10tacle, I agree with your points, but we have to keep in mind the importance of saving face in the Asian civilization(Samuel Huntington, Clash of Civilizations classifies Japan as a separate culture from the rest of Asia, but saving face is huge there too). The thought of "backing down" wasn't possible to Japan(yes, there were a few like Yamamoto, who knew, or last had an idea, of how bad it would get for Japan), and I doubt it will be to China either. They'd rather bleed their people white than back down and lose face.
As a conservatarian, I firmly believe companies first responsibility is to profits/shareholders, I don't blame companies for this. I think this is one of those rare instances, where the national security interests of country, have to be asserted by the Government, and they(legislative branch) have to come up with a policy and pass some laws that clearly lay out what is and is not permissible, in regards to IP sharing rights. I detest all governments, but National security is the feds biggest prerogative.