Microsoft-Sponsored Study Says Problems Caused By Using Windows Software Will Cost Businesses $500 Billion In 2014

from the awkward dept

The copyright industries' obsession with trying to shoot down piracy at all costs can sometimes cause them to end up shooting themselves in the foot. Here, for example, is a great example from Microsoft, which has recently been fulminating against the dangers of software piracy:

A new study released Tuesday reaffirms what we in Microsoft’s Digital Crimes Unit have seen for some time now -- cybercrime is a booming business for organized crime groups all over the world. The study, conducted by IDC and the National University of Singapore (NUS), reveals that businesses worldwide will spend nearly $500 billion in 2014 to deal with the problems caused by malware on pirated software. Individual consumers, meanwhile, are expected to spend $25 billion and waste 1.2 billion hours this year because of security threats and costly computer fixes.

The study fills out the picture with some details of the methodology (pdf):

In 2013 IDC tested pirated software from more than 550 Web and P2P sites or CDs bought in street markets to determine the prevalence of malware in pirated software. In January and February of 2014, the Department of Electrical and Computer Engineering at National University of Singapore conducted a forensic analysis of 203 PCs that were purchased from PC resellers, specialty shops, and PC markets in typical buying situations in 11 countries. Together, this research found the chances of encountering malware in a pirated copy of software is one in three. The chance of encountering malware in a PC purchased with pirated software is more than 60%.

Although the report doesn't say so explicitly, we are clearly dealing with Windows systems here -- computers are referred to throughout as "PCs," never as Macs, and some of the malware is named as "Win32/Enosch.A, Win32/Sality.AT, Win32/Pramro.F," which attack Windows systems exclusively. We can also be pretty sure that none of the infected programs was open source. Why? Because pirating software that is already freely available makes no sense -- and is certainly unlikely to be as profitable as offering black market versions of costly closed-source programs.

Putting this information together -- in order to "Get The Facts" as Microsoft always liked to say -- we arrive at the interesting conclusion that the use of commercial closed-source programs running on Microsoft Windows will cost businesses around $500 billion in 2014 alone because of the wasted time, lost data and reputational damage that will result from associated malware infections.

Assuming the research results are representative of what's happening -- and there's no reason to suppose they aren't -- the obvious conclusion to draw from them for PC users is not just to stop using pirated software (a good idea), but to stop using Windows-based programs too, and to switch to open source applications running on an open source operating system like GNU/Linux. After all, free software is even cheaper than pirated software, and yet rarely has any of the problems identified in the new report.

That's a really useful message for those facing the unwelcome prospect of paying their share of $500 billion to deal with the multiple problems associated with the Windows platform, but probably not the one Microsoft had in mind when it sponsored the research.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: copyright, infringement, malware, open source, piracy, software
Companies: microsoft

Jury Hits Michael Robertson With Estimated $41 Million Infringement Bill Over MP3Tunes

from the excessive? dept

Following last week's decision by a jury that Michael Robertson could be held personally liable for songs that he "sideloaded" into his MP3Tunes music locker via the site's Sideload.com feature, the jury has now issued a verdict so complicated that no one is quite sure how much Robertson is being ordered to pay, but it's believed to be in the range of $41 million. The verdict seems questionable on a variety of levels, not the least of which is that MP3Tunes apparently had, and followed, a clear DMCA takedown policy (which an earlier court ruling had found to be sufficient). Where this case became more complicated was over the question of whether or not the company had "red flag knowledge" of infringement and whether Robertson himself was liable, in that he'd "sideloaded" certain songs that he'd found publicly available elsewhere online into his music locker. The details of the apparently very complex ruling will be important, but anyone who runs a cloud computing service might want to pay attention to this case, as it's going to be a rather important one as it moves through the appeals process.

Filed Under: copyright, infringement, jury, michael robertson, sideloading
Companies: capitol records, emi, mp3tunes

Microsoft Enlisting Clueless States Attorneys General To Shake Down Foreign Companies For 'Piracy'

from the not-this-again dept

Almost exactly three years ago, we wrote about an effort by Microsoft to try to get various states to pass laws that would make it illegal to buy from a foreign company that uses unauthorized software. The goal was, basically, an incredibly cynical way for Microsoft to abuse overeager, grandstanding Attorneys General who want to pretend they're "helping local businesses" by blocking every other company from doing business with whoever might be the best supplier... unless they suddenly became licensed Microsoft customers. There were all sorts of problems with that idea, but over the past three years, Microsoft has apparently continued to push forward with variations on that concept -- and are now successfully getting states Attorneys' General (who have no authority over copyright issues) to shake down foreign companies with claims that they're "pirates."

In short, states Attorneys General are suing foreign companies, claiming that they're using infringing software, and claiming that this unfairly "harms" local competitors. Often, the "local" competitors have absolutely no clue this is being done in their name, or that they've even been "harmed" by a competitor they've never heard of:

The Oklahoma suit, filed in a state district court, alleges that Neway Valve Co. and affiliates, based in China, where they make valves and other equipment for oil companies, illegally obtained "copyrighted software that is crucial to the production and sale of their products," gaining an advantage over Oklahoma-based rivals.

