Software pirates settle with Microsoft

Software pirates settle with Microsoft

Three Auckland resellers found to be selling unlicensed software have reached out-of-court settlements with Microsoft.

The companies are TDM Technology Ltd, with premises in Howick and Henderson, operated by Ayman Franso and Nicholas Jansen (; Pars TV in Auckland’s Mount Albert, operated by Al-Huseiny Ibrahim; and PCTown, of Waitakere, run by Linjiang Yu (

Two other companies have not settled with Microsoft and the proceedings remain before the Auckland District Court.

The amounts paid by the three defendant companies are confidential, says Kevin Ackhurst, Microsoft’s New Zealand country manager. The five cases mainly involve the pirating of Windows operating systems and Office applications. The recent settlements relate to action dating back to late 2008 and are part of Microsoft’s continuing efforts to combat software piracy. Ackhurst does not know when the two ongoing cases are likely to be concluded.

The settlements follow two High Court proceedings filed in November 2008 against Auckland-based traders charged with selling counterfeit Microsoft software, probably sourced from China.

In December 2008, Reseller News reported the unrelated case of two New Zealand defendants who were able to ship counterfeit software to US customers by advertising it on Trade Me, then having the goods shipped directly to customers by the China-based counterfeiters. Those cases have since been settled in New Zealand, although the defendants are subject to ongoing cases in the US.

Ackhurst says software piracy by New Zealand resellers more usually occurs through ‘hard-loading’, where computers or other hardware are sold with counterfeit or unlicensed software pre-installed.

The software vendor says it is also concerned pirated software puts users in danger of identity theft and viruses, citing a 2006 IDC white paper (sponsored by the software giant), ‘The Risks of Obtaining and Using Pirated Software’, which estimated 43 percent of tested pirated software contained spyware, malware or other added code.

Local reseller PB Technologies says the impact of software piracy on the channel is significant, and partners want to know offenders will be investigated and prosecuted to ensure a level playing field. As well as supplying international brands (the company’s website claims it to be the largest computer store in New Zealand), PB Technologies assembles its own PCs.

PB general manager, Darren Smith, says the reseller treads a difficult line, especially when servicing customers’ computers. PB’s technicians frequently find suspect or incorrectly licensed software, but generally can’t act for fear of losing business. “We see it every day in our service department,” he says, “but we’re not the police, so we can’t police it. We’d have lots of unhappy customers if we started asking, ‘Where’s the licence sticker?’ We have to assume they’re honest.”

He acknowledges industry claims for revenue lost through piracy overstate the case, because those who use pirated software wouldn’t in any case pay for the licensed versions. “You wouldn’t get the whole lot, definitely, but you’d certainly get a percentage of it,” he says. “What the percentage would be, I don’t know but there’s no doubt that there’s lost revenue and that shouldn’t be dismissed. I’ll leave it to the business analysts to try and do the calculations.”

Smith concedes the piracy battle is unlikely ever to be won and, as such, successful prosecutions probably represent only a tiny proportion of infringements. “I don’t know that the companies doing the hard-loading are the only [pirates]. There’s a lot of sharing between neighbours and whatever, as well. But it’s important that people see there’s actually a penalty and that people are being caught. Dishonest people will always be dishonest. The police can’t catch every criminal, but they have to be seen to be catching some of them. If everyone thought it was easy to rob a bank, a lot more people would.”

Ian Booker, owner-operator of Waiuku Computers, says he doesn’t sell many PCs; instead mainly providing services to his customers, but he would be “very concerned” if he discovered unscrupulous competitors touting unlicensed products. In his experience, Microsoft’s Genuine Advantage programme is helping to reduce piracy. “Inside New Zealand things have improved because of Microsoft’s security and the way its software is registered,” he says.

Larger system builders appear not to be experiencing any ill-effects from competitors hard-loading pirated software, though. Richard Morgan, managing director of Cyclone Computers in Christchurch, says unlicensed software isn’t even on his radar. “It may well happen to small business and retail sales, but we don’t play in that market.”

In late 2005, RN reported Microsoft saying its certificates of software authenticity were being stolen and resold as new, and that the company was working with its partners to change how certificates are matched during activation. Ackhurst says this continues to be a problem for software makers.

Victims of piracy who have bought a machine with pre-installed, unlicensed software may be eligible for replacement software from Microsoft.

The vendor evaluates such instances on a case-by-case basis, Ackhurst says. “The best thing they could do is get hold of us and discuss it with us.”

Microsoft offers a confidential hotline (0800 747 229) that partners and customers can use to report suspected piracy.

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