Microsoft’s Counterfeit Auction Dragnet

Using online auctions to hawk counterfeit software hasn’t paid off for dozens
of alleged sellers named by Microsoft .

In its largest effort so far, the software giant said it filed suit against
50 online dealers who used eBay and other Internet
auction sites to sell counterfeit products to unaware consumers and
businesses.

The U.S. topped the focus of the worldwide enforcement effort with 15 legal
auctions. Others include 10 each in Germany and the Netherlands with five
online dealers named each in France and the U.K., according to a statement.

Microsoft said there are also proceedings in Argentina, Belgium, Korea,
Mexico and Poland.

Before filing the lawsuits, the defendants had been sent cease-and-desist
letters, as well as the items removed from the online auction site,
according to a statement.

In all cases, it was found the sellers had engaged
in copyright and trademark infringement, according to Microsoft.

Microsoft intervenes in about 50,000 eBay software auctions each year that
are viewed as involving copyright infringement. The software maker said more
than 50 percent of discs its purchased on eBay were suspect for one reason
or another.

More than a third of the time — 39 percent — the software giant said its
purchases were counterfeit while another 12 percent was either counterfeit
or had been tampered with.

“It is simply not worth putting your personal and confidential information
at risk to save a few dollars on software,” Matt Lundy, Microsoft’s senior
attorney, said in a statement. “It can cost much more in the long run.”

A single incident of
malicious software could cost an organization more than $1,000 for a single
workstation, according to IDC. The price of lost or compromised data could
reach $10,000 per incident, according to researchers.

Lundy said counterfeit software auctions “are a significant problem,” and
sites such as eBay are becoming more and more popular with sellers. However,
Lundy denied auctions are to blame.

“We believe strongly in online
commerce,” he told internetnews.com.

While a large portion of online software auctions are potentially
illegitimate and the nature of auctions make purchases risky, the Microsoft
exec refused to rule out auctions as a valid source for software sales. “If
the offer seems too good to be true, it probably is,” Lundy advised.

In June, Microsoft analyzed counterfeit Windows XP disks and found 34
percent could not be installed on a computer, and another 43 percent were
altered, containing added programs or code not part of genuine Microsoft
Windows.

In 2005, Microsoft filed several lawsuits focused on the sale of counterfeit
Windows applications. In June 2005, Microsoft hit companies selling counterfeit copies of its software to consumers.

Months later, the software maker targeted resellers using its distribution channels to sell counterfeit copies.

However, Microsoft hasn’t exhausted its legal attack on counterfeiters. “Our
enforcement effort will continue.”

At the tip of Microsoft’s legal attack against software counterfeiters is
its year-old Windows Genuine Advantage (WGA)
program.

The WGA, designed to allow Windows users know if they’ve purchased
legitimate Microsoft software, has also been criticized by users because it
walls-off non-critical updates for Microsoft software that fails the WGA
test.

Microsoft said this latest round of legal action was assisted by tips
provided by consumers using the WGA program.

Earlier this year, Microsoft expanded
its ant-counterfeiting efforts to create the Genuine Software Initiative
(GSI).

Along with suing counterfeiters, the software maker said it would
invest in education, engineering and enforcement.

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