Feds Bust Silicon Valley Software Piracy Ring

More than two-dozen people were arrested in the Silicon Valley Thursday after FBI and other local law officials cracked down on what they are calling an international software piracy ring.

The arrests, dubbed “Operation Cyberstorm” of mostly Taiwan citizens centered on pirated versions of Microsoft Office 2000 and Microsoft Windows NT as well as Adobe Systems Photoshop, Adobe Illustrator and Adobe Go-Live.

The sting involved sites from Seattle to Los Angeles, but mostly centered in and around San Jose. The charges range from criminal copyright infringement to trafficking in counterfeit goods and money laundering.

During a press conference Friday, FBI Director Robert Mueller said the software was duplicated in Taiwan and then sold in the states.

The two-year old investigation involved the Internal Revenue Service, 127 agents and detectives. Most of the arrests were made at homes and businesses including Fremont, Calif.-based Samtech Research, Beyond2K and Marlin Trading.

According to court records, the suspects used private mailboxes at Mail Boxes Etc. stores in the San Francisco Bay area as the place to receive and sent the pirated software.

Bail was set as high as $50,000 for nine of the defendants who made their appearance in a San Jose federal courtroom late Thursday afternoon.

International piracy has become big business and a big headache for companies and law enforcement alike.

Figures released by the International Planning & Research Corp. in 2001 show online piracy cost U.S. software makers $2.6 billion in 2000, $11.8 billion worldwide. Pirated copies of Microsoft’s products have cost the company an estimated $75 million.

“We are immensely appreciative of the collective efforts of law enforcement in breaking this case,” said Rich LaMagna, manager of worldwide investigations for Microsoft. “At a time when our nation’s economy is struggling, steps to protect intellectual property have perhaps never been more critical. The FBI’s leadership and the hard work of all the federal, state and local law enforcement agencies is a testament to what can be accomplished when there are talented and dedicated professionals working as a team to stop a highly organized criminal conspiracy.”

Illegal over-the-counter sales have not solely contributed to the problem. The report also shows online piracy is on the decline, the result of lower software prices and increased distribution throughout the world. North America, home to most of the PC software developed, ranks dead last in online piracy, at 37 percent.

A simple Internet search for the phrases “warez” or “appz” is testimony to how easy it is to download pirated versions of popular software.