final paper - group 2 - computer software piracy trends and issues in the united states

8/2/2019 Final Paper - Group 2 - Computer Software Piracy Trends and Issues in the United States

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Computer Software Piracy Trends and

Issues in the United States

Summer 2011

Karen Ferguson

Toni GarciaJames Dolina

(SMT-273614-01-11SU2) Cyber Crimeand Computer ForensicsEmpire State College


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Purpose of Study

The purpose of our research is to identify the status of computer software piracy primarily on a national

level. We wish to identify what the trends in software piracy are, what counter measures are in place, and

what cases and tools exist on this topic. Our purpose is to inform a policy maker or general member of

the public of the landscape of piracy issues; by providing an analysis and identifying trends, our reader

will have the information to knowledgeably discuss the issue. Our audience is not necessarily a technical

one, but readers interested in business and ethics.

Opening Statement, Assumptions or Hypothesis

Is software piracy a real threat to the US economy? Are the statistics of the cost of piracy in financial and

global security realistic? And, what can be done about it?

Discussion of Findings

Why do people choose to undertake software piracy? A recent global study by Bagchi and Cerveny

searches for the reasons behind global software piracy. It states the 4 most common causes are

assumed to be economic factors, regulatory factors, technical factors, and social/cultural factors. The

analysis determines that economic factors are not a key factor alone. Internet use growth rate does not

predict rises in piracy until after 2003; at this time, the increase in internet growth correlated with an

increase in piracy. The concolusion is it is more than money and opportunity that are at work. The

explosion of the internet and availability does correlate with increased use and increased piracy.

Scorpeccis article also examines what drives digital piracy, and the steps which can be taken to combat

it. His article states: Even if consumers involved in digital piracy are generally aware that it is illegal, it is

not always perceived as un-ethical, so continued emphasis should be placed on education and consumer

awareness to overcome this perception. Industry and some governments have instituted extensive

campaigns toward this end, and these actions can be paralleled with enforcement campaigns to reduce

the likelihood of piracy.


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Software piracy is fundamentally a violation of copyright protection. Program and software developers

expect to be compensated for fair use of their intellectual property.

Regulatory Background of relevant laws and acts of the US Government

Senate Bill S893

Signed by President Bush in October 1992, the bill elevated software piracy from a misdemeanor to a

felony, if 10 or more illegal copies of software are made within a six-month period, and if the copies are

worth a total value of over $2,500. The first offense is punishable by five years in prison and a fine of

$250,000. The second offense is punishable by up to 10 years in prison.

United States Copyright Act

This act holds someone guilty of illegal reproduction of software subject to civil damages of up to

$100,000 per title infringed, and criminal penalties, including fines of as much as $250,000 per title

infringed and imprisonment of up to five years.

No Electronic Theft Act

The NET Act made criminal the willful infringement of copyrighted works, specifically by electronic means,

even when the infringing party derives no direct financial benefit from the infringement. Through this act,

somebody who made copies of software and distributed them through a web site, for example, was now

liable for damages. If the copyrighted works copied had a total retail value of over $1,000, the infringing

party could be imprisoned for up to to 6 years.

International Agreements

The U.S. government is committed to fighting software piracy abroad as well. In 1991, a Special 301

investigation under the U.S. Trade Act of 1974 found that the Chinese government has been lax in

enforcing software copyright laws. In January 1992, a Memorandum of Understanding was signed by

China, in which it pledged to strengthen its principal intellectual property laws, and to treat software as


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literary work. In 1994, an investigation found that the intellectual property practices in China were

especially "onerous and egregious," leading to the United States threatening China with trade sanctions.

The United States has taken a firm stance and has made it clear that it will impose trade sanctions

against countries which do not take steps to eliminate software piracy.

Digital Millenium Copyright Act

The DMCA is the most comprehensive reform of the copyright law in the U.S. in a generation. One of the

highlights of DMCA is to make it a crime to circumvent anti-piracy measures built into most commercial

software. The Act also outlaws the manufacture, sale, or distribution of code-cracking devices used to

illegally copy software.

Prioritizing Resources and Organization for Intellectual Property Act Public Law 110-403

On October 13, 2008, the President signed the Prioritizing Resources and Organization for Intellectual

Property Act into law (Pub. L. 110-403) (the PRO-IP Act). The new statute strengthens the intellectual

property laws of the United States in several respects. For example, it amends Section 410 of the

Copyright Act to codify the doctrine of fraud on the Copyright Office in the registration process. The law

also clarifies that registration is not a prerequisite for a criminal copyright prosecution and makes it

unlawful (civilly or criminally) to export unauthorized copies of protected works, including copies of

phonorecords, from the United States. In addition, the law amends Section 506 of the Copyright Act to

provide for the forfeiture of any property used to commit or facilitate the commission of a criminal offense

involving copyrighted works.

The Act creates a new enforcement paradigm for the federal governments efforts to combat

counterfeiting and piracy. For example, it creates an Intellectual Property Enforcement Coordinator

(IPEC) within the Executive Office of the President. This office would be primarily responsible for

developing and implementing a Joint Strategic Plan against counterfeiting and piracy and the coordinator

would serve as a principal advisor to the President on domestic and international intellectual property

enforcement policy. The Act also provides for improved investigative and forensic resources for


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enforcement of laws related to intellectual property crimes and allocates additional funding for resources

to investigate and prosecute intellectual property crimes and other criminal activity involving computers.