[....]

Valve manufacturer Balon Corp., of Oklahoma City, was named by the attorney general as an injured party. That came as news to Phil Scaramucci, co-president of Balon, who said that he didn't know much about Neway and wasn't aware of the suit until he read about it in the newspaper.

In other words, this has absolutely nothing to do with protecting those local companies. They're being named in lawsuits that they don't even know about it and don't feel harmed by competitors they've never even heard of. This is all about Microsoft, yet again, abusing the legal system for its own benefit. It makes you wonder how much taxpayer money is being used to support these lawsuits.

Filed Under: copyright, infringement, states, states attorneys general
Companies: microsoft

ICE Takes To Twitter In Ridiculous Attempt To Defend Interrogating A Man In A Movie Theater For Wearing Google Glass

from the theft? dept

Earlier this week there was a report about a guy being yanked out of his seat in a movie theater for wearing Google Glass during the movie. Glass was turned off, and the guy kept them on because he had prescription lenses installed and wears them as his regular glasses. Both the MPAA and federal agents were called to interrogate the guy for a few hours, asking him a bunch of ridiculous questions until late in the night, before someone finally realized he hadn't done anything. Both the MPAA and ICE confirmed the incident happened, and yesterday folks at ICE -- who have recently been transitioned into the new Homeland Security Investigations (HSI) organization -- decided to take to their bizarrely named twitter account, @wwwicegov, to further "defend" these actions, by talking up how they're in charge of dealing with "movie theft." Because, apparently, Homeland Security Investigations doesn't understand the law, and doesn't realize that (1) infringement is not, and has never been, "theft" and (2) a dude wearing a powered-off Google Glass is not doing anything wrong. Here are the tweets: As you can see, there's a lot of ridiculousness there -- just the fact that they repeatedly refer to it as "theft," as mentioned above. The problem is that ICE's role as "the lead agency to combat piracy" is a joke. As ICE, it was supposed to focus on stopping counterfeit physical products from crossing the border. But with the help of Joe Biden and Hollywood, that mandate has been twisted repeatedly, so that what started as a very narrow mandate is now being treated as this broad mandate from an organization that doesn't even understand the issues. For years now, the group has made sure to conflate the very, very different issues of counterfeits at the border with copyright infringement, as it tries to expand its own mandate.

And now that's reached the absolutely insane point of yanking people out of their movie seats for doing nothing wrong, entirely on the say so of the MPAA -- a private group which has a long history of overreacting badly to new technologies.

What comes out of this is that ICE/HSI now appears to be incredibly gullible, falling for basically every bullshit claim from the MPAA. Just imagine if ICE/HSI had been around and had this sort of broad stupid made-up power over "intellectual property theft" during the introduction of the VCR -- back when the MPAA was declaring it illegal? ICE would be out there raiding and shutting down electronics stores for selling the devices. All because the MPAA said so.

Filed Under: copyright, google glass, homeland security, hsi, ice, infringement, movie theft
Companies: amc, mpaa

Court Dismisses Copyright Lawsuit, Noting IP Address Is Not Enough Evidence For Infringement

from the nice-to-see dept

A few courts have noted similar things, but Fight Copyright Trolls and TorrentFreak both recently covered an interesting district court ruling out of Seattle, where Judge Robert Lansik noted that the producers of the movie Elf Man failed to state a claim for relief, since the only evidence they had was an IP address -- which wasn't enough to actually implicate any particular person in copyright infringement.

Plaintiff’s complaint does not raise a plausible inference that any of the named defendants are liable for direct, contributory, or indirect copyright infringement. In the fact sections of the complaint, plaintiff carefully refrains from alleging that the owners of the IP address – i.e., the named defendants – are the ones who utilized the internet access to download the copyrighted material. Rather, plaintiff alleges that the IP address assigned to each defendant “was observed infringing Plaintiff’s motion picture” ... and that each named defendant either (a) downloaded the BitTorrent “client” application and used it to download and share the copyrighted material or (b) permitted, facilitated, or promoted the use of their internet connections by others to download and share the copyrighted material .... Pursuant to plaintiff’s allegations, a particular defendant may have directly and intentionally stolen plaintiff’s copyrighted material, or she may simply have “facilitated” unauthorized copying by purchasing an internet connection which an unidentified third party utilized to download “Elf-Man.” Plaintiff provides no factual allegations that make one scenario more likely than the other: both are merely possible given the alternative allegations of the complaint.

[....] The critical defect in this case is not the alternative pleading of claims of direct, contributory, and indirect infringement. Rather, the problem arises from the alternative pleading of the facts that are supposed to support those claims. The effect of the two “or” conjunctions means that plaintiff has actually alleged no more than that the named defendants purchased internet access and failed to ensure that others did not use that access to download copyrighted material.

Of course, we've seen plenty of copyright holders directly allege that failure of a internet account holder to stop infringement is somehow a violation of the law itself, but