New Product Features Help Combat Software Piracy

An edge-to-edge hologram and product-specific graphics cover the entire surface of the CD-ROM, ensuring Microsoft authenticity.

REDMOND, Wash., Feb. 10, 2000 — The role of victim and unknowing partner in the growing world of software piracy can fall into nearly anyone’s lap, according to Microsoft’s lead investigative team that traces the work of criminals seeking to dupe consumers. The work of software pirates has not only placed consumers at risk of being fooled on the Internet and in retail settings, but has also seeped into the distribution channel, touching everyone from the manufacturers to system builders.

With the new anti-piracy features in Microsoft Windows 2000 and the latest version of Office 2000, consumers at every level now have additional tools to protect themselves from software piracy that can stem from organized crime rings to
“Mom and Pop”
scam shops to online “warez” pirates seeking a quick buck.

“The proliferation of piracy requires us to constantly re-evaluate how people can ensure they are getting the real thing when they see the Microsoft name,”
said Jackie Carriker, group manager of anti-piracy efforts for Microsoft.
“It seems we are in a perpetual cat-and-mouse game with counterfeiters. But hopefully these features will make it more challenging for would-be pirates to make a quick buck while making it easier for customers and resellers to differentiate between genuine and counterfeit software.”

The Growing Anti-Piracy Problem

Software piracy, or the illegal copying and distribution of software, is both an individual and a worldwide problem that takes a toll on the global economy. In 1998, software piracy caused the loss of more $11 billion in revenue worldwide, according to the Business Software Alliance (BSA). That same year, software piracy cost 109,000 jobs in the U.S. alone. There are currently approximately 2 million auction and “warez” sites pushing pirated or counterfeit goods, compared to 100,000 in 1997, according to BSA estimates. In short, software piracy is a problem for everyone at every level of the distribution channel — from honest resellers to consumers.

“Consumers who believe they’re getting a great deal on software end up running the risk of a pirated copy not being able to perform,” said Rich LaMagna, Microsoft’s chief investigator.
“Whether shopping on the Web or through more traditional distribution channels, it is wise for consumers to take precautions to ensure they’re getting a genuine product. Piracy is a big business, and we’re dealing with some pretty underhanded ‘professionals.'”

Software counterfeiting has grown significantly over time, with methods changing as technology and software have advanced. As these methods have changed, so too have the efforts to combat them. In the days of floppy disks, many efforts to stem piracy were consolidated in the manufacturing of the disk, either by deliberately encoding errors on certain parts of the diskette or by physically punching tiny holes on it. The install programs on the disks
to ignore the errors or would even ensure they existed. Because the original MS-DOS disk copying programs could not translate these deliberate errors, when an install program ran from a copied disk, the install would abort. Another way to prevent copying and ensure that a user had genuine software was to require the first installation disk to be in the floppy drive whenever that program’s .exe file was started. As is the case today, these types of technical methods can stem counterfeiting attempts by average users. However, malicious technical
spend their days attempting to debug or hack their way around such systems, and unfortunately, they are frequently successful.

When CD-ROMs came along, it became slightly more difficult for manufacturers to devise anti-piracy triggers. In many cases, they relied on specific product key numbers, noted only on the CD case or on the outside of the packaged box, for single registration purposes. Unfortunately, because CD
has become commonplace and disks are easy to copy, it now becomes equally as important to add intricate physical anti-piracy features, like holograms, to Microsoft products and packaging to ensure authenticity. Because no anti-piracy method is 100 percent foolproof, and software pirates remain well-funded and technologically savvy, staying one step ahead of them remains a constant challenge.

Today, counterfeiters increasingly use the Internet to distribute pirated software, often advertising their products with deceptive inventory explanations to fool consumers into believing they are getting a great deal on a genuine product that was overstocked or otherwise deserved to be discounted. Because of this unique medium, in which customers do not actually have the opportunity to see the product they are licensing, it becomes more difficult to recognize if the product has been peddled by pirates.