The History of Software Piracy

In 2001, the US government made large-scale news when it issued over 100 arrest warrants worldwide

for piracy, the culminates of 3 operations internationally over the prior years.

The three operations were as follows:

Operation Buccaneer, a one-year investigation by the U.S. Customs Service and the Justice

Department's Computer Crime and Intellectual Property section, working in conjunction with the U.S.

Attorney for the Eastern District of Virginia. Buccaneer involved the simultaneous execution of 58 search

warrants against high-level Warez leadership and members around the world.

Included in the targets is the piracy group called DrinkOrDie, which is made up of about 40 members

worldwide. The groups decode antipiracy measures in software and release the code on the Internet

before or at the time of a new product's launch, causing losses for software companies. The U.S. worked

with authorities in the U.K., Australia, Norway, and Finland in the investigation.

Operation Bandwidth, a two-year effort to identify and prosecute groups and individuals involved with

illegal access to computer systems and the piracy of proprietary software using Warez storage sites on

the Internet. The investigation involved the Defense Criminal Investigative Service, the Environmental

Protection Agency Office of the Inspector General and the Federal Bureau of Investigation.

The groups, along with the Nevada U.S. Attorney's Office, created an undercover Warez site as part of

the investigation, which was used to transfer more than 100,000 pirated files, including more than 12,000

separate software programs, movies, and games. More than 200 suspects participated in the piracy

efforts at the undercover site. Thousands of copies of pirated software will be removed from circulation

because of the sting, as well as computer hardware seized by authorities.


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Operation Digital Piratez, a yearlong effort by the FBI and the New Hampshire U.S. Attorney's Office to

infiltrate several Warez distribution organizations, including "cracking groups" specifically created for the

purpose of pirating software so that it may be distributed over the Internet in violation of U.S. copyright

laws.

As noted by Urbas, Operation Buccaneer i llustrates the cross-national reach of both Internet-based

intellectual property crime and the law enforcement response, as well as some of the complexities that

arise in applying jurisdictional concepts such as the double criminality requirement for extradition in this

evolving prosecutorial landscape.

Economic impact of piracy

Loss of revenues

The Business Software Alliance is at the forefront of fighting global software piracy. It produces an annual

report estimating the cost, the most recent of which reports:

The commercial value of PC software piracy leapt 14 percent globally in 2010 to $59 billion. This figure

has nearly doubled in real terms since 2003. The driving force behind the trend is piracy in the worlds

emerging economies, where the personal computer market is growing fastest

Although this makes the scope of piracy on the global level alone seem insurmountable, some caution

and skepticism should be applied when considering these numbers. The Government Accountability

Office completed a report on piracy in 2010 which did note it is of a global impact. This was the first

recent US study and it t called into question some of the assertions about the effects of piracy on

copyright owners including software manufacturers. The GAO reported, Most experts we spoke with

and the literature we reviewed observed that despite significant efforts, it is difficult, if not impossible, to

quantify the net effect of counterfeiting and piracy on the economy as a whole."

"Three widely cited U.S. government estimates of economic losses resulting from counterfeiting cannot

be substantiated due to the absence of underlying studie. The illicit nature of counterfeiting and piracy


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makes estimating the economic impact of (intellectual property) infringements extremely difficult, so

assumptions must be used to offset the lack of data."

The GAO review supported the claim that piracy harms industries and consumers and could slow U.S.

economic growth, but the scope of this is almost incalculable. Part of the problem lies in the nature of

piracy and illegal goods. One way that copyright owners calculate the value of lost sale is "substitution

rates" to indicate how many people who buy pirated merchandise would have otherwise purchased

legitimate products had the illegal material not been available. This is impossible to measure per the

GAO report but it does offer a counterperspective to the estimates provided by the Business Software

Alliance.

Links to terrorism funding

It seems debatable whether software piracy and terrorism are or have been linked together. Back in 2008,

then Attorney General Michael Mukasey made a bold claim that terrorist organizations do indeed sell

pirated software as a means of financing their organizations. In a speech presented to the Tech Museum

of Innovation he was quoted as saying:

Criminal syndicates, and in some cases even terrorist groups, view IP crime as a lucrative business,

and see it as a low risk way to fund other activities.

Mr. Mukasey then went on to name several instances in which the United States Justice Department had

arrested those involved in piracy and even in which countries the department has worked with other

countries via investigations. He noted arrests in Florida, China, and named the Russian Mafia as being

involved as well. Unfortunately, he never once presented any concrete evidence linking software piracy to

terrorism. His motivation in making such a bold, unfounded statement was to convince people of this link

in order to push Congress into passing legislation that would increase penalties for intellectual property

(IP) infringement, grant police more power, and to create a new agency geared at fighting IP theft. Most

people believed that this was just political posturing as a result of pressure from those lobbyists in the

electronic media industry.


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Fast forward to 2009, when the Motion Picture Association, which is the European equivalent to the

Motion Picture Association of America, paid for a study which again claimed that piracy was fostering

terrorism. The study, created by the RAND Corp. was a 182 page document entitled Film Piracy,

Organized Crime and Terrorismand suggested that the connection between piracy and terrorism may

be stronger than previously believed. This study produced 3 case studies which identified a direct link

from piracy and terrorism which I will expound on further.

