PRISM Magazine On-Line  - December 1999
Crime and Punishment Online

By Margaret Mannix

Illustration by Davy LiuThanks to the Internet, Eric Doney has a lot more sleuthing to do—cybersleuthing, that is. An intellectual property attorney with the California law firm of Donahue, Gallagher, Woods & Wood, Doney tracks down software pirates for the Business Software Alliance (BSA) and manufacturers such as Autodesk and Macromedia. The firm has 18 attorneys who spend their days ferreting out copyright violators. Three staffers are devoted to the newest venue for software pirates, the online auction sites. The cyberdetectives monitor such sites daily, sending e-mails to suspected violators of the Digital Millennium Copyright Act (DMC). "We send an average of 75-80 DMC notices a day just for auctions," says Doney.

Software piracy is nothing new. Before the Internet, disks loaded with software programs were passed among friends, relatives, and school chums—a rather cumbersome process that naturally limited the number of ultimate users. What's more, disks could only hold so much information, again keeping somewhat of a lid on piracy attempts. AutoCAD, for example, would require 35-40 floppy disks.

That was then. Today, the Internet has dramatically changed the ease and access of software distribution. Programs can be sent via e-mail attachments or downloaded with no handling of disks required. Software dealers can set up an electronic storefront and instantly have a world of potential buyers. Trouble is, a number of unauthorized software resellers are also setting up shop on the Internet. "Just as legitimate businesses are looking to the Internet as a new distribution channel and a very effective tool for reaching out worldwide to expand their business opportunities, so are crooks,'' says Tim Cranton, a Microsoft corporate attorney. "It's the future of the economy and it's also the future of crime."

What's more, the open nature of the Internet allows software pirates to carry out their deeds anonymously, making it difficult for companies to track them down. The Internet "allows you to move intellectual property around very fast, in very large chunks, and in some cases, in almost untraceable form," says Chris Randles, senior vice president of MathSoft. "The Internet gives everyone a getaway car." With losses to traditional business software piracy in the U.S last year valued at $2.9 billion (based on retail pricing), this new piracy venue could mean potentially greater losses. "The cost and damage inflicted through this new, insidious form of piracy is incalculable," says Mike Flynn, manager of Internet anti-piracy for the Software & Information Industry Association (SIIA).

Legit Software

Because most university engineering departments deal directly with software manufacturers or authorized distributors, most don't have to worry too much about being conned by Internet software pirates. "Most universities tend to say we can do our students a big favor and ourselves a big favor by getting a site license,'' says Douglas M. Green, dean of the Marquette University College of Engineering. "That way everybody gets the latest and the greatest,'' says Green. "That way you are absolutely sure you are legitimate with licenses and such."

"We work very hard to make sure that no one is using pirated software," says Gerald Jakubowski, dean of the College of Science and Engineering at Loyola Marymount University. "We make sure that we provide all of the software to the students that they may need. It's expensive on our part, but we are trying to make sure we are not doing anything illegal," says Jakubowski.

Still, with the advent of e-commerce, there are times when students, faculty, and engineering professionals will turn to the Internet to purchase software. And there are legitimate software retailers on the Internet—but buyers should thoroughly check out unknown vendors. Some miscreants design snazzy, professional-looking sites that can fool even the savviest of computer users. "You can't really tell much about the shop or the person you are dealing with based on the content of the Web site,'' says Cranton. Since you don't know who is behind the screen, Cranton suggests the shopper verify the site's physical address and inquire about issues such as warranties and return policies.

Buying software from an unknown Internet vendor can be risky. "It's the same thing as buying a pirated CD soundtrack," says Jakubowski. "Who knows if you are purchasing the real thing or a mock-up from the original?" The software can be out of date or faulty and arrive minus the user manual, license, and certificate of authenticity. And the user can't get technical support or subsequent upgrades from the manufacturer. "They are really ripping people off and making people think they are getting a bargain," says Randles. In addition, the buyer is vulnerable to viruses.

Illustration by Davy Liu Online Bidding

That's why software manufacturers are worried about the rising popularity of online auction sites. In August, the SIIA found that 60 percent of the software being auctioned on three major online auction sites was illegitimate. The sites are working closely with the manufacturers and, when notified, will cancel auctions of such software.

Many of the products being auctioned had clear warning signs of fraud. The price differentials, for one, are a dead giveaway of suspect software. "We discovered Macromedia Director with a suggested retail price of $999 being auctioned for $28," says Peter Beruk, vice president of antipiracy programs for SIIA. Adobe Photoshop 5.0 was up for $11.99. "Its recommended retail price is normally $549," notes Beruk. Other red flags are software marked "back-up copy" or handwritten labels. Compilation disks with multiple pieces of software from several different manufacturers should also be viewed with suspicion.

The software that seemed a bargain might turn out to be useless. For example, one recent offering on an online auction site was Mathematica at a starting bid of $35. But it's a student version, and the manufacturer, Wolfram Research, is mighty strict about who uses those versions since it gives students such a hefty discount (the professional version starts at $1,495) on its products. "If he is not a student, he can't get a password," says Carol Bates, customer service manager for Wolfram Research. Bates notes the company has about 1,000 unresolved password requests in its database. "They are actually mostly professors who try to pass themselves off as students," says Bates. "Everybody wants a little break."

Perhaps the biggest problem the software manufacturers are facing in the future are the growing number of "warez" sites. "Warez" is the Internet code word for illegal copies of software. The BSA says there are almost a million such sites now; two years ago it counted roughly 100,000. "There are people who consider it a game to get the latest software as quickly as possible," says Doney. "There are people who delight in breaking the locking device that comes with the software. There are people who do it just to 'show' us."

Tell It to the Judge

Software makers don't shy away from the courtroom in pursuit of software pirates. In September, for example, Microsoft filed legal actions against three businesses for illegally distributing software via the Internet. The defendants sent out solicitations to buy software via spam; the messages requested credit card numbers for payment or directed recipients to Web sites where software could be purchased. Thousands of people and businesses were duped into buying the counterfeit software.

The software behemoth also recently found that pirates are duplicating software licenses, known as End User License Agreements. These are designed for businesses who already have a particular piece of software and want the right to run the program on more computers. In the past year, Microsoft found that 40 federal, state, and local government agencies bought more than 1,200 counterfeit licenses.

The aggressive monitoring and legal crackdowns are having some success. For example, Doney says illegal software auctions are taken down faster and word has been getting around that the industry is on the warpath. As a result, Doney says he now sees less counterfeit software up for auction. Still, Doney and his cohorts aren't resting on their laurels. In fact, he may soon try a new tack by going after the auctioneers themselves. "At some point, we are going to pick off one of these people and make an example of him."


    Margaret Mannix is a freelance writer in the Washington, D.C. area.