Version of Anti-Piracy Features

To crack down on this growing problem, Microsoft is launching an aggressive Internet monitoring program that specifically addresses sites that post Microsoft software for illegal downloading. Monitoring various Web sites, including auction sites, around the clock will help to cripple the efforts of pirates seeking to make a quick buck, and prevent more consumers from being duped by a download price that looks, and often is, too good to be true. In January alone, Microsoft took down over 100 sites posting illegal downloads of Windows 2000 and will be aggressively continuing to monitor and immediately shut down similar sites.

To further protect the integrity of its products, Microsoft will also include a variety of new anti-piracy features in retail and original equipment manufacturer (OEM) versions of Windows 2000 Professional and the next service release of Office 2000. All of the features are intended to increase value for customers, maintain the integrity of the distribution channel and protect Microsoft’s intellectual property.

Microsoft will ship Windows 2000 Professional and the first service release of Office 2000 as packaged products with an edge-to-edge hologram covering the entire surface of the product CD-ROMs. When tilted in the light, the hologram displays the product name and product-specific graphics from the hub to the outer edge of the CD-ROM. The graphics etched directly into the CD identify the appropriate Windows 2000-specific products, including Server, Advanced Server, Professional and Data Center. The complex visual also identifies the sales channel method, such as
“OEM,” “Retail Upgrade,” “Full Packaged Product”

The edge-to-edge hologram is a patented technology developed by 3DCD, a joint venture of Applied Holographics PLC and Nimbus CD International Inc. The technology involves incorporating the complex holographic images into the surface of the disc as part of the CD manufacturing process.

A Certificate of Authenticity (COA) label — with more security features than any currency in the world — is included with every genuine Microsoft product.

Windows 2000 software distributed through the channel with new computers will also include a new peel-and-stick Certificate of Authenticity (COA) label that must be placed on the system in an easy-to-find location, such as the computer tower. Retail versions of Windows 2000 will include a slightly different version of the COA label on the spine of the retail box. The COA label, which includes more security features than any currency in the world, has four overt technologies that confirm its authenticity to both customers and channel partners. These include:

  • A copper, holographic, interwoven thread revealing the words

  • The product-specific name printed on the center of the label;

  • A unique product key in the center of the label; and

  • The Microsoft logo, which changes color between gold and silver when tilted in the light.

Following a successful two-year pilot program, the Office Registration Wizard will be included in the next service release of retail versions of Office 2000 in the U.S. to help prevent illegal installations of the software. The Registration Wizard is easy for customers to use — they need only to provide the name of the country in which they reside to receive an automatically generated installation number that confirms registration. No personal information is required. If a customer prefers, he or she can register anonymously via e-mail, the Internet, postal mail, fax or telephone. This technology will not impact customers with a volume license agreement.

Software Piracy: A Cross-Industry Problem

The software industry has not been alone in attempting to protect its intellectual property and the quality of its products for consumers. Indeed, industries with similar claims on copyright ownership — including film, music and literature — have come up against counterfeiters and unknowing or misinformed consumers who aid in the illegal distribution of a product. Their efforts to thwart illegal copying have met with mixed success.

In the music industry, for example, Digital Audio Tape (DAT) machines became an agent of copyright infringement, used to make copies of music CDs at perfect quality levels. To stem the problem, coding was written to the DAT to prevent mass copying.

These days, the recording industry finds itself in the difficult position of swimming against the MP3 tide. MP3 is a music file format that makes it easy to store tunes on a hard drive and trade them with others. As with software, users find common sites where there is either a link or direct access to a product. Listeners simply have to download the product in the MP3 format, creating a situation where listeners could unknowingly break the law by infringing on the copyright protection that rightfully belongs to a songwriter or recording artist.

Singer and songwriter Michael Bolton recently spoke to Broadcast Music Incorporated (BMI) on behalf of copyright protection, saying,
“Songwriting royalties put food on the table long before my first hit as a recording artist. That’s a pretty typical story in our business. Don’t stifle the next generation of songwriters.”

Efforts to stem counterfeiting will continue for decades to come, Microsoft anti-piracy experts say. As technologies change, so will the anti-piracy features. To ensure the continued growth of the technology and software industries, customers should attempt to prevent counterfeiters from stealing genuine products, Microsoft officials say. And Microsoft remains committed to the education and enforcement needed to aid customers and channel partners at every step.

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