Print 36 comment(s) - last by JonnyDough.. on Jan 9 at 3:09 AM

The counterfeit ring allegedly produced millions of dollars worth of counterfeit Microsoft software

The news is flooded with reports of illegal activity online and in the technology world. Groups of pirates sell counterfeit software and make hundreds of thousands of dollars doing so. Many of the alleged software pirates hail from countries outside of the U.S. where the long arm of the law traditionally can’t reach.

Things are changing though and The New York Times reports that a court in southern China has convicted 11 people for violation of international copyright laws. The 11 people were working in a sophisticated software-counterfeiting ring that ran for years manufacturing and distributing pirated Microsoft Software around the world.

The 11 men were sentenced to terms ranging from 18 months to over six years in Chinese prison. Microsoft was very happy for the sentences handed down and said in a statement released Wednesday, "[The prison terms are] the stiffest sentences ever handed down in this type of Chinese copyright infringement case."

The New York Times reports that some legal specialists believe the case to be a landmark of joint anti-piracy efforts between the FBI and Chinese authorities. The counterfeit group that the 11 men operated in is called one of the most sophisticated rings ever seen. Microsoft said, "[The group is] the biggest software counterfeiting organization we have ever seen, by far."

The counterfeit products produced were of such high quality that they were difficult to tell from authentic software. The counterfeit goods were packaged in similar packaging and even had counterfeit Microsoft authenticity certificates. The counterfeit ring produces software like Windows XP and Office 2007 and was broken up in July of 2007 according to The New York Times.

Associate general counsel for Microsoft, David Finn said, "This is absolutely unprecedented. The size and scope of the operation is unlike anything we’ve seen before. We found their products in 36 countries."

The case is cited to illustrate the point that software pirates are becoming increasingly sophisticated in their methods and can export fully packaged, high-quality software products. Microsoft says that even customs officials were fooled by the counterfeit software and the fake Microsoft "Certificates of Authenticity." According to officials, the ring wasn't selling the software inside China and was exporting the goods to foreign markets where profits were higher.

Chinese and FBI officials say that hundreds of millions in software was seized in different international raids. The Shenzhen court where the 11 men were sentenced found that the men had sold less than $200,000 in counterfeit products overseas. With the alleged worth of the counterfeit goods confiscated in raids it's unknown if there are more people working in the counterfeit rings still at large or if other people within the ring simply took a larger portion of the ill-gotten gains.

The software was said to be produced on machinery costing millions of dollars to purchase with packaging and materials in several languages including English, German, Spanish, and others. Warehouses were found connected to the ring that had molding machines, gilding machines, sealing machines, and air compressors stored inside.

Microsoft isn't alone in being a target for software counterfeiters, Symantec software is reportedly widely targeted by pirates as well.

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

While this is great and all...
By Motoman on 1/2/2009 12:18:24 PM , Rating: 5
...I can't shake the nagging feeling like China just coughed these 11 guys up in response to Microsoft's "black screen" if to say, "we are against it with you."

I'm just going to take a wild guess here and posit that there are somewhat more than 11 people making counterfeit software (and other stuff) in China...

RE: While this is great and all...
By bupkus on 1/2/2009 1:29:37 PM , Rating: 4
" According to officials, the ring wasn't selling the software inside China and was exporting the goods to foreign markets where profits were higher."

This probably made it more difficult to find these people.
Which then begs the question, why no prosecutions for those people selling inside China?

RE: While this is great and all...
By chmilz on 1/2/2009 1:41:52 PM , Rating: 5
why no prosecutions for those people selling inside China?

First rule of China: What gets counterfeited in China stays in China.

RE: While this is great and all...
By crystal clear on 1/3/2009 7:45:26 AM , Rating: 1
Great response but easily said than done.

If you regularly make business trips to China you will understand what I mean...

Corruption is the source all evils.

Corruption is rampant at all/every level that makes it impossible to STOP the flow of counterfeited goods out of China.

Hong Kong is the major oultet for all counterfeited goods from China.

Corruption is so rampant that makes it practically next to impossible to stop it.

My business trips to China expenses reports have the regular hotels/restaurants/travelling expenses also have some very important items that are labelled as tips & commissions paid that are infact bribes paid to get things done.

Thsts China- Whats Corruption to you is in fact a way of life to them,as a matter of fact an essential part of their lives.

RE: While this is great and all...
By JonnyDough on 1/3/09, Rating: 0
RE: While this is great and all...
By spread on 1/3/2009 10:22:17 PM , Rating: 3
Evil is the source of evil.

Things would be the same if we didn't have money, or anything to serve as currency.

By JonnyDough on 1/4/2009 4:00:20 AM , Rating: 2
Not so. There have been civilizations based on honor and sharing in the past. Within these civilizations things were good...but they were ultimately conquered by greedy empires that wanted more. Google "ancient eastern civilizations" for more reference.

