China convicts Microsoft counterfeiters to stiff prison terms

The fight against software piracy received a shot in the arm on New Year's Eve when a Chinese court convicted 11 people of violating national copyright laws and participating in a sophisticated counterfeiting ring that for years manufactured and distributed pirated Microsoft software throughout the world.

"The three primary offenders in this case violated copyright in a very serious way," according to a statement by the Futian Court, which is based in the southern city of Shenzhen. Using legal copies of software, they made counterfeit copies that were worth 305.65 million yuan ($44.3 million), the statement said.

The accused, described by Microsoft as "ringleaders of the world's largest software-counterfeiting syndicate, were given jail sentences of between one-and-a-half and six-and-a-half years after being found guilty of counterfeiting, supposedly the longest sentences for the crime in Chinese history.

They reportedly distributed over $2 billion in fake Microsoft software before being identified in a joint operation between the FBI and the Chinese Public Security Bureau, leading to a series of arrest in July 2007. In a statement, Microsoft said "evidence provided by Microsoft customers through the Microsoft [Windows Genuine Advantage] piracy reporting tool proved to be essential in tracking down this criminal syndicate." (See: Raids in China target $2-billion Microsoft software counterfeiting syndicate)

The counterfeit goods, like Windows XP and Office 2007, were sold over the Internet and shipped from China, mostly to the US and Europe, where they commanded relatively high prices, investigators say. American and Chinese officials say they broke up the criminal ring in July 2007 with the arrest of 25 people in China, the dismantling of several manufacturing facilities and the confiscation of counterfeit software valued at more than $500 million.

The counterfeit Microsoft software was produced using manufacturing equipment that costs millions of dollars, investigators said, and appeared in English, German, Italian, Korean, Spanish as well as other languages. The Chinese government found warehouses filled with molding machines, gilding machines, sealing machines and air compressors.

''This is absolutely unprecedented,'' David Finn, Microsoft's associate general counsel for worldwide piracy and counterfeiting issues, said. ''The size and scope of the operation is unlike anything we've seen before. We found their products in 36 countries.''

The software giant emphasized that its piracy-reporting tool was essential in tracking down and sentencing this particular criminal syndicate. Tens of thousands of customers identified the software they were using as fake and more than 100 Microsoft resellers helped trace the counterfeit software and provided physical evidence (e-mail messages, invoices, and payment slips) to help build the case. (See: Microsoft unveils new anti-piracy measure in China amidst strong protests)

Microsoft's vice president for the Greater China region, Fengming Liu, said, "We will continue to work with the relevant authorities in China to ensure that counterfeit software does not undermine the development of China's knowledge economy."