The Tri-Border Area(TBA - Latin America) Consisting of the borders of Brazil, Argentina, and Paraguay

and widely thought to be a haven for criminal organizations as well terrorist groups most notably,

Hezbollah. Rand researches, as well as other experts have concluded that the TBA is one of the most

influential financing areas in regards to Islamic terrorism outside of the Middle East. Led by Assad Ahmad

Barakat, it is believed that this network used piracy as a means of generating millions of dollars which

was funneled to Hezbollah. Barakat was not the first to be implicated though as Lebanese businessman

Ali Khalil Mehri who also had close ties to Hezbollah was arrested after searches of his offices yielded a

cache of counterfeit CDs, and video games. Mehri apparently took advantage of the weak government

system to gain exclusive rights to the products he manufactured including a title to produce Playstation

Gaming Systems. Therefore if merchants tried to sell so called registered products they would be

subject to extortion which because of the titles he wrongfully received was upheld by the police in that

area.

Northern Ireland This case involves the Irish Republican Army (IRA) and details the direct connection

between counterfeiting and terrorism. It is thought that the groups here have been active in piracy since

the days of the home video explosion and their stranglehold only tightened and as the ease and quality of

the media duplication increased. By 2004 it was believed that terrorist groups controlled over 80 percent

of the film and software piracy in the area. An example of this occurred in 2000 when 3 Irish Customs and

Excises officers were searching a suspected fuel-laundering plant just a few feet from the border between

the Republic and Northern Ireland. There the officials came upon a van filled with what appeared to be

counterfeit DVDs, CDs, and video games along with DVD copying devices. When the police arrived they

noted that the van had over 100,000 in pirated media. They had also noted that the van was seen in a


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local marketplace selling merchandise out of it. When preparing to return to their district with the property

two rockets were fired from the Northern Ireland side of the border. Also at that time several vehicles

pulled up and masked gunmen appeared demanding the return of everything that was seized. The police

did not resist and the men fled with the merchandise. The police were convinced that the men belonged

to the Real Irish Republican Army (RIRA).

South AsiaOriginally a crime syndicate, Dawood Ibrahims D-Company organization has been able to

create a monopoly controlling the master copies of pirated Bollywood and Hollywood films. First by loan

sharking in the film production industry, then moving into film distribution, home video manufacturing and

eventually film piracy. The organization became a terrorist one when they conducted the Black Friday

Mumbai bombings in which 257 were killed and 713 were injured. They later developed ties with al Qaeda

and the Kashmiri terrorist group Lakshar-e-Taiyiba (LeT). This led to Ibrahim being added to the U.S.s

terrorist watch list and his assets being frozen. Apparently, Indian officials were well aware of D-

Companys piracy operation but did not intervene. It was then in 2005 when U.S. Customs seized a large

shipment of counterfeit discs in Virginia and the threat of trade sanctions did their authorities begin

cracking down on this pirating outfit.

With the tremendous growth in software piracy, comes a corresponding increase in the tools and

techniques necessary to catch the wrongdoers. Software piracy can range from using a licensed copy of

a program on multiple (sometimes hundreds) computer stations to cracking the security on an eagerly

awaited game release, and making it available for download at the same time its being released to retail

outlets.

The BSA has a website atwww.nopiracy.comto enable users to easily report fraud, and maintains the

confidentiality of the informant. The company will contact the person to ensure that they get as much

information as possible before pursuing the case, and since most informants are disgruntled employees,

to make sure that there is a case worth the time and money to pursue:i

"I was the IT coordinator and questioned higher up why I was installing the same CD on all thecomputers even though we bought one license," wrote an informant. "[The] response was that[my employer] was too cheap to buy all the licenses." The informant went on to say that"management knew about the issue from Day One and recommended it to save cost. This was
http://www.nopiracy.com/http://www.nopiracy.com/http://www.nopiracy.com/http://www.nopiracy.com/


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brought up several times among the IT staff and was pushed off, as it was considered no bigdeal."

The BSA also needs to know the number of computers at the company, and how many software licenses

were purchased legally. They will then contact the software vendor to find out if there are, in fact, enough

licenses corresponding to the number of PCs. Any documentation the informant may have of meetings,

notes and emails regarding the use of the unlicensed software is also used to support the case.

Once all the evidence is gathered, a team consisting of employees and attorneys from the BSAs member

companies review the case, and decide whether to go forward. The first step is to notify the CEO of the

offending company written notice of the allegations, while keeping the informants identity confidential. It

requests the company perform an audit of the use of the software in question, and looks to settle out of

court, basing the settlement on the retail price of the software. In 2008, the BSA received 2,500 leads,

requested 920 audits, went to court in 1 case, and collected $9.5 million in settlements.ii

Computer games make up a huge part of the pirated software market, and as the hackers or thieves get

more sophisticated, law enforcement and developers must find new ways of stopping them. One game

developer came up with a unique way of identifying those who are using pirated copies of his game he

intentionally inserted an error into the gameiii. Garrys Mod is not a typical game there are no objectives

to attain but a game in which the player manipulates and creates objects, called an open world or

sandbox physics game.

Earlier this year, after one of the game updates, the creator took to Twitter to ask if anyone was unable

to shade polygon normals. People responded on Twitter, and on the games forums, saying the game

would crash a few seconds after start-up, with the error, Engine Error: Unable to shade polygon

normals, followed by a series of numbers in parentheses. What they didnt know was that the error only

affected those who were playing pirated copies of the game, and the numbers were used to identify the

user accounts and ban them from the game forums.

