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Chinese Court Sentences Ringleaders of World's Largest Software Counterfeiting Syndicate


Microsoft hails concrete action taken by Chinese government to protect intellectual property rights: meting out what is believed to be the harshest penalties yet under China's tightened piracy laws.

The Futian People's Court in Shenzhen, China, handed down sentences to 11 ringleaders of what Microsoft called "the world's biggest phony-software syndicate." Ranging from one-and-a-half to six-and-a-half years, the sentences are believed to be the harshest for this type of crime in China's history. Based in the southern China province of Guangdong, members of the syndicate were arrested by Chinese authorities in July 2007, following an international investigation that involved China's Public Security Bureau (PSB), the FBI, Microsoft, and hundreds of Microsoft customers and partners who provided information that helped the investigation.

According to an article in newsday.com, while the technology and entertainment industries say that China still has a long way to go in intellectual property protection, such punishments could help the country greatly improve its image as one that does not crack down hard enough on copyright violators.

The 11 accused were part of a criminal syndicate responsible for manufacturing and distributing more than an estimated US2 billion worth of high-quality counterfeit Microsoft software. The counterfeit software, found in 36 countries and on five continents, contained fake versions of 19 of Microsoft's most popular products and was produced in at least 11 languages. According to an article by Jordan Robertson in The Seattle Times, the phony software was so sophisticated that it contained legitimate computer code written by Microsoft for its Windows XP, Vista, and Microsoft Office programs. To mimic security programs and fool users into believing that they had the genuine article, the criminals added their own coding as well.

Evidence provided by Microsoft customers through the Microsoft piracy reporting tool proved to be essential in tracking down this criminal syndicate. Tens of thousands of customers used Microsoft's anti-piracy technology Windows Genuine Advantage to identify the software they were using as fake. Automatically installed in users' machines, the program scans computers for pirated software and alerts people if it believes their products are not properly licensed. Additionally, counterfeits are detected through customs seizures, test purchases by Microsoft, and resellers who alert authorities to suspicious competitors. In this case, more than 100 Microsoft resellers played a key part in helping to trace the counterfeit software and provided physical evidence critical to building the case, such as e-mail messages, invoices and payment slips.

According to David Finn, associate general counsel for Worldwide Anti-Piracy and Anti-Counterfeiting at Microsoft, "Microsoft greatly appreciates the work of China's PSB and the FBI in taking strong enforcement action against this global software counterfeiting syndicateUnfortunately, software counterfeiting is a global, illegal business without borders. Criminals may be on the other side of the globebut they prey upon customers and partners all over the world. This case is a testament to the importance of Microsoft's commitment to close collaboration with government bodies and local law enforcement agencies around the world to bring these criminals to justice, wherever they may be."

For his part, Fengming Liu, vice president of Microsoft Greater China Region, said: "Enforcement of intellectual property rights is critical to fostering an environment of innovation and fair competitionOver the years, Microsoft has been working closely with the Chinese government to promote intellectual property rights. Thanks to the actions of the Chinese government, we have seen a significant improvement in the environment for intellectual property rights in China we will continue to work with the relevant authorities in China to ensure that counterfeit software does not undermine the development of China's knowledge economy."

Christophe Zimmermann, the coordinator of the fight against counterfeiting and piracy at the World Customs Organization, concluded, "The actionby the court in China sends a very clear message to counterfeiters that governments around the world are serious about stopping this form of criminality and are willing to step forward to protect their citizens from the harm caused by counterfeit goods."

While research results* indicate that 82 percent (more than double the worldwide piracy rate of 38 percent) of the software used in China in 2007 was not legitimately purchased, serious (even harsh) sentences and other punitive measures are bound to make cracks in the counterfeiters' armor.

*Commissioned by the Business Software Alliance

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