Busting Software Pirates

On Oct. 29th, police in Bavaria arrested a British man who had fallen asleep in his car at a service station near Aschaffenburg. Officers found Peter Murray-Cowan, 39, dozing at the wheel of an Audi so stuffed with boxes of what appeared to be Microsoft Office 97 Professional software that the car was barely drivable. Sensing counterfeit, police took both driver and 4,000 copies of one of the world's most popular business programs — worth $2 million on the retail market, according to Microsoft — into custody. Murray-Cowan, a British businessman and would-be politician who ran for local office in Suffolk in 1999, was already wanted there for jumping bail on 12 charges of infringing the trademark on Microsoft Windows. Police are weighing fresh charges in Germany against a request for extradition to the U.K. (though Murray-Cowan has not been convicted of anything).

In an unrelated case, Italy's financial police, the Guardia di Finanza, announced last week it had conducted synchronized raids across nine Italian provinces, closing down an Internet piracy ring with an estimated turnover of over $60 million a year in CDs, DVDs, pornography and high-priced software titles. Investigators say it was one of the largest-ever software piracy busts in Europe. In one instance, police had to trick the pirate before he could delete any data from his hard disk. Police said they dumped pails of water under the door to flood his home. As the suspect ran out to see what was happening, they ran in.

Three European countries, 12 suspects nabbed in two busts and tens of millions of dollars in pirated software — just another couple of weeks in the fight against the counterfeiters, who appear to be headed for another banner year, cutting into legitimate sales by billions of dollars. In 2001, worldwide losses from software piracy were estimated at $10.9 billion, with 25% of that coming from Europe. Eastern Europe is particularly notorious: an estimated 67% of all software installed there is illegitimate. But even with its traditionally strong intellectual property laws, Western Europe is having trouble coping with software crime.

The busted Italian ring "is known to have links to organized networks in other countries," according to the Business Software Alliance (BSA), an umbrella group of companies which worked with police on the operation, known as smart. The BSA says it is also cooperating with authorities in the U.K., Netherlands, Germany and Spain on similar large-scale piracy rings.

Among the loot seized in operation smart: video games and videocassettes (everything from film classics to the latest Robert De Niro flicks); counterfeit industrial cad/cam software that normally retails for $5,000 to $20,000 per title; more than 400,000 MP3 music files (recordable CDs and burned DVDs containing 80 music albums each); counterfeit smart cards to access pay satellite TV; and pornography — some of it produced by the ring, some pirated — that included pictures of children engaging in sexual acts with adults.

The Italian ring, allegedly led by a man police will identify only as a phone company employee nicknamed Robhy, was selling $60 million-worth of this stuff each year over the Internet using three Italian websites. (Visitors to those sites now see a Guardia di Finanza logo and a message saying they have been shut down.) Software attracts a wide variety of pirates, from international gangs of criminals to local thieves and enterpreneurs. "There are all kinds of people involved," says the leader of the smart raid, Commandant Mario Piccinni, who heads a specialist corps of Milan's Guardia di Finanza. "There are professionals, a baker, a factory worker and an unemployed person." All 11 suspects were charged and released. "The investigation is ongoing," says Piccinni. "It serves our purposes that these people are being released."