FBI sting busts Microsoft, Symantec counterfeiters

The FBI and Chinese authorities have broken up a crime syndicate that was peddling hundreds of millions of dollars of counterfeit software from Microsoft and Symantec.

The joint operation, which was codenamed "Summer Solstice" and included members of the People’s Republic of China’s Ministry of Public Security, led law enforcement to make 25 arrests and seize more than $7 million in assets and about $500 million in pirated software, the FBI said this week in a statement.

Agents with the FBI’s Los Angeles office personally conducted 24 searches, netting them about $2 million in counterfeit software products and assets totaling about $700,000, the agency said. One of the groups, known as MA Ke Pei, sold counterfeit goods to U.S.-based distributors.

"The growing crime involving the theft of copyrighted material does not end at U.S. borders but affects the global economy," J. Stephen Tidwell, assistant director-in-charge of the FBI in Los Angeles, said in a statement announcing the arrests. "The buying and selling of counterfeit goods amounts to stealing the ideas of others and is no different than common theft, where the consequences of getting caught include going to jail and other serious penalties."

Representatives from Microsoft and Symantec, who along with their partners assisted in the investigation, today praised the busts as a sign companies and law enforcement are dedicated to protecting intellectual property.

"This case represents a milestone in the fight against software piracy – governments, law enforcement agencies and private companies working together with customers and software resellers to break up a massive international counterfeiting ring," Brad Smith, Microsoft’s senior vice president and general counsel, said.

Cris Paden, a Symantec spokesman, told today that Symantec last year filed a civil lawsuit against a number of alleged counterfeiters, seeking $15 million in damages based on lost profits. The company's own investigation helped authorities bring down the ring.

"We had been receiving reports from people who thought they were Symantec customers, saying the (pirated) disk (they purchased) was crashing their computer," Paden said. "This is a worldwide piracy syndicate. This counterfeit software, it can crash your computer, it can have trojan horses on it, and it can have spyware on it. And you can’t get updates."

Mike Dager, CEO of anti-piracy firm Arxan Technologies, told SC today that software makers should also rely on preventative technology, not only law enforcement busts, to protect their good name.

"It puts a very, very tiny dent (into the overall problem of piracy)," he said of the arrests.

The Business Software Alliance and IDC estimate that, worldwide, businesses will spend $350 billion on computer software during the next four years; meanwhile, $180 billion in PC software will be pirated. China remains one of the leading manufacturers of pirated software.

Click here to email reporter Dan Kaplan.

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