Combating Software Counterfeiting

♠ Posted by Emmanuel in at 7/26/2007 05:28:00 PM
Here in the Far East, there too is a flood of pirated software from China and Taiwan. Visit street markets in Ho Chi Minh City, Bangkok, Jakarta, Kuala Lumpur, or Manila and you will see pirated software hawked rather openly. Before getting to the stories concerned, let me get two points across. First, it is often assumed that counterfeiters sell shoddy goods. When it comes to software, though, I demur. The problem with this assumption is that even software pirates are not immune to marketing considerations. If their wares constantly didn't work or fouled up users' computers, repeat customer purchases would not be forthcoming. Hence, I have found that it is the exception--not the rule--that pirated software doesn't work. The packaging is often quite spiffy too. Can you tell which is the Vista fake between the two packages below? Instead, the problem that I have found with pirated software is that updates and patches made available online do not usually run with pirated software--as they shouldn't. Hence, I usually buy the real thing to ensure that upgrades do update.

Second, I don't think that America's current efforts to weed out software piracy in China will have much of a lasting effect on the availability of pirated wares. The equipment you need for replicating software is not complicated--a CD-ROM or DVD making machine is hardly expensive or difficult to procure. China makes the stuff today. Tomorrow perhaps Vietnam, after that Cambodia, then maybe Africa and so on. Plus. breaking codes is child's play. To me, finding new means of delivering content that are not subject to piracy is a better avenue for software makers to pursue rather than adopting a knock-their-heads approach to enforcement. Let me plug my fave blogging platform, for example--Blogger. Heck, I would still choose Blogger even if you gave me the option of choosing paid services like Typepad and WordPress. Blogger and other Google services aren't prone to piracy as the Google business model isn't based on distributing software in boxes. Now, let's first take a look at the OECD's recent statements on piracy care of the BBC:

At least $200bn (£100bn) worth of counterfeit goods were sold in 2005, an Organisation for Economic Cooperation and Development (OECD) report has said.

But the total value of counterfeit items made and sold worldwide - from medicine to computer software - could be much higher, the OECD added.

It said the products made were "often substandard" and "can even be dangerous".

The OECD called on nations to increase the action taken against the crime.

The $200bn approximation, based on data from customs seizures in OECD countries, did not include fake and pirated goods which were made and sold in the same country.

Digital products, distributed via the internet, were also not factored into the total.

"If these items were added, the total magnitude of counterfeiting and piracy worldwide could well be several hundred billion dollars more," the OECD said...

In addition to items such as computer software and DVDs, car parts, medicines and electrical components were among the types of goods identified by the report.

China was recognised as the largest source of pirated goods - accounting for about 86% of goods confiscated.

In other findings, the Middle East was identified as the biggest market for fake car parts, while the consumption of counterfeit cigarettes was highest in Latin America, Africa and Asia.

"Counterfeiting and piracy are illicit businesses in which criminal networks thrive," the report said.

"The report shows that the items that they and other counterfeiters and pirates produce and distribute are often substandard and can even be dangerous."

The International Chamber of Trade (ICC) welcomed the "comprehensive and thorough investigation of the problem" and also called on governments to act swiftly to crush these crimes.

The world business body estimated the total value of counterfeit and pirated goods worldwide is more than $600bn, but even this was the "tip of the iceberg".

It said the OECD failed to factor in the broader impacts - including those on employment, consumer health and safety and tax revenues.

"The costs to society and economies around the world are enormous," said ICC secretary general Guy Sebban.

A European Union study, published last month, found that the number of counterfeited items seized by customs officials had trebled in 2006 against the previous year.

And here is the more recent BBC report on the US busting up a large China-based counterfeiting ring:

Pirated software worth $500m (£250m) has been seized as the FBI shuts down a world-spanning piracy outfit.

Before the raids the Chinese counterfeiting syndicate was thought to have sold and distributed software worth more than $2bn.

The FBI and China's Public Security Bureau arrested 25 people during the two-week operation against the pirates.

Despite recent crackdowns, industry figures suggest that 82% of the software used in China is counterfeit.

The FBI said it had been building up a case against the piracy syndicate for years before staging the raids on the software production plants in China's Guangdong province.

During the raids, dubbed Operation Summer Solstice, the FBI seized more than 290,000 CDs with a claimed market value of $500m.

The gang was known to be producing pirated versions of 13 of Microsoft's most popular programs including Windows Vista, XP and Server as well as Office 2003 and 2007...

In a statement Microsoft said vital information that helped to track down the pirates came from its Windows Genuine Advantage (WGA) scheme.

WGA forces users of some versions of Windows to validate their copy of the operating system with Microsoft when updating their software.

Microsoft said information gathered by WGA from more than 1,000 fake copies produced by the counterfeiters and sold around the world helped law enforcement agencies home in on the pirates. Fake software produced by the group was found in 27 countries.

"Countries around the world are expected to experience a significant decrease in the volume of counterfeit software as a direct result of this action," said Microsoft in its statement. [Don't bet on it.]