claim on Friday.

Zhongyi Electronic Ltd., a 100-employee firm, alleged that Microsoft has used its inputting technology and fonts in Windows operating systems without commercial agreement for a decade, the official Xinhua news agency reported.

The lawsuit puts Microsoft in the unfamiliar position of defending its intellectual property practices in China after years of fighting piracy of its software there.

Zhengma, the core product of Beijing-based Zhongyi, allows Internet surfers to convert Chinese words typed in the Roman alphabet into Chinese characters.

"Microsoft hasn't paid us for 10 years, since they paid for using Zhengma in Windows 95 in 1998," Lan Dekang, general manager of Zhongyi, was quoted by Xinhua as saying.

Microsoft said in a statement that it had the right to use Zhongyi's product and fonts after the two parties entered into agreements under the supervision of Chinese government agencies.

"Microsoft has fully performed its obligations including paying Zhongyi the license fees in accordance with the license agreements," the statement said.

Proceedings in the case began on Tuesday in the Beijing No.1 Intermediate People's Court, according to Zhongyi's Web site.

Zhongyi has not yet established a litigation target because it does not know how many sets of Windows operating systems are in use, Xinhua reported.

(Reporting by Simon Rabinovitch, editing by Will Waterman)
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