Strong Industry Partnerships Can Address the Evolving Software Piracy Landscape

Posted by Juan Hardoy
Director, EMEA Anti-Piracy & Digital Crime, Microsoft

Today, I had the pleasure of speaking at the Seventh Global Congress on Combating Counterfeiting and Piracy in Istanbul, which was opened by Turkey’s Prime Minister, His Excellency Recep Tayyip Erdogan. As with every Global Congress, Microsoft is grateful to its conveners, the World Customs Organization, INTERPOL, the World Intellectual Property Organization (WIPO) and the International Chamber of Commerce/Business Action to Stop Counterfeiting and Piracy (ICC/BASCAP), as strong allies in the fight against counterfeiting.

Whether the focus is on toys, merchandise, medicines or software, the organizations that are deeply concerned with counterfeit products and the serious harm that they cause, cuts cross-industry—from the retail, pharmaceutical and consumer goods industries, to governments, law enforcement and consumer protection agencies. It is not surprising then, that the most effective solutions to the collective problem of counterfeiting are rooted in cross-industry partnership and cooperation.

During our panel discussion on “Capturing the Elusive Infringer on the Internet,” my counterparts at the International Anti-Counterfeiting Coalition, MarkMonitor, UPS and the International Trademark Association and I examined the progress that enforcement officials and IP rights holders have made through new, collaborative processes that are changing the way we address counterfeiting and piracy on the Internet.

For example, I shared the disruption strategy my colleagues used to dismantle the counterfeit software operations of a global organized crime network. The criminals utilized legitimate-looking e-commerce sites with names like “CD Cheap” to fraudulently trick customers into purchasing counterfeit software. And over the course of the decade spent tackling the “CD Cheap” operation, Microsoft’s most valuable breakthrough was proving that industry stakeholders can leverage existing laws to achieve meaningful progress in the struggle against online counterfeit sales.

While the Eastern Europe-based crime ring originally operated under a physical disc delivery model, they, like many of the criminals we’ve encountered over the past decade, transitioned to a Web-based download-focused model. The model spawned hundreds of phony e-commerce sites that were marketed by spam sent through advanced techniques, including the illegal use of botnets and Trojan-hijacked computers. Through the use of software spam, the organization made nearly $4 million each month dealing counterfeit software, effectively defrauding customers around the world.

Our team developed a disruption strategy that mapped out the crime network through its payment processes; and given that fraudulent activities violate banking institutions’ terms of service, we were able to stop their profit flow. Through cross-industry collaboration with MasterCard, Visa, PayPal and the International Anti-Counterfeiting Coalition, our “follow the money” solution resulted in an online environment where dealing in counterfeit software was no longer a sustainable profit source for the network.

While this case demonstrates the way our strategies morph to suit the ever-changing online environment, it doesn’t suggest that Microsoft’s job is done. In fact, there remains a real danger to our unsuspecting consumers, who search the Internet looking for good deals, and aren’t expecting to be “taken” by an online scam. Too often, unsuspecting shoppers pay close to full-price on what turns out to be fake software.

Whether customers and businesses are duped by spamming operations run by criminal organizations halfway around the world, or enticed into grabbing counterfeit software from a peer-to-peer network, Microsoft is focused on the need to work smarter with its partners in the effort to tackle all forms of software piracy.

On April 26, Microsoft and many others will join WIPO to celebrate World IP Day and emphasize the importance of IP rights. This is yet another example where collaborators come together to work on collective solutions for today’s changing world, cultivating innovation and creativity as well as reducing the prevalence of IP crimes.

Software piracy has evolved significantly from the days of street vendors and swap meets, but one thing that hasn’t changed is the importance of strong partnerships with industry, law enforcement and intellectual property protection and advocacy agencies. As is evident from this conference in Istanbul, by working together, we are able to better understand the interconnected market dynamics that ultimately lead to more innovative and agile responses in the fight against counterfeiting and piracy.

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