Microsoft Launches Net Piracy Crusade

In what the company is calling the "first wave of a new global campaign" against Net piracy, Microsoft (Nasdaq: MSFT) announced Tuesday that it has taken action to remove 7,500 Web site postings in 33 countries that were allegedly selling counterfeit and other illegal copies of Microsoft software.

The Redmond, Washington-based software giant said it will be working with industry partners and law enforcement agencies to pursue other online software pirates.

"The growth of counterfeit software on the Internet is a threat not only to those who create content, but to consumers who are being asked to pay good money for bad products. The goal of this new campaign is to help ensure that Internet commerce is characterized by genuine products and honesty rather than dodgy goods and theft," said Microsoft counsel Brad Smith.

Fighting Fire with Fire

Microsoft said its campaign "comes as emerging technologies such as Gnutella, Freenet, and others seek to make it easier to distribute pirated copies of movies, music and software on the Internet."

Microsoft's response to the new file-sharing technologies was to roll out some new technology of its own, including an Internet monitoring tool that can search suspect sites on the Internet 24 hours a day, 7 days a week. The company hopes that by automating one of the most time-consuming tasks related to copyright enforcement, it will be able to identify and address thousands of illegal sites in a single day.

The automated search tool is being backed up by investigators who examine sites, make test purchases, and work with ISPs and auction sites to track down the pirates behind the illegal sites.

Raids and Lawsuits

Microsoft said that it asked for the removal of allegedly counterfeit offerings from Internet sites and only took legal action if there was no cooperation.

Not all of the Internet pirates cooperated when asked to remove their counterfeit offerings. The enforcement program has already resulted in 64 criminal raids and 17 civil lawsuits in 15 countries, including Australia, Brazil, Germany, Hong Kong, Israel, South Africa, Sweden, the United Kingdom and the United States.

In the U.S. alone, more than 3,000 illicit Internet auction postings were removed in July. One of the worst offenders -- with 600 auction postings -- was a New York company called Copy USA that allegedly used auction sites to advertise Microsoft software at "too good to be true" prices.

Microsoft investigators made test purchases from the company and received counterfeit copies of the Windows 2000 operating system.

Online Infringement Surge

File-sharing technology is threatening not only the software industry, but also the music industry, which is currently involved in an epic battle against such online companies as Napster that allow users to digitally copy and share copyrighted music. A federal court judge ordered Napster to shut down last week until a trial could be held on the merits of its file-swapping software.

However, an appellate court decided the company could stay open pending final resolution of the case.

Said Robert Holleyman, president of the Business Software Association, "While the recent Napster debate highlights the illegal downloading of content for free, we're also witnessing an upsurge in unauthorized Internet sites fraudulently offering 'special low prices,' collecting money, and then delivering fake CD-ROMs to unsuspecting consumers."

Holleyman added, "Although Napster is not designed to aid directly in the piracy of business software, new technologies can and should enhance ways to access and distribute copyrighted works legally. Unauthorized file sharing and the distribution of illegal creative works, through any means, pose a serious threat to consumers and the global economy."