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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.

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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.

"I want people to see my movies in the best formats possible. For [Paramount] to deny people who have Blu-ray sucks!" -- Movie Director Michael Bay
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