Intellectual Property

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					Intellectual Property: Software Piracy and The Theft Of Copyrighted Material In The Technological World

A treatise by Timothy Petitte October, 2004

This publication endeavors to illustrate the nature of illegal copying of computer-based media as it evolved in recent years and as it stands today. Growth, adaptation and hierarchical formations of digital theft over the past few years will be analyzed to attempt to describe how widespread, even common, piracy has become in all parts of the world.

In what many people term the Information Age, in the current decade it is fair to say that computers power the world. The popularity of personal computers (PCs) in all first-world countries puts a machine in most offices, homes, schools and dormitory rooms. Driving every one of these machines are countless software titles and media forms, the need for which adds countless billions of dollars into the economy. Where there is money to be made, theft is sure to follow, and when dealing with devices who inherently possess the ability to reproduce their own valuable assets, software theft, or "piracy" as a more general term, is especially common. This paper will attempt to describe the who, what, where and whys of the state of piracy in recent years and should convince any reader who believes in the power of law enforcement to end it that matters are far from simple. First, "how." Piracy as an organized effort has existed since the advent of modems in the mid nineteen eighties. In days when the primary storage media was floppy disks, hard drives were a rare luxury, and modems were slow and equally uncommon, there was not yet any such concept as copy protection. Major titles from business software companies such as Microsoft (makers of DOS and programming tools back then) and Corel (Word Perfect) as well as any new games would be compressed into archive files such that each disk, regardless of its contents, was packed into a single file, and uploaded to BBSes (Bulletin Board Services) who allowed illegal materials. Users of these services who lived near boundaries of telephone area codes, and as such could dial numbers on the other side free of charge, would download from these sources and then upload to others across the border. In this fashion, these "couriers" as they were termed, would spread files to every other BBS across the entire United States over the course of a few days. Pirating in this form was very much a small, niche style of black market comprised of privileged individuals who knew where to find such services. Nevertheless, the foundations were laid. Fast forwarding a few years to the late nineties when the Internet was maturing quickly, the increasing availability of permanent high-speed data lines allowed for much faster file transfers and instant communication without any geographical limitations. Anyone in a city with the emerging cable internet connections or a well-funded college with a networked campus could now run a far faster, more efficient server using FTP, the most basic File Transfer Protocol used on the Internet. The BBSes of yore quickly fell by the wayside as superior solutions were developed. Eventually, programs which allowed direct server-to-server file transfers were created, eliminating the need to download a copy before sending. With this advancement, couriers were no longer limited by the speed of their personal connections and could therefore transfer files anywhere in the world in a fraction of the time. This is the system still in place today. With present day line speeds offering the possibility of servers operating at one hundred megabits or even more, large business applications such as Microsoft Office or the latest Adobe image editors can circle the entire globe in a matter of minutes. However, what is described above represents only the top level of distribution. Although all things grow with time, it is still akin to the closed, privileged society of BBS members and by no means readily accessible to most people. After all, if it were, it would be easily infiltrated and shut down by law enforcement agencies, and that does not happen often. (More on that later.) This brings up question of "who." It is true that there are many talented programmers in Russia, Asia, and poor eastern European countries who specialize in breaking copy protection, and their work is actually quite readily available to the public on the World Wide Web. They provide serial numbers, small programs to generate serial numbers, and modified program files with the application's code for requesting authorization removed, all freely downloadable from numerous well known web sites hosted in countries with few or no laws against such material. But, these are small files which require a person to already have a copy of the software at hand, whereas the private servers described above provide complete copies. Therefore, contrary to popular belief, Russia and Asia are not the primary sources of illegal software. In fact, the majority of it originates from the United States where the most interesting and lucrative material is produced and is logically the easiest to obtain. On the question of "who," original discs are frequently acquired by employees of retail stores or even the software publishers themselves, often giving them the ability to send out a pirated copy before products are available on store shelves, let alone shipped to foreign countries. A particularly high profile example of this occurred in 2001 when Microsoft announced Windows XP, their flagship operating system. It was pirated several weeks before the official launch date. Untold thousands of copies were made before the company made a single dollar. (See Figure 1, next page.) From a United States Department of Justice (DOJ) press release regarding piracy: ...organizations, known as “warez” release groups, that specialize in the Internet distribution of pirated materials. Release groups are the first-providers - the original source for most of the pirated works traded or distributed online. Once a release group prepares a stolen work for distribution, the material is distributed in minutes to secure, top-level warez servers and made available to a select clientele. From there, within a matter of hours, the pirated works are further distributed throughout the world, ending up on public