Obtaining and releasing highly anticipated games in the days before the official release is one of the main

goals of software pirates. These suppliers may obtain the software from employees of the software


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company, or of the packaging warehouses, by snooping on the companys FTP site, or by obtaining a

demo from the company and cracking the demo license & generating a retail license.iv

A review of

Craigslist postings helped identify a person selling Modern Warfare 2 for Xbox two weeks before the

game was to go on sale.v The games publisher called in IPCybercrime.com, a firm specializing in online

investigations, who contacted the seller and arranged to buy the software. When another Craigslist ad

appeared, they were able to use a social networking site to connect the two sellers, who then admitted

they had stolen the games from the storage area of a local retail store.

Another posting for the game on a piracy forum led investigators to run the email address through

Facebook, and got a hit to a profile of a software modder, with a phone number. After several days of

negotiation, a deal was made, and the investigators were able to get a business address from the seller.

When they looked into the address, it turned out to be a computer business, and the owners teenage son

was the prime suspect. The local police department got involved at that point, and set up a sting. The

subject was arrested, but not before the game was hacked and leaked on torrent sites.

Microsoft has several labs around the world dedicated to defeating counterfeiters. One of the methods

they use to identify the counterfeit software is to match the markings on the rings around the center of the

disc with others to trace it back to the source, similar to the way ballistics can match the markings on

bullets:vi

At a crime lab in Dublin, Microsoft's (MSFT) Donal Keating uses a custom-built microscope totake 72 high-resolution images of a counterfeit software disc. Just as police use ballistics tomatch bullets to a suspect's gun, Keating, the company's senior forensics manager, will use theabrasions and grooves on the stacking ring, a raised ridge around the disc's center, to match it toother fakes. He'll then try to trace the counterfeit disc to the factory and the crime syndicate thatproduced it.

The high-tech probing is part of a campaign by the world's largest software maker to vanquishcounterfeiters. Microsoft employs 75 investigators, lawyers, and analystsmany with experiencein narcotics and Mafia casesin nine labs around the world. They're armed with maps that help

pinpoint where suspect products are bought or seized by law enforcement, software that identifiesdigital fingerprints on discs, and a program that scours the Web for downloadable fakes.

As the worlds largest software producer, Microsoft has lost the largest share of the estimated $10 billion

dollars per year in revenue that counterfeiting costs the software industry. By gathering the information

on where the fakes originate, they have been able to identify and break up counterfeiting rings worldwide.
http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=MSFThttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=MSFThttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=MSFThttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=MSFT


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Prosecution:

Recent cases

In a case that began in 2010 file sharer Jammie Thomas-Rasset became the first defendant in a

Recording Industry Association of America lawsuit to go to a jury trial. She was found guilty of

downloading 24 songs from the music sharing site Kazaa. The history of this case began in 2007 when a

judgment of $222,000 being levied against her. That trial was declared a mistrial when the judge revealed

he had incorrectly instructed the jury on the law. The second trial resulted in an award of $1.92 million

dollars which was reduced to $54,000. The judge then ordered a new trial to be held if the parties could

not agree to that amount or settle. Since Thomas lawyers have said they would appeal any decision that

they considered excessive damages, a third trial was held. In that trial, the Minnesota Courts jury

awarded the RIAA $1.5 million or roughly $62,500 for each of the illegally downloaded songs. Just last

month, U.S. District Judge Michael Davis lowered that verdict to $54,000 much to the dismay of the RIAA

who maintain that judges do not have the jurisdiction to reduce jury verdicts when it comes to cases

involving the Copyright Act. Under the Copyright Act, damages as much as $150,000 per infraction are

allowed. The judge cited fairness as his reasoning for reducing the verdict to a mere $2,250 per illegal

download. Im sure this wont be the last we hear of this case as an appeal is likely to occur.

The U.S. Department of Justice puts out the latest press releases on Intellectual Property crimes

athttp://www.cybercrime.gov/ip.html:vii

August 15, 2011 - MICHIGAN WOMAN SENTENCED TO TWO YEARS IN PRISON FORSELLING MORE THAN $400,000 IN COUNTERFEIT BUSINESS SOFTWARE:

Jacinda Jones, 31, of Ypsilanti, Mich., also was ordered by U.S. District Court Judge David M.Lawson in Detroit to serve three years of supervised release following her prison term and to pay$441,035 in restitution. Jones pleaded guilty on April 20, 2011, to one count of criminal copyrightinfringement. According to documents filed in court, Jones grossed more than $400,000 betweenJuly 2008 and January 2010 by selling over 7,000 copies of pirated business software atdiscounted prices through the website www.cheapdl.com. The software had a retail value of morethan $2 million and was owned by several companies, including Microsoft, Adobe, Intuit andSymantec. Jones activities came to the attention of the U.S. Immigration and CustomsEnforcement (ICE) agents, who made several undercover purchases of the pirated business andutility software.

viii

June 7, 2011 - Cincinnati Man Pleads Guilty to Selling More Than $1 Million inCounterfeit Tax Preparation Software:
http://www.cybercrime.gov/ip.htmlhttp://www.cybercrime.gov/ip.htmlhttp://www.cybercrime.gov/ip.htmlhttp://www.cybercrime.gov/ip.html


