eBay’s latest marketing campaign proclaims it’s “better when you win it” and encourages bidders to “shop victoriously,” but when it comes to buying and selling software on the online auction site, it’s the vendors that are doing all the losing.
A full 35 percent of all software installed on personal computers last year was pirated, according to IDC, meaning more than $40 billion in legitimate sales were lost to shady characters hawking their ill-gotten wares on the streets of Shenzhen or at flea markets in Des Moines or, more and more every day, at everyone’s favorite place to “win” online: eBay.
Partly because of the efficiency and anonymity of the process and partly because of eBay’s highly popular “Buy It Now” transaction option, software pirates are moving a staggering amount of stolen or counterfeit software through the site to buyers who are apparently oblivious, indifferent or both.
And the situation, according to investigators, is so out of control, nobody can offer up even a reasonable guesstimate as to how much illegal software is sold each day, month or year on the site.
Vendors aren’t stupid and they’re none too pleased by this development, but they and the authorities can’t seem to do much to stem the flow of illegal software because they’re constantly playing catch-up to professional crooks who set up multiple—sometimes hundreds, maybe even thousands—seller IDs.
Whether it’s Microsoft Windows Vista or Symantec Norton Utilities or Adobe Photoshop, eBay bidders can pick and choose the software they want, make a bid and conclude the sale in minutes, leaving nothing but a trail of useless feedback comments and empty links behind.
Stepping to the fore in this decidedly uphill battle is the Software and Information Industry Association (SIIA), a trade association representing more than 800 software and digital content companies, of which maybe two dozen are active members.
The trade association in May 2005 launched what it calls its Auction Litigation Program to monitor eBay—and to a lesser extent smaller niche auction sites and rogue Web sites—to identify individuals and groups selling pirated software online.
“There’s a lot of money to be made in illegal software,” Keith Kupferschmid, the SIIA’s senior vice president for intellectual property, said in an interview with InternetNews.com. “It’s a combination of stolen software or OEM software that’s somehow not sold with the hardware. Sometimes it’s academic software. Sometimes it’s counterfeit. Usually it’s being sold by an individual who’s just trying to make a buck.”
One particular individual, Bob Tarkens of San Francisco, fell into the SIIA dragnet.
Although it’s too early to say whether Bob Tarkens is really Bob Tarkens or even if he really lives in San Francisco, SIIA investigators caught wind of his little scam selling Symantec software on eBay and initiated an investigation that culminated Wednesday with a lawsuit filed in U.S. District Court in San Francisco.
The suit, filed by SIIA attorneys on behalf of Symantec, alleges Tarkens managed to sell more than 1,000 pirated copies of various Symantec and other antivirus software packages in less than a year.
Some of the Symantec applications he allegedly sold, like its pcAnywhere product, retail for between $119 and $199, give or take $10 to $20. Though SIIA didn’t provide the pricing details, one can assume that, even at steep discount, Mr. Tarkens’ criminal empire netted him at least $50,000 in about a year.
The sheer volume of his enterprise, combined with his proclivity for providing the software in the Buy It Now format as well as other little clues the SIIA wouldn’t disclose made him a sitting duck for the haggard staff of four investigators patrolling eBay’s software auction section.
“We’re still not sure if he was only using one seller ID,” Jason Allen, manager of SIIA’s Internet anti-piracy group, said in an interview with InternetNews.com. “He was a power seller who completed one or more sales a day.”
Allen said his team of investigators estimate about 75 percent of all software on eBay is sold through the Buy It Now option.
“It’s popular even for people who aren’t doing anything wrong,” he said. “But the problem is someone can put the software up there and then it can be gone in a second. Sometimes we don’t even have time to notify eBay to take the listing down before it’s already gone.”
eBay’s Baby Steps
Nichola Sharpe, a spokeswoman for eBay, said the company takes counterfeiting and pirating seriously and points to the company’s Verified Rights Owner (VeRO) program, established in 1998, as an example of how it’s fighting back against the criminal element.
“We collaborate with the rights owners,” she said in an interview with InternetNews.com. “The door is always open. Through the VeRO program, SIIA and other rights holders report it to us and we take it down. Counterfeiting is illegal and harmful to the marketplace and for us it’s all about the customer experience.”
But in the press release announcing the Tarkens lawsuit, SIIA went to some effort to make it clear that VeRO alone wasn’t cutting it.
“Current strategies, such as taking down auctions through eBay’s Verified Rights Owner program, have not adequately remedied the problem,” the SIIA said in its release.
Allen was more direct.
“It never seems like (eBay) is out on the forefront of things,” he said. “It took them a long time to implement filtering that keeps certain brands and products from even being available on the site. It took them a long time to prevent people from registering to buy or sell on the site without a credit card or PayPal account. They’re always a step behind.”
eBay’s Sharpe said the company this time last year initiated some filtering provisions and limited the number of one- and three-day auctions for luxury goods. She said these additional security measures were extended to the software category in the spring of this year.
However, the Buy It Now purchasing format—preferred by crooks and squares alike—is still used as much or more than it ever has to buy software applications.
In an e-mail late Thursday, Sharpe wrote that eBay hasn’t banned the Buy It Now functionality because the company feels the seller restrictions it says it has already implemented—elimination of one-day and most three-day auctions, required PayPal verification and volume restrictions on the number of items an individual can sell—will “significantly reduce the opportunity of potential counterfeiters to abuse Buy It Now.”
She added that “one of the restrictions is around volume limits so this obviously reduces the amount of items for sale an individual seller can list within a set time period. This limits the amount of sales activity before a rights owner, or eBay, detects and removes the suspected counterfeit item.”
To the SIIA, this explanation is less than satisfactory.
“If eBay agrees that getting rid of one- and three-day auctions is part of the solution, why are they still allowing Buy It Now?” Kupferschmid said. “The reasoning is very inconsistent.”
The SIIA said it will be rolling out at least two new programs before year’s end focused more on advising buyers on potential tip-offs and the consequences of buying purloined software. They will also provide educational information for legitimate sellers who may or may not know about vendor policies and procedures regarding the resale of their intellectual property.
In the meantime, SIIA investigators will remain on watch and its attorneys will be filing more and more lawsuits in the months ahead.
“We’ve made some big strides and have been doing a lot of work for the past two years,” Allen said. “We’ve made a little dent. We need to keep up the pressure and follow through with other new initiatives that will bring attention to the issue.”