channels on IRC and peer-to-peer file sharing networks accessible to anyone with Internet access. ( It should be quite clear by now that the recent efforts of the RIAA (Recording Industry Association Of America) to slow the flow of pirated music over peer-to-peer networks was a naive and futile effort. The professional-level servers are also the origin of enormous amounts of music, movies, and games, all pirated before official release dates the same way software is, but this did not seem to concern them. Their approach to discourage Americans from sharing music for free was to sue individual downloaders; average citizens looking for little more than the latest pop music album, who have no awareness at all of the professional thieves who originally produced the files. The thoughtlessness of the Association's actions spoke for itself when it was revealed that they were also suing twelve year old children, and old ladies who did not even own computers - and not even dropping such frivolous suits when they were found. To find fruitful anti-piracy efforts, one must look to the massive resources and coordination of the United States FBI (Federal Bureau of Investigation), DOJ (Department of Justice) and InterPol (International Police). Armed with the knowledge presented here, their specialists knew that the only way to harm a community of organized crime was the infiltrate it and attack from the inside. To this end, Operation Buccaneer was started some time in the year two thousand. Agents from these organizations quietly joined this community, gaining accounts on large servers and even creating some of their own for entrapment purposes. On December 11, 2001, they struck, arresting high-level members and confiscating computers all over the world. From the official DOJ press release that day: WASHINGTON, D.C. - Attorney General John Ashcroft announced today that in three separate federal law enforcement actions, federal agents executed approximately 100 search warrants worldwide against virtually every level of criminal organizations engaged in illegal software piracy over the Internet. The three Operations, codenamed "Buccaneer," "Bandwidth" and "Digital Piratez," struck at all aspects of the illegal software, game and movie trade, often referred to as the "warez scene." The targets of these Operations included both individuals and organizations, known as "warez" groups, that operate within the United States and in various nations around the world and specialize in the illegal distribution over the Internet of copyrighted software programs, computer games and movies. ( These operations were executed simultaneously in the United States, Canada, England, Australia, Norway, Finland and more countries. Several dozen arrests were made, and at least one hundred twenty computers, many with storage capacities exceeding a thousand gigabytes, were taken. In addition, since the community is tightly knit and in constant communication, anyone who was not arrested on that day shut down their operations temporarily to avoid scrutiny and detection in the immediate future. To illustrate the extensiveness of the pirate community and the impact of these operations upon it that day, observe Figure 2 on the following page. The Internet Traffic Report is a web site which continually polls data links all over the world to determine the overall amount of activity of all Internet based communications. On the night in question, traffic in North America, Europe, and indeed worldwide swiftly dropped to one quarter of its normal values. That is to say that the trafficking of illegally copied data accounted for no less than three quarters of all information transmitted over the Internet on that day. While this was a severe blow to data theft, having struck some of the most productive pirates in the world, most others either resumed normal operations with heightened security weeks later, or were eventually supplanted by newcomers. A similar barrage of law enforcement operations occurred again on April 22, 2004. Operation Fastlink is the culmination of four separate undercover investigations simultaneously being conducted by the FBI, coordinated by the FBI Cyber Division, and the U.S. Department of Justice... As a result of Fastlink, over 120 total searches have been executed in 27 states and in 10 foreign countries. Foreign searches were conducted in Belgium, Denmark, France, Germany, Hungary, Israel, the Netherlands, Singapore, Sweden, Great Britain and Northern Ireland. Conservative estimates of the value of the pirated works seized easily exceed $50 million. Conservative projections of the losses to industry attributable to these distribution hubs are in the hundreds of millions of dollars. (

