Microsoft Protects Consumers From Global Online Marketplace Fraud

Every day, consumers are unwittingly put at risk for computer viruses, malware and spyware when they purchase counterfeit software from global online marketplaces.

As part of its continuing effort to protect consumers and support legitimate online commerce, Microsoft Corp. today announced the filing of 52 lawsuits and the referral of 22 cases to local law enforcement in 22 countries against resellers who allegedly sold counterfeit Microsoft software on various online marketplaces. In addition, Microsoft announced the release of a new educational guide to help consumers spot and avoid counterfeit software offered on online marketplaces. These announcements are part of Microsoft’s continuing effort to protect consumers from the dangers of counterfeit software and build on Microsoft’s first global enforcement action in 2006 to combat online marketplace piracy.

Notorious Knockoffs

Fifteen of the 52 lawsuits filed involved software traced to the largest-ever commercial counterfeit syndicate, which was broken up earlier this year by Chinese authorities, the FBI and Microsoft. Through its investigations, Microsoft found that the counterfeit software produced by the Chinese syndicate was distributed in some markets through domestic online sellers. As in the takedown of the Chinese syndicate, Microsoft customers played a role in helping to identify the counterfeiters in these cases by filing piracy reports with Microsoft after anti-piracy technology in Windows Genuine Advantage indicated that their software was fake.

“The criminal syndicate broken up this past summer by Chinese law enforcement and the FBI was linked to a significant amount of illegitimate Internet activity,” said David Finn, associate general counsel for Worldwide Anti-Piracy and Anti-Counterfeiting at Microsoft. “We took note of that fact and followed up globally, since we have a responsibility to help combat cyber-pirates who operate without borders and attempt to deceive unsuspecting software consumers around the world.”

Proceed With Caution

Although it can contain harmful viruses or tools that compromise users’ privacy, counterfeit software is designed to closely resemble the genuine article and fool consumers. As a result, consumers seeking to purchase genuine software online are often tricked by those who misuse online marketplaces. “Every day, software pirates around the world put countless consumers at risk by selling defective counterfeit software through Internet marketplaces,” Finn said. “As part of our ongoing effort to combat software piracy, Microsoft is committed to taking the legal action necessary to protect consumers around the world from the dangers of counterfeit software, and we encourage consumers to look to the legitimate channel — both online and offline — when seeking genuine Microsoft software.”

According to an October 2006 IDC white paper sponsored by Microsoft, counterfeit software can contain spyware, malware or other dangerous code. It may fail to operate properly and present real risks to consumers and businesses through potential security breaches and the resulting loss, damage or misuse of their important business and personal information.

Protecting Online Commerce for Customers and Partners

Savvy shoppers searching online marketplaces for the best deal can be at risk by unknowingly buying counterfeit copies that may contain spyware, malware or other dangerous code. Therefore, Microsoft is working with the popular global online marketplace eBay to educate consumers and support honest resellers.

Microsoft is working with eBay to educate eBay’s community of users regarding counterfeit software and to that end has produced the “Microsoft Buying Guide,” which points consumers to best practices and resources for purchasing software on online marketplaces. This guide appears in eBay’s Reviews and Guides section (http://reviews.ebay.com/Before-You-Buy-Understand-the-Dangers-of-Counterfeit_W0QQugidZ10000000004755497), and is part of a wealth of resources that Microsoft encourages consumers to consult to make safe software purchasing decisions. It also appears on Microsoft’s How To Tell Web site at http://www.howtotell.com.

Microsoft also participates in eBay’s Verified Rights Owner Program (VeRO, http://pages.ebay.com/help/tp/vero-rights-owner.html) and has done so since its inception in 1998. eBay’s VeRO program enables rights owners, such as Microsoft, to efficiently report counterfeits to eBay for removal from the site.

“eBay applauds Microsoft’s actions to stop the abuse of its intellectual property. The sale of counterfeits is an industrywide problem both offline and online. Counterfeit software is illegal and not welcome on eBay, as it reduces trust between our buyers and sellers,” said Matt Halprin, vice president of Trust & Safety for eBay Inc. “As our business has grown and the challenges of global counterfeiting have become more complex, cooperation with law enforcement and rights owners has become more critical — we need to fight the sale of counterfeit goods together.”

The Costs of Piracy

Globally, PC software piracy robs the software industry of an estimated $40 billion (U.S.) per year. Lost industry revenue is just the beginning; the fourth annual BSA and IDC global software piracy study (May 2007) estimated the worldwide PC software piracy rate at 35 percent in 2006. According to another study released in 2005, reducing the rate of piracy by just 10 percent over four years could potentially generate 2.4 million new jobs, $400 billion in economic growth and $67 billion in additional tax revenue for the world economy.

The 52 lawsuits filed today were filed in Belgium (1), Canada (1), France (3), Germany (12), Hong Kong (1), India (1), Ireland (1), Italy (2), Netherlands (7), Turkey (1), South Africa (1), the United Kingdom (6) and the United States (15).

Twenty-two criminal cases were referred to law enforcement in Argentina (1), Belgium (1), China (1), Dominican Republic (2), France (3), India (1), Japan (2), Korea (2), Mexico (1), Panama (1), Poland (3), Taiwan (3) and Turkey (1).

Genuine Microsoft Software

These lawsuits are part of Microsoft’s Genuine Software Initiative, which is aimed at advancing education within the software ecosystem as part of Microsoft’s long-term efforts to increase awareness about the consequences of software piracy, advance engineering technologies to protect its intellectual property, and support enforcement of anti-piracy policies and laws. More information about Microsoft’s Genuine Software Initiative is available at http://www.microsoft.com/genuine.

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

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