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According to court documents, Davis purchased by downloading or on a CD, Quicken and TurboTax software manufactured by Intuit Inc., with accompanying labels and packaging that wereprotected by copyright. Davis copied the original software multiple times to CDs, withoutpermission, and created counterfeit packaging and labeling for the CDs. According to courtdocuments, Davis sold the counterfeit Intuit software on eBay, received payment and then mailedthe counterfeit software to the purchaser via the U.S. Postal Service. Within the packaging, Davissometimes included a false disclaimer claiming that he was merely acting as a broker for anotherseller. Davis also falsely represented on the online eBay auctions that he was selling originalIntuit software, but instead he sold counterfeit Intuit software, usually at prices belowmanufacturers suggested retail price.

ix

May 26, 2011 - TWO INDIVIDUALS CONVICTED OF IMPORTING AND SELLINGCOUNTERFEIT CISCO COMPUTER NETWORKING EQUIPMENT:

Zhao and her associates used a number of sophisticated schemes to defraud U.S.-basedpurchasers through a Virginia-based company called JDC Networking Inc. JDC Networking Inc.altered Cisco products by using pirated software, and created labels and packaging in order tomislead consumers into believing the products it sold were genuine Cisco products. To evadedetection, Zhao used various names and addresses in importation documents, and hid millions ofdollars of counterfeit proceeds through a web of bank accounts and real estate held in the namesof her family members in China.x

Recommendations

The software manufacturers and developers will need to continue to be vigilant and work on building abetter mouse trap to combat software piracy. Its hard to ascertain how much financial damage is done tointellectual property with software piracy. The breadth of the impact from terrorist organizations from thisvenue is unclear but worthy of ongoing surveillance. The efforts by the US and the anti-pirateers havehad some success, but there is l ikely to be more developments in the future.

Conclusion/Summary

Software piracy in the US and the world are an ongoing threat. New media and growth of access to anduse of the internet will continue to pose challenges. The current US economic malaise cannot beattributed solely to the impact of intellectual property rights violation. Casual attitudes towards piracy insociety are a factor in the widespread use of software piracy. Recent court decisions and prosecutionsof the more recent US intellectual property acts will work hand in hand with improved anti-piracy tools tohelp manage this activity in the future.


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REFERENCES-Annotated Bibliography

Group 2: Jury Annotated Bibliography

Eighth Annual BSA 2010 Piracy Study, May 2011. In brief. www.bsa.org/globalstudy

1. BSA Survey: Emerging Markets Boost Software Piracy to $59 Billion in 2010s. (2011, May).

Wireless News,***[insert pages]***. Retrieved July 29, 2011, from ABI/INFORM Trade &

Industry. (Document ID: 2348656141).

This article is an executive level summary that shows the scope of software piracy by nation, region, and

financial value. It is a snapshot of economic impact and of trends. It summarizes some of the extensive

information available from the BSA (Business Software Alliance) website.

Quote:

The commercial value of PC software piracy leapt 14 percent globally in 2010 to $59 billion. Thisfigure has nearly doubled in real terms since 2003. The driving force behind the trend is piracy inthe worlds emerging economies, where the personal computer market is growing fastest.

The intended audience is general, particularly the member software manufacturers and researchers

interested in statistics about the breadth of global software piracy.

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2. PC SOFTWARE PIRACY POSES CHALLENGES TO CYBER SECURITY. (2009). Computer

Security Update, 10(6), 3-7. Retrieved from EBSCOhost.

The article focuses on the issues concerning increasing computer softwarepiracy which poses

challenges to cyber security in the U.S. In the Sixth Annual BSA-IDC Global SoftwarePiracy Study

released by the Business Software Alliance (BSA), progress has made in slowing the illegal use of

computer software products. However, the progress has declined causing serious challenges to the

information technology sector in the U.S. It further states that despite the effort of the U.S. government in

battling piracy, its negative impact has gone beyond the software industry as well as in the information

technology sector.

The United States has the lowest PC software piracy rate in the world, 20 percent. However, ithas the largest dollar losses from piracy, $9.1 billion, because it is by far the world's largestsoftware market. Losses have risen steadily in recent years while the piracy rate has hoveredaround 20-21 percent.Software piracy also increases the risk of cyber crime and security problems. For example, therecent global spread of the Conficker virus has been attributed in part to the lack of automaticsecurity updates for unlicensed software. And in a 2006 study, IDC found that 29 percent of Websites and 61 percent of peer-to-peer sites offering pirated software tried to infect test computerswith "Trojans," spyware, keyloggers, and other tools of identity theft.


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Software piracy also lowers tax revenues at a time of increased fiscal pressures on governmentsworldwide.According to the 2008 IDC study noted above, reducing piracy by 10 points would generate $24billion in higher government revenues without a tax increase."The proven 'blueprint' for reducing piracy is a combination of consumer education, strongintellectual property policies, effective law enforcement, and legalization programs by softwarecompanies and government agencies," Holleyman said. "The progress seen in so many nationsisproof that this anti-piracy strategy works."

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3. Bagchi, K., Kirs, P., & Cerveny, R. (2006). GLOBAL SOFTWARE PIRACY: CAN ECONOMIC

FACTORS ALONE EXPLAIN THE TREND?. Communications of the ACM, 49(6), 70-75.

Retrieved from EBSCOhost.

This article searches for the reasons behind global software piracy. It states the 4 most common causes

are assumed to be economic factors, regulatory factors, technical factors, and social/cultural factors.