This time, at least two hundred computers were seized, now containing several thousand gigabytes of storage apiece, as well as new arrests of high-level individuals. Presumably the Internet Traffic Report, still in operation, witnessed a similar drop in usage. And, normal operations have long since resumed in the same manner as before. This pattern seems likely to continue indefinitely. There is a point of irony to all of this that must be mentioned. While piracy may lose software companies a great deal of money, it has fueled the hard drive, CD writer, and now DVD writer industries in ways that no legitimate use does. The need to store all of this illegal material has generated an unprecedented and unrivaled demand for data mediums. At the time of this writing, the largest hard drives on the market have a capacity of four hundred gigabytes, with drives up to two hundred gigabytes being in the affordable sub-one hundred dollar price range. There are few legal activities which would consume anywhere near this amount, with typical usage of a business or family PC requiring less than ten gigabytes to hold an office application suite and a few games. However, because of the price points and ease of production, most new PCs come equipped with drives in the forty to eighty range. Anyone craving more can easily add a second or third drive to any machine, and many do. The dedicated servers described earlier can easily contain a dozen hard drives apiece. In addition, CD writing drives ("burners") have become a standard feature to be found in every home, and DVD writers, capable of holding roughly six times as much data, are quickly gaining popularity. Certainly not all of these are being used solely for creating music discs as the RIAA would like to believe. It is impossible to calculate how many millions of dollars have gone into the storage industry thanks to piracy. What about the penalties of being caught? In regards to companies who are found to be running unlicensed software in the workplace, the BSA (Business Software Alliance) has this to say: If the copyright owner brings a civil action against you, the owner can seek to stop you from using its software immediately and can also request monetary damages. The copyright owner may then choose between actual damages, which includes the amount it has lost because of your infringement as well as any profits attributable to the infringement, and statutory damages, which can be as much as $150,000 for each program copied. In addition, the government can criminally prosecute you for copyright infringement. If convicted, you can be fined up to $250,000, or sentenced to jail for up to five years, or both. ( The BSA focuses on companies who have not properly paid for multiple licenses if programs running on their office computers, rather than chasing after the kinds of people so far mentioned. For this, they have an "audit tool," an application which checks all software on a computer for proper registration. This tool is run by whistleblowers inside some companies and done via random audits of suspected ones. When improper copies are found, the business in question pays a hefty fine to the BSA, often in the hundred thousand dollar range, to avoid the legal action specified above and receive good licenses and an official blessing from the BSA that their computers are now clean. Another interesting aspect of intellectual property is the realm of Abandonware. This term refers to software which is no longer being sold or supported by the copyright holder. The term is also used for software which is still available, but for which support and development have been discontinued. Strictly speaking, transfer of this software is unlawful in most jurisdictions, as the copyright is still in effect. Abandonware changes hands based on the presumption that the time and money that a copyright holder would have to spend enforcing it is greater than any money the holder could earn selling new licenses. Most commonly, Abandonware web sites focus on classic games. Old favorites of the nineties such as Dune, Ultima, Lemmings and Civilization are easy to find. Emulators exist for all old console systems such as the original Nintendo, Atari, and Sega entertainment systems, and most of the games ever made for these systems are also available for download. Hopefully it is clear by now that as long as there is money, there will be theft, and that this is especially true of computer-based data. It seems highly probably that the current state of affairs will continue for years to come. For every FBI agent valiantly fighting crime, there is an equally talented and skilled pirate fighting back. Both they and average people at home will always love getting things for free, and no amount of law enforcement will cure that.

About The Author I am an undergraduate at Binghamton University studying for a B.S. degree in computer science, expecting to graduate this semester. I have had a love for computers since the first grade, when my classroom owned a classic Apple IIGS. We learned basic procedural thinking and logic using a simple educational drawing program named LogoWriter, which involved writing scripts to make an animated turtle move in a desired pattern. My family bought one of these machines a year later to encourage my interest in technology, and that it did. The usefulness of a 1980s era computer was very limited until I obtained my first modem in 1993. Throughout junior high and high school, I joined several (legitimate) BBSes, which served as my introduction to online games, chatting and e-mail long before the Internet became popular. The transition to the Internet a few years later was therefore an easy one. In 1995 in high school, I built a new computer; a 486-based PC system for which I mail-ordered all of the components and assembled myself. Since then, I have regularly read hardware-review web sites and similarly custom built my own new machines roughly every two years to stay current with technology at minimal expense. Currently I enjoy watching and recording television through a TV Tuner card in my computer, plus playing first person shooter and real time strategy games against my friends. I am most interested in networks and computer security, and hope to be able to pursue these in the field after graduation. My original Apple IIGS is still in perfect working order, but is currently stored at my grandmother's house for lack of any real use. --