Yesterday in Phoenix federal court, Matthew Purse was sentenced to 21 months in federal prison, 3 years probation and $12,000 in fines and restitution. Purse had pled guilty to conspiracy, mail fraud and criminal copyright infringement when he and his accomplice, Chris Walters (who remains a fugitive), were caught engaing inseveral massive software piracy schemes through various eBay accounts and various websites, such as SoftwareDiner.com and Fivedollarsoftwarehouse.com.

SIIA initially discovered several massive software piracy schemes and began an investigation that eventually led to the indictment and conviction of Purse. SIIA forwarded the results of its investigation to the U.S. Department of Justice and other government agencies, and then worked closely with them to pursue Purse and others involved in the piracy schemes. On February 26, 2009, Purse pled guilty to conspiracy, mail fraud and criminal copyright infringement.  Purse and Walters duped nearly 8,000 unsuspecting consumers out of hundreds of thousands of dollars and cheated software companies such as Adobe, Symantec, Apple, Corel, Intuit and many others out of millions of dollars in revenue.  For more on this check out SIIA's press release.

Yesterday, Gregory Fair, a 46-year-old man from Falls Church, Virginia, was sentenced to three years and five months in federal prison and was ordered to pay $743,098 in restitution to Adobe for selling at least $1.4 million in pirated Adobe software on eBay.  This past April Fair pled guilty to charges of criminal copyright infringement and mail fraud for selling the pirated software since 2001.  In addition to restitution and jail time, Fair also had to forfeit a BMW, a Hummer, a Mercedes, a 1969 Pontiac GTO and $144,000 in cash seized from a safe deposit box, all of which were obtained from his sale of the pirated software. 

The case was originally brought to the attention of federal authorities by SIIA-member Adobe in 2007.  Once alerted to the problem, undercover U.S. postal inspectors made several "test" purchases of the pirated software from Fair.  After verifying the illegal nature of the software, they then raided Fair's home where they found a CD burner and label printer that Fair was using to make copies of the illegal software.  The case was prosecuted by federal prosecutors Marc Miller and Glenn Leon.  Miller has been at the forefront of many of these eBay software piracy cases, including the case of Jeremiah Mondello, who comtinues to serve his four year prison term for selling pirated software on eBay.

About ten days prior to Fair's sentencing, another Gregory, Gregory Bambo, a 47 year-old-man from Richmond, California was also sentenced to prison for engaging in software piracy.  Bambo pled guilty to selling pirated software online during a three-year period beginning in 2004 and was sentenced to prison for one year and one day.  During the three years he engaged in the piracy, Bambo sold at least 1,400 cracked software programs having a combined retail value of just over a half million dollars. 

Microsoft is bundling anti-piracy tracking software with routine updates.  The updates include a validation process that allows Microsoft to determine whether the operating system and productivity software installed on the user’s computer are genuine.  This is part of Windows Genuine Advantage Program (WGA) and Office Genuine Advantage Program (OGA).  These global anti-piracy efforts began in 2004 and 2006 respectively and have been slowly rolled out to more than forty countries worldwide.  Microsoft says that these programs “are part of Microsoft’s on-going effort to protect its customers and partners from counterfeit software and to increase customer awareness of the value of genuine Microsoft software.”

WGA currently has the capability to check the validity of Windows XP, Vista, Windows 2000 Professional and some versions of Windows 7.  OGA checks the validity of Office XP, Office 2003 and Office 2007.  But it is a controversial move by the software giant that is garnering criticism and legal action.  Lawsuits have been filed in the United States and China alleging that the anti-piracy measures violate privacy, anti-trust and product liability laws.  It also has been criticized for producing false positives – invalidating legitimate software.  Microsoft stresses that these cases are rare and can easily be resolved by visiting their technical support website.  Microsoft also claims that these “automatic updates” are optional and can be rejected by users before installation.

Users that are operating legal software will not see any alerts or messages and can install all available updates.  However, users who are using pirated software will be alerted either by a pop up dialogue box, a black screen or a message in their system tray that says: “This copy of Microsoft Office is not genuine.”   The message directs the user on how to obtain a legitimate copy of Microsoft product.  They will not be allowed to install any available updates.

Some have criticized the programs as the heavy handed tactics of a software giant.  However, it is important to realize the impact piracy has on the software industry including contributing to unemployment rates.   Piracy also impacts computer users.  People that use counterfeit software forfeit the benefits that come with the purchase of legitimate software like technical support, updates, patches, user manuals.  You also risk the possibility of being infected with a computer virus.  So get your piracy check-up!

The long-running case of Solers, Inc. v. Doe in the District of Columbia raises the interesting dilemma of balancing significant free speech rights with the interest of an alleged "victim" to pursue claims against an alleged anonymous defamer.  Usually, this issue arises in the context of an online message board poster's public diatribe against someone or something, made under a pseudonym.  The alleged victim then sues the poster under the name "John Doe" and immediately subpoenas the web site host or publisher to try to discover the real identity of the poster.  Thus far, courts have acknowledged the transcendental importance of free speech and, for the most part, blocked disclosure of the posters' identities.  A collection of some of those cases is described here.  In Solers, there is a twist.  An informant ("whistleblower") made a private report to the SIIA via a piracy reporting link on the SIIA's web site, and Solers subsequently embarked on a quest to unmask that informant.  The latest appellate ruling in the case is a mixed bag for Solers, establishing significant hurdles that make it unlikely for Solers to acquire the identity of the informant, but giving Solers one more shot to try.  More significantly, the decision adds to a body of case law addressing when an alleged claim of wrongdoing may overcome the First Amendment right to make anonymous speech.

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Creative Edge Master Shop of Fairfield, Iowa, and its affiliate, Flex Kits LLC, were recently targeted by SIIA and five of its member software companies, following a confidential tip that Creative Edge and Flex Kits were using illegally-installed (unlicensed) copies of software in their business operations.  A lawsuit was filed after the alleged infringers failed to resolve the case through SIIA’s voluntary audit program.  It has now been announced that the case has settled.  In addition to requiring Creative Edge and Flex Kits to update their licenses to adequately cover the software use, and to implement new internal compliance measure, the settlement included a “six figure payment” by Creative Edge to SIIA and its members, according to a press release announcing the settlement.  

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I’d like you to take a trip back with me to the early 1990’s -- a time when the high tech industry was exploding with new and innovative hardware and software in the form of business applications, games, and much more.  Unfortunately, with these new innovations came rampant copyright violations.  Adults and kids were beginning to copy software, almost without thinking about it.  Some were doing so knowingly.  While others were simply not aware that their actions were illegal.

As any good trade association would do, SIIA (then known as SPA, the Software Publishers Association) jumped in and took immediate action.  We decided to embark on a broad education campaign to enlighten the public at large – particularly focusing on school kids.  Our message was simple – to teach kids the importance of copyright protection as a means for encouraging innovation and creativity and the dangers of software piracy.

The result of our efforts was the VERY popular video called “Don’t Copy That Floppy!”  

The video was a huge success in the schools in the 90’s.  Year after year, the video – along with the copyright lesson plans – were used by thousands of teachers across the country to educate their students to respect copyright and to not copy software illegally

Now, lets fast-forward to 2009.  Floppies are long gone.  SPA is now SIIA.  And people generally know much more about copyright -- thanks in large part to the likes of Napster, YouTube and John Doe lawsuits brought by the recording industry.

But, as they say, the more things change, the more they stay the same.  The high-tech industry continues to explode with new and innovative hardware and software in the form of business applications and games.  And, just like in the 90’s, if not more so, copyright violations continue to be rampant.  In fact, today it’s not just software that’s being pirated.  It’s music, movies and, of course, digital content (like newspaper and magazine articles, books, and test materials).

Even though floppies no longer exist and the video is very outdated, it continues to be as popular as ever.  You can find groups devoted to the video on facebook, discussion groups and various websites (where you can even buy your very own "DCTF thong!).  There are close to 100 versions of the video posted on YouTube. When you search for the video on Google you get tens of thousands of hits.  Perhaps, most importantly, despite being quite outdated, Don’t Copy That Floppy continues to be shown to students throughout the country.

Even now – 17 years after it was first launched --  the Don’t Copy That Floppy video is easily the most successful and most popular copyright educational video of all time.  If you don’t believe me just ask yourself – when was the last time someone actually copied a floppy. (insert laugh track here).

So, 17 years after we first released the original Don’t Copy That Floppy, after being swamped with requests, we have decided to make a sequel, aptly named Don’t Copy That Too (DCT2).  Even though the video won't be released until next month you can check out a preview of the new video.

In one of the more significant statements against piracy in recent memory, four founders of one of the world's most notorious "pirate" sites, the Pirate Bay web site created in Sweden, were sentenced on Friday to a year in prison and ordered to pay a $3.6 million fine by a Swedish court.  Sweden had long been considered somewhat of a "safe haven" for Internet pirates to operate in, and is known for a culture (especially among its younger citizens) that not only widely accepted, but promoted, piracy of copyrighted materials.  There is even a political party in Sweden, the "Pirate Party," whose primary agenda is making copyrighted materials freely available.  Copyright owners in the United States and other countries, along with their governments, had been working with the Swedish government to step up enforcement of copyright laws and change the perception of Sweden as a lawless territory when it comes to intellectual property.

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As reported previously in this blog, late last year President Bush signed into law, S. 3325, “the Prioritizing Resources and Organization for Intellectual Property (PRO-IP) Act of 2008.”  The bill creates an IP Enforcement Coordinator (IPEC) within the Executive Office of the President.  The IPEC – which is often referred to as the “IP Czar” – is to be appointed by the President and confirmed by the Senate. 

Last week, Senate Judiciary Chairman Patrick Leahy, ranking member Arlen Specter, and Senators Evan Bayh, and George Voinovich – all whom were strong advocates for the PRO-IP bill – sent a letter to President Obama urging him to promptly nominate an IP enforcement coordinator.  Earlier this year the U.S. Chamber of Commerce had drafted a similar letter urging that the IP Czar be appointed within the first 100 days of the Obama Administration.

Late last year and early this year, as is typical in DC, there were rumors swirling about several potential candidates for the position. After two months of mostly silence, those winds seemed to have settled on just a few, with the apparent leading candidates being Victoria Espinel, former assistant trade representative for intellectual property at the office of the U.S. Trade Representative and law professor at George Mason School of Law in Virginia, and Shira Perlmutter, formerly head of the office of Policy and International Affairs at the U.S. Copyright Office and law professor at The Catholic University of America in Washington, D.C.

Under the PRO-IP Bill, whomever the new IPEC is will be tasked with drafting a joint strategic plan for combating infringement and counterfeiting, including cooperation with foreign government agencies.  Once the IPEC is confirmed the National Intellectual Property Law Enforcement Coordination Council (NIPLECC) would be abolished and replaced with another interagency advisory committee under the control of the IPEC.

Organizations that centralize their software purchases stand a much better chance of being software compliant than those that do not have a formal process in place.  This is true for small and large organizations alike but certainly the risk of non-compliance increases as the size of the organization does.

The advantages of centralizing software acquisition cannot be overstated.  For those organizations that do not centralize their purchases, they run the risk of being either underlicensed or overlicensed.  After performing a software audit, many organizations have found that they are both underlicensed for some software titles and overlicensed for others.

Some organizations that are underlicensed have found themselves in the middle of an enforcement audit or lawsuit simply because the IT department did not have control over the software their employees were purchasing and using on a daily basis.  Organizations that are the target of these types of investigations run the risk of monetary fines and negative publicity. More...

Recent articles in Outdustry and CNET announced the pirating of iTunes gift cards in China.   Apparently, hackers in China have figured out a way to generate keycode numbers for iTunes gift cards and then sell counterfeit $200 iTunes gift cards using these numbers for less than $3.  People can then buy these cards and use them to buy songs etc. on iTunes just as anyone else would do with a legitimate iTunes gift card.

The obvious victim here is Apple, who's out the money that it would normally get from selling the card to a consumer.  Not only do they lose that revenue, but they also have to turn around and pay a royalty to whomever owns the rights to the downloaded songs. 

So why should you care about this?  Maybe you don't care if Apple loses a few million dollars to piracy.  Maybe you shouldn't.  That's a discussion for another day.

What you should care about is the "other" victim here -- perhaps, the "real" victim.  This is about the honest person who buys a legitimate iTunes gift card only to find out that their card is invalid because some pirate in China stole his or her keycode number and already used it on iTunes.

For those who think piracy is a victimless crime -- think again.  The victim here, as in most cases of piracy, are the millions of honest people who play by the rules and who buy legitimate software, movies and music.  It's these honest people who are suffering the consequences of piracy.  More...