The FBI’s recent seizure of $80m worth of counterfeited software in California and Texas earlier this year, one of the biggest busts of its kind to date, has resulted in several arrests.
Most of the counterfeited software was Microsoft Corp desktop applications and operating system programs.
Redmond, Washington-based Microsoft says it collaborated with the FBI on the two-year investigation which culminated yesterday in arrest warrants being issued for 11 individuals in California, Washington, and Texas.
They are being charged with software piracy on several counts, including unauthorized media replication, printing of counterfeit documentations, and distribution of counterfeit software.
The two-year investigation, codenamed Digital Marauder, honed in on a criminal counterfeit ring operating from the western US. The replication of the software is alleged to have been done in the Los Angeles area while printing was done in San Francisco.
Microsoft says it has adopted new anti-piracy technical measures to help consumers identify genuine products. For example , all new PCs that come with Microsoft software pre-installed, come with an embedded holographic label bearing the words Microsoft and genuine. Retail versions of Microsoft’s operating systems also come with an edge-to-edge hologram etched onto the surface of the CD.
Microsoft points out that customers who buy counterfeited versions of its software, even unknowingly, are not eligible for technical support or product updates.
Ultimately the Microsoft seizure is still a drop in the ocean. A recent survey by market research outfit IDC shows that over 35% of the software sold last year was pirated in one form or another costing legitimate software firms a whopping $29bn in lost revenue.
Software counterfeiting is most rampant in Asia-Pacific where laws governing copyright protection are still immature and rarely enforced. While the losses in the region were more or less the same as in North America ($7.5bn compared to $7.2bn in North America) the piracy rate is still more than double at 53% reflecting smaller (but more) counterfeit sales.
But according to IDC it is European software houses that are most hurt by counterfeiting.
IDC estimates that Europe has a 37% piracy rate resulting in loss of more than $9.8bn.