The analysis determines that economic factors are not a key factor alone. Internet use growth rate doesnot predict rises in piracy until after 2003; at this time, the increase in internet growth correlated with an

increase in piracy.

The implication is that in order for piracy rates to decrease there must not only be a change in economicconditions, but also in societal structure and attitudes.

Attitudes about copying also play a major role in piracy. Unlike countries such as the U.S., where copyingis generally equated with cheating, copying is often viewed a cultural exercise, not an immoral practice, inmany Asian nations. Asian art students are required to diligently copy the work of masters as an exercisein learning. Success is measured by the similarity of the copy to the original. Copyright laws are not wellunderstood or even recognized in many of these nations[10].

Even in developed Western nations, some people believe that pirating software is not wrong. Theexample of piracy in the music industry is worth noting in this context; many U.S. citizens who couldotherwise buy a copy of a popular music CD regularly downloaded pirated music from sites such asNapster and Kaaza[3]. Since the price of a CD is frequently considered exorbitant relative to the cost ofproducing one, individuals in many uncertainty-embracing nations may feel that the injustices inflicted bythe manufacturers justify piracy.

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4. Bsa.org

The Business Software Alliance (http://www.bsa.org) is the voice of the world's commercialsoftware industry and its hardware partners before governments and in the internationalmarketplace

This web page is a premiere source of information and publishes annual reports on piracy. It offers

education and rewards for identifying software pirates.
http://cacm.acm.org.library.esc.edu/magazines/2006/6/5896-global-software-piracy/fulltext#R10http://cacm.acm.org.library.esc.edu/magazines/2006/6/5896-global-software-piracy/fulltext#R10http://cacm.acm.org.library.esc.edu/magazines/2006/6/5896-global-software-piracy/fulltext#R10http://cacm.acm.org.library.esc.edu/magazines/2006/6/5896-global-software-piracy/fulltext#R3http://cacm.acm.org.library.esc.edu/magazines/2006/6/5896-global-software-piracy/fulltext#R3http://cacm.acm.org.library.esc.edu/magazines/2006/6/5896-global-software-piracy/fulltext#R3http://cacm.acm.org.library.esc.edu/magazines/2006/6/5896-global-software-piracy/fulltext#R3http://cacm.acm.org.library.esc.edu/magazines/2006/6/5896-global-software-piracy/fulltext#R10


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(3) developing and maintaining adequate recordkeeping systems.

(c) Contractors and recipients of Federal financial assistance, including recipients of grants and loanguarantee assistance, should have appropriate systems and controls in place to ensure that Federalfunds are not used to acquire, operate, or maintain computer software in violation of applicable copyrightlaws. If agencies become aware that contractors or recipients are using Federal funds to acquire,

operate, or maintain computer software in violation of copyright laws and determine that such actions ofthe contractors or recipients may affect the integrity of the agency's contracting and Federal financialassistance processes, agencies shall take such measures, including the use of certifications or writtenassurances, as the agency head deems appropriate and consistent with the requirements of law.

(d) Executive agencies shall cooperate fully in implementing this order and shall share information asappropriate that may be useful in combating the use of compute software in violation of applicablecopyright laws.

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10. Burke L. THE UNITED STATES TAKES CENTER STAGE IN THE INTERNATIONAL FIGHT

AGAINST ONLINE PIRACY & COUNTERFEITING. Houston Journal of International Law

[serial online]. Fall2010 2010;33(1):227-233. Available from: Academic Search Complete,

Ipswich, MA. Accessed August 6, 2011.

--------------------

http://www-cs-faculty.stanford.edu/~eroberts/cs181/projects/software-piracy/government.html

Partly due to the lobbying of major software producers, like Microsoft and Adobe, the government hasbegan cracking down on software piracy. The Clinton/Gore administration, in particular, has been veryadamant about protecting the rights of software manufacturers and distributors, and have enacted lawsthat proscribe harsh penalties for those who infringe on software copyrights.

Senate Bill S893

Signed by President Bush in October 1992, the bill elevated software piracy from a misdemeanor to afelony, if 10 or more illegal copies of software are made within a six-month period, and if the copies areworth a total value of over $2,500. The first offense is punishable by five years in prison and a fine of$250,000. The second offense is punishable by up to 10 years in prison.

United States Copyright Act

Holds someone guilty of illegal reproduction of software subject to civil damages of up to $100,000 pertitle infringed, and criminal penalties, including fines of as much as $250,000 per title infringed andimprisonment of up to five years.

No Electronic Theft Act

The NET Act made criminal the willful infringement of copyrighted works, specifically by electronic means,even when the infringing party derives no direct financial benefit from the infringement. Through this act,somebody who made copies of software and distributed them through a web site, for example, was nowliable for damages. If the copyrighted works copied had a total retail value of over $1,000, the infringingparty could be imprisoned for up to to 6 years.

International Agreements


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The U.S. government is committed to fighting software piracy abroad as well. In 1991, a Special 301investigation under the U.S. Trade Act of 1974 found that the Chinese government has been lax inenforcing software copyright laws. In January 1992, a Memorandum of Understanding was signed byChina, in which it pledged to strengthen its principal intellectual property laws, and to treat software asliterary work. In 1994, an investigation found that the intellectual property practices in China wereespecially "onerous and egregious," leading to the United States threatening China with trade sanctions.The United States has taken a firm stance and has made it clear that it will impose trade sanctionsagainst countries which do not take steps to eliminate software piracy.

Digital Millenium Copyright Act

The DMCA is the most comprehensive reform of the copyright law in the U.S. in a generation. One of the

highlights of DMCA is to make it a crime to circumvent anti-piracy measures built into most commercial

software. The Act also outlaws the manufacture, sale, or distribution of code-cracking devices used to

illegally copy software.

http://www.copyright.gov/newsnet/2008/354.html

Prioritizing Resources and Organization for Intellectual Property Act Becomes Public Law 110-403

On October 13, 2008, the President signed the Prioritizing Resources and Organization for IntellectualProperty Act into law (Pub. L. 110-403) (the PRO-IP Act). The new statute strengthens the intellectualproperty laws of the United States in several respects. For example, it amends Section 410 of theCopyright Act to codify the doctrine of fraud on the Copyright Office in the registration process. The lawalso clarifies that registration is not a prerequisite for a criminal copyright prosecution and makes itunlawful (civilly or criminally) to export unauthorized copies of protected works, including copies ofphonorecords, from the United States. In addition, the law amends Section 506 of the Copyright Act toprovide for the forfeiture of any property used to commit or facilitate the commission of a criminal offenseinvolving copyrighted works.

The Act creates a new enforcement paradigm for the federal governments efforts to combat

counterfeiting and piracy. For example, it creates an Intellectual Property Enforcement Coordinator(IPEC) within the Executive Office of the President. This office would be primarily responsible fordeveloping and implementing a Joint Strategic Plan against counterfeiting and piracy and the coordinatorwould serve as a principal advisor to the President on domestic and international intellectual propertyenforcement policy. The Act also provides for improved investigative and forensic resources forenforcement of laws related to intellectual property crimes and allocates additional funding for resourcesto investigate and prosecute intellectual property crimes and other criminal activity involving computers.

11. Feds Crack Software Piracy Rings

Two-year probe targeted international groups illegally distributing software, games, and movies

online.

ByTodd R. Weiss,Computerworld Dec 13, 2001 10:00 am

A two-year federal investigation into international software piracy over the Internet culminated earlier thisweek in the serving of more than 100 search warrants against suspects allegedly involved in piracysyndicates.

In an announcement, the U.S. Department of Justice saysthree separate federal investigationsover the past two years had targeted international groups that illegally distributed pirated
http://www.pcworld.com/author/Todd-R.-Weisshttp://www.pcworld.com/author/Todd-R.-Weisshttp://www.pcworld.com/author/Todd-R.-Weisshttp://www.computerworld.com/http://www.computerworld.com/http://www.computerworld.com/http://www.pcworld.com/news/article/0,aid,57883,00.asphttp://www.pcworld.com/news/article/0,aid,57883,00.asphttp://www.pcworld.com/news/article/0,aid,57883,00.asphttp://www.pcworld.com/news/article/0,aid,57883,00.asphttp://www.computerworld.com/http://www.pcworld.com/author/Todd-R.-Weiss


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As part of the U.S. Governments efforts to create jobs for American workers and increase U.S.exports to overseas markets, I recently travelled to Europe to press for greater cooperation infighting intellectual property theft overseas, which hurts innovators and brands here inAmerica. Counterfeiting and piracy is a global crime, and it requires a global solution.

At the World Copyright Congress in Brussels, I spoke about the need to work with foreign

governments and the private sector to stop criminals who attempt to evade intellectual propertylaws by operating overseas. In Brussels, I met with members of the European Commission andEuropean Parliament, as well as American businesses. In London, I met with members of UKsParliament and the UK IP Crime Group, a group of enforcement agencies and industry groupswhich seek a collaborative approach to fighting intellectual property crime.

This collaborative approach, working with the private sector, is something that my office has beenengaged in here in the U.S. Over the last several months, my office has been working closelywith Internet Service Providers, advertisers, credit card companies, payment processors, searchengines, domain name registrars and registries taking voluntary action against online piracy.These private-sector companies, as well as foreign governments, recognize that we all have astake in maintaining a safe and secure global marketplace. I welcome their cooperation and willcontinue to engage with them as we fight worldwide counterfeiting together.

Victoria Espinel is the U.S. Intellectual Property Enforcement Coordinator. -------------

12. Cass S. Patrolling the Web for Pirated Content. Technology Review[serial online]. January

2010;113(1):63. Available from: MasterFILE Premier, Ipswich, MA. Accessed August 6,

2011.

Case Study with company Attributor and the MDCA. Attributor was founded in 2005 to find unauthorized

uses of the clients copyrighted works on the internet, so that the work can be taken down or properly

attributed.

13. Gregor Urbas. (2006). Cross-national investigation and prosecution of intellectual

property crimes: the example of "Operation Buccaneer". Crime, Law and Social

Change, 46(4-5), 207-221. Retrieved August 6, 2011, from Law Module. (Document

ID: 1255296681).

Operation Buccaneer was the name given to a law enforcement operation against DrinkOrDie, a highlyorganised but globally dispersed Internet-based software piracy group. The concerted enforcementaction, led by the US Customs Service and Department of Justice, extended to several Europeancountries and Australia. This paper contrasts the legal consequences that flowed, with numeroussuspects pleading guilty in the United States, some contested prosecutions in the United Kingdom, and asole Australian suspect facing extradition to the United States to face charges. Operation Buccaneerillustrates the cross-national reach of both Internet-based intellectual property crime and the lawenforcement response, as well as some of the complexities that arise in applyingjurisdictional concepts such as the double criminality requirement for extradition in this evolvingprosecutorial landscape.

14. RIAA - Recording Industry Association of America - April 10, 2011,http://www.riaa.com/

The RIAA is the industry that is most concerned and vocal when it comes to piracy in the music industry.The RIAA website details the effects and consequences with regards to piracy. Contained within thisarticle are the statistics of how piracy negatively impacts the recording industry. This website is relevantin my research because it contains the facts of information that will help me prove the effects of piracy inthe music industry.
http://www.riaa.com/http://www.riaa.com/http://www.riaa.com/http://www.riaa.com/


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15. Pruitt, Scarlet. MPAA: Movie Piracy is the New Plague. PC World. 9 July 2004. 1 April

2011.

This article outlines the increasing trend in peoples use of the internet or other options in order to illegally

watch movies. It contrasts the effect of rising ticket prices on the consumers that actually go to themovies and spend the money versus going on the internet and downloading or streaming movies. Itidentifies the worrying trends that the movie industry is facing and the estimated effects that these trendswill have on movies.

16. Sandoval, Greg. Feds raise questions about big medias piracy claims. C -Net News. 12April 2010. 1 April 2011. .

The purpose of this article details the government study of piracy and compares it to claims that weremade by the various media regarding the actual effects of piracy in terms of costs and damages. Thefinding by the Government Accountability Office questions how the media actually came up with the costsand damages that piracy has on the industry. The Government Accountability Office had also stated thatthere was a possibility that piracy did not effect to the economy as badly as thought by media industryand the consensus is that more investigation is needed as more questions needed to be addressed.

17. James D. Torr. "Introduction." At Issue: Internet Piracy. Ed. James D. Torr. San Diego:Greenhaven Press, 2005. August 2004. 2 April 2011. .

This article examines piracy and the media including its history and how piracy of media became about,beginning with VHS and tapes. It also does a good job of defining piracy in all its form as well as gives alook in the evolution of piracy software programs on the internet and their effects. It looks at how the waysthe MPAA and RIAA are trying to fight piracy as well as what those individuals who copy media are usingas their rationale when it comes to the court systems and prosecution.

Sources:

Treverton, G.F., & Matthies, C., & Cunningham, K.J., & Goulka, J., & Ridgeway, G., & Wong, A.

(2009) Film Piracy, Organized Crime, and Terrorism. Retrieved fromhttp://www.rand.org/content/dam/rand/pubs/monographs/2009/RAND_MG742.pdf

Kavets, D. (2009 March 3). Hollywood-Funded Study Concludes Piracy Fosters Terrorism.

[Supplemental Material] Wired.com. Retrieved from

http://www.wired.com/threatlevel/2009/03/hollywood-funde/

Gralla, P. (2008, April 2). Seeing through windows [Web log post]. Retrieved from

http://blogs.computerworld.com/feds_lie_about_link_between_software_piracy_and_terrorism

Kravets, D. (2011, July 22). RIAA Litigation [Web log post]. Retrieved from

http://www.wired.com/threatlevel/category/riaa-litigation/

Sources:

i King, J. (2009, September 14). Gotcha! Pursuing software pirates. Retrieved August 20, 2011, from

Computerworld: http://www.computerworld.com/s/article/print/342035/Gotcha_Pursuing_software_pirates?

iiKing, J. (2009, September 14). Gotcha! Pursuing software pirates. Retrieved August 20, 2011, from

Computerworld: http://www.computerworld.com/s/article/print/342035/Gotcha_Pursuing_software_pirates?

iiiGarrys Mod catches pirates the fun way. (2011, April 12). Retrieved August 20, 2011, from

www.gamepron.com: http://www.gamepron.com/news/2011/04/12/garrys-mod-catches-pirates-the-fun-way/
http://www.pcworld.com/article/116842/mpaa_movie_piracy_is_the_new_plague.htmlhttp://news.cnet.com/8301-31001_3-20002304-261.htmlhttp://www.rand.org/content/dam/rand/pubs/monographs/2009/RAND_MG742.pdfhttp://www.rand.org/content/dam/rand/pubs/monographs/2009/RAND_MG742.pdfhttp://www.wired.com/threatlevel/2009/03/hollywood-funde/http://www.wired.com/threatlevel/2009/03/hollywood-funde/http://blogs.computerworld.com/feds_lie_about_link_between_software_piracy_and_terrorismhttp://blogs.computerworld.com/feds_lie_about_link_between_software_piracy_and_terrorismhttp://www.wired.com/threatlevel/category/riaa-litigation/http://www.wired.com/threatlevel/category/riaa-litigation/http://www.wired.com/threatlevel/category/riaa-litigation/http://blogs.computerworld.com/feds_lie_about_link_between_software_piracy_and_terrorismhttp://www.wired.com/threatlevel/2009/03/hollywood-funde/http://www.rand.org/content/dam/rand/pubs/monographs/2009/RAND_MG742.pdfhttp://news.cnet.com/8301-31001_3-20002304-261.htmlhttp://www.pcworld.com/article/116842/mpaa_movie_piracy_is_the_new_plague.html


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final paper - group 2 - computer software piracy trends and issues in the united states

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