RE: While this is great and all...
By ggordonliddy on 1/4/2009 10:56:31 PM , Rating: 2
> According to several religions, MONEY (or ownership and a desire for control and possession) is the source of all evil.

Just how ignorant are you? The saying is that "the love of money is the root of all evil", not the money itself. That is a HUGE difference.

By JonnyDough on 1/9/2009 3:09:13 AM , Rating: 2
Actually, greed is not the source of evil, as evil is only relative to the perspective of the one judging. You create your own reality. And if you really want to get technical it's in the Bible, not a saying.

RE: While this is great and all...
By The0ne on 1/5/2009 5:01:13 AM , Rating: 2
Many of them just can't afford the prices that set for legitimate software, much less anything else. Just imagine yourself being paid $50-$100 a month and having things cost the same as here or more. And this is in a big city!

So in some ways I can understand why so many turn to "cheap" pirated goods instead of legal products. Hell, I think I would too if I was in their situation. Having said this however, it's not like it can't change. Government really has to step in to address them but the problem is so large and there are so many people it's not easy.

RE: While this is great and all...
By The0ne on 1/5/2009 5:02:41 AM , Rating: 2
And I agree with the #1 poster, I think this is just a PR thing.

RE: While this is great and all...
By wvh on 1/2/2009 10:48:25 PM , Rating: 2
In Belgium, smoking cannabis is illegal. Up to 70% (IIRC) of students have experienced it in one way or another at least once. Therefore, any possession up to a certain limit (3 grams?) with no intent to deal will be tolerated and the act decriminalised.

You simply can't prosecute and put all of the population in jail. Well, I know that the US has more than 1 out of 100 of the adult population behind bars (according to the BBC), but I don't think that's a particularly sane modus operandi.

Not just locking up people; China's economy would go down the drain if each and every small company and poor individual would be forced to pay up Microsoft's prices.

RE: While this is great and all...
By Motoman on 1/3/2009 12:11:18 AM , Rating: 3
China's economy would go down the drain if each and every small company and poor individual would be forced to pay up Microsoft's prices., every small company and poor individual would be forced to switch to Linux and OpenOffice.

RE: While this is great and all...
By crystal clear on 1/3/09, Rating: 0
By carl0ski on 1/3/2009 10:45:03 PM , Rating: 2
"Microsoft's general counsel, Brad Smith, publicly alleged that open-source products Linux and OpenOffice infringe no less than 235 of Microsoft's patents".

This is FUD that you are spreading.
Microsoft's general counsel has yet to act on this.
For such a wide spread infringement surely this would have faced court already?

Microsoft is not the only company with Patents
Red Hat, IBM, Google, Sun Microsystems, Intel and Novell have large patent portfolios also.
I'm pretty sure their investments in Linux and/or OpenOffice were actioned by Microsoft, retaliation would occur to protect their investments.

By Mitch101 on 1/2/2009 2:15:03 PM , Rating: 3
I'm sure 11 more guys in China are sitting around saying "You know there is a big opening in the software pirate industry right now"

I think its a good start but with Prison sentences of 18 - 6 years and they raked in millions of dollars well there doesn't seem like enough incentive not to commit the crime there. Especially if your choices are make soccer balls for $1.00 a week or copy some CD's and do some jail time.

Great work!
By oTAL on 1/2/2009 1:14:41 PM , Rating: 4
This is great for software developers and other IP holders everywhere, since it means the Chinese government is starting to seriously tackle these issues.

An important point for me is that the people pirating Symantec software should be given sentences twice as harsh. That's like pirating Celine Dion CDs.
Sentence: 3 years for piracy + 10 years for distributing crap. ;)

RE: Great work!
By Screwballl on 1/2/2009 2:40:34 PM , Rating: 2
Agreed... counterfeit Kia car parts anyone?

RE: Great work!
By stmok on 1/2/2009 8:57:27 PM , Rating: 2
This is great for software developers and other IP holders everywhere, since it means the Chinese government is starting to seriously tackle these issues.

It isn't so great when you realise that this is all "for show" to scare people, rather than a prevention measure.

RE: Great work!
By Laitainion on 1/3/2009 6:34:35 AM , Rating: 2
That's all these cases ever are. You can't find and lock up everyone, or even all the serious offenders. The role of any punishment delivered by the State can only be a deterrence because the chance of actually being punished is fairly low and always has been.

RE: Great work!
By AnnihilatorX on 1/4/2009 6:38:45 PM , Rating: 2
Isn't the new Norton getting quite good reviews on many sites somehow?

Riaa should take a page
By tastyratz on 1/2/2009 11:59:42 AM , Rating: 1
Now THAT is what I call an effective use of resources. There are always big fish to fry like this and THESE are the people they really should be focusing on. Congrats to all involved on the bust, this is a big problem.

RE: Riaa should take a page
By Regs on 1/2/2009 12:10:44 PM , Rating: 1
Agreed. Obviously a problem many countries do not want. Especially if China ever wants to become the next super power or compete, they're going to have to make a lot of policy choices that support big business.

Who knows. Maybe they'll even build a road or two and actually start making their currency worth more.

RE: Riaa should take a page
By grath on 1/2/2009 5:07:45 PM , Rating: 3
[quote]...actually start making their currency worth more.[/quote]

My economics teacher said emphatically that China revaluing their currency is one of the biggest things we have to be afraid of in this century. Whether it is that extreme Im not sure, but in any case it is not something to look forward to.

RE: Riaa should take a page
By Regs on 1/2/2009 11:52:32 PM , Rating: 2
Bush urged them into valuing it higher. The math is that China is purposely devaluing their Yuan to 40% so they can continue exporting and making U.S exports less attractive. When the currency is manipulated it does not show the true picture of a country's economy. If they let it attain true market value, what we're worried about is that if they let the currency rise too freely, it will unravel their "facade" of a power house and their economy will collapse. Unfortunately that will mean doom and gloom for the rest of us as well.

RE: Riaa should take a page
By amanojaku on 1/2/2009 1:43:40 PM , Rating: 2
Entertainment math

RIAA theorem:

Dozens of albums = dozens of flops
hundreds of counterfeiters = thousands of sued dollars
tens of thousands of pirates = millions of sued dollars

Bootleggers' equation:

Billions in entertainment money = tens of thousands of poor, pissed off customers

Customer's dilemma:

0 albums = my time and money

By chmilz on 1/2/2009 1:43:18 PM , Rating: 5
"11 in Software Piracy Case Imprisoned for Failing to Bribe Proper Authorities"


11 out of 1,321,851,888 total
By Bateluer on 1/2/2009 11:56:27 AM , Rating: 2
Nice . . . Good job. I'm sure Chinese prison is no picnic, but shoot, why bother to have a press release?

RE: 11 out of 1,321,851,888 total
By stmok on 1/2/2009 8:49:20 PM , Rating: 2
Because its a standard "anti-piracy" tactic.

The point is to set an example out of a selected few; to scare others away from this practice.

The RIAA applies the same strategy...Except they gun after poor or deceased people.

In reality, it doesn't do crap. (Deep down, everyone knows and admits that.)

hallow victory
By wvh on 1/2/2009 10:36:20 PM , Rating: 2
The reason why software is so easy to counterfeit and it's such an easy target, is because its value is so arbitrary. If Microsoft would charge, say $5 for Windows or $10 for Office, it would be very difficult to counterfeit and still make profit. One major reason MS is so rich is because it can practically charge whatever it wants for a simple digital copy. Because that's what you get, really. Just like music CDs – it will become increasingly difficult to convince people to pay up for something when they can make an exact copy for free themselves. I don't think this system of copyright can go on as is without serious reconsideration, as even the full extent of the law has not, does not and will not deter a lot of people from making such a copy. Let's face it, the main reason why so many people buy Office is because they fear the law. But the law in a democracy should follow the people's opinion (with time as an averaging and delaying factor), and very few people think that giving up $200 ($250? I ain't got a clue about current MS prices to be fair) MS tax per computer is a fair deal, even if most agree software/music should be paid for.

This is a hallow victory.

Frankly, I wouldn't want to be a (public) software house or music company at this point in time.

RE: hallow victory
By Lexda on 1/4/2009 2:15:12 AM , Rating: 2
Right, because the public should be able to demand whatever they want from private corporations. A democracy protects everybody, including corporations. You say a digital copy is cheap. Well, yeah, the 2nd, 3rd, and 4th copies cost just as much as the disc they're pressed on. But do you know how many millions the first copy cost to produce?

Bottom line is that MS can charge whatever it damn well pleases, and if you don't like it, use OOo. You're not obligated to use and buy MS Office. If you don't think paying what they ask for is a fair price, use our wonderful capitalist economy and tell them by not buying the product; eventually they'll get the hint and lower the price. I'd rather not devolve into communism and socialism, kthxbai.

By Beenthere on 1/2/2009 4:19:23 PM , Rating: 1
...they should all go to prison and pay $10K per copy. That would be a nice deterrent. It won't stop all piracy but it would sure get some sleeze off the streets. If you can't abide by the laws of society there is a prison cell with your name on it.

By Mithan on 1/2/09, Rating: 0
These 11 men should have suicided to...
By on 1/2/09, Rating: -1
RE: These 11 men should have suicided to...
By bodar on 1/2/2009 9:47:17 PM , Rating: 1
Well, your mother should have swallowed, but I guess hindsight is always 20/20, bub.


"Can anyone tell me what MobileMe is supposed to do?... So why the f*** doesn't it do that?" -- Steve Jobs
Related Articles

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki