A private eye on piracy

It's not just paranoia: software piracy costs billions world-wide. Milly Jenkins reports on a crackdown on computer crime

Pirating, the software industry says, is too glamorous a word to describe what counterfeiters, code crackers, "warez" traders and hard- disk loaders do. They prefer to call it thieving - from the cracker who uploads Tomb Raider to a bulletin board, to the teenager who downloads it on to his bedroom PC, from the mafioso counterfeiters with an international export business in "gold" CDs, to the dodgy geezers selling them at car boot sales.

Software piracy is as old as the industry, but is always on the rise. The Business Software Alliance says that piracy rates went up by 20 per cent last year. It is estimated that half of all the software in the world is illegal, costing the industry $11.2bn in lost revenues every year.

There have always been the small-time fraudsters - the employee who takes the Microsoft Word disks home to put on his girlfriend's laptop, the friends who play pass-the-parcel with Doom and the IT managers on tight budgets, fuelling every PC in the office with one piece of software. All are technically crimes, but of a haphazard, disorganised nature. The real nightmare only started a few years ago, when piracy got a lot more organised.

The meteoric rise of the Internet has blown the black market for pirated software wide open. The pirates who use the Bulletin Board System to swap the latest games and programs now have a worldwide audience to offer their "warez" to, for free. The motivation for these software Robin Hoods is the sheer glory of having been the first to crack a game's code or to have uploaded a beta version of Windows 95, months before it ever got near a shop shelf. In turn, this endless supply of illegal software has given bootleggers an easy source of material to copy, en masse, on to disks and CDs. New, cheap CD-copying equipment makes it easy to "burn" CDs, each with hundreds of software applications, to be sold at street markets or by mail order on the Internet. New, cheaper, scanners have also given counterfeiters a way to produce packaging that looks like the real thing.

When software companies talk about the Mafia and Chinese Triads, it tends to sound like yet another Internet conspiracy theory. But earlier this year, the National Criminal Intelligence Service said there could be no doubt that organised crime is moving away from drugs into software piracy. Martin Smith, of Novell's anti-piracy group, has headed several Triad-related investigations over the past year. In one, counterfeit software was being shipped from China to Amsterdam and then sold in Germany, having been advertised on the Internet. Payment for the software was being sent to addresses in Seattle and New York, both of which turned out to be Triad fronts.

"In another case, we got a call from a man in Dusseldorf's Chinatown who had found rows of disk copiers in a basement he rented, under a martial arts gym," says Smith. Assisted by the local police, the premises were raided and more than 135,000 diskettes were seized.

Novell's crime unit, based in Berkshire, relies on the legwork of its technical investigators for leads, as well as tip-offs on its hotline. They work country by country, as it takes time to get familiar with local police and legal systems. They do most of the surveillance work, so Smith, previously a private investigator, spends a lot of time hanging around on street corners and following people on the Tube, hoping to link names to faces and addresses. When he has enough evidence, the police are called in to raid and arrest.

British police do not have the time or money to chase software pirates themselves. The Computer Crime Unit at Scotland Yard is expected to deal with computer crimes of every description, and though there are dedicated units in Manchester and Birmingham, they are small and under-resourced. A report last year said that British police were shamefully behind on computer crime compared with forces in other countries, and that they shy away from complicated, international investigations.

John Loader, head of the crime unit for the European Leisure Software Publishers Association (Elspa), says that getting the police involved in his cases can be a struggle: "When you explain that an offence took place in Bolivia, you see them switching off."

Elspa represents games and multimedia companies, such as Sega and Nintendo, which lose more than pounds 150m a year in the UK alone. "I feel like King Canute trying to push the sea back," says Loader. Even so, this year he has already seized over pounds 20m worth of pirated software, from raids on British markets and factories. Since he has limited resources, he focuses on cases that will lead to criminal prosecutions.

The Business Software Alliance, and mega-companies such as Microsoft and Novell, have more money to spend on civil lawsuits. The BSA's enforcement programme targets businesses that are using copied, unlicensed software. Ignorance is no excuse, although their current campaign is to catch companies which knowingly break the law. Most of their leads come from disgruntled employees calling their crimeline, which offers rewards of up to pounds 2,500.

The BSA will settle out of court, but only after extracting hefty damages - pounds 50,000 is the highest payment so far in Britain - and publicly shaming the offending company.

Britain has the lowest piracy rates in Europe, even though one in every three software applications is illegal. But compared with "one-disk countries" such as Greece, Vietnam and Indonesia, where piracy is as high as 99 per cent, we are positively angelic. The most the BSA can hope to do in those trouble spots is to lobby governments to tighten up legislation.

In some countries, this approach has worked wonders. The Italian government was persuaded to take action by giving its equivalent of the Inland Revenue, the Guardia di Finanza, responsibility for software piracy. After their first few raids, businesses were so scared of the Guardia paying a visit that software sales shot up dramatically overnight.

Putting the frighteners on businesses is the easier part of the BSA's job. The difficult part is trying to persuade individuals not to use illegal software. Their message is that pirated software hurts users, because they are left without support services and exposed to viruses. But when they complain about lost revenues, the response is always the same: why should hearts bleed for Bill Gates's lost millions? "It has nothing to do with Bill Gates being a billionaire," says Dave Gregory, of Microsoft's UK theft unit. "This is simply stealing, and Microsoft has a duty to place the right moral values on people. If children see their dad copying software, what kind of message is that sending them?"

The BSA's argument is more concerned with economics than with morals - pirating stops thousands of jobs being created, deprives governments of millions in taxes, bankrupts small software companies and, in the long term, affects the industry's ability to develop new products.

For the software detectives, the plan is to keep tapping away at the pirates who are creating all this mayhem. Martin Smith says that whenever they raid a factory or bring down a bulletin board, there is a knock-on effect: Novell software disappears from other sites, counterfeiters become more cautious, and sales go up. "People are getting to know we're out there," says John Loader. "As with all crime, the secret is to keep them on the run"

BSA hotline: 0800 510 510

Elspa Crime Unit hotline: 0990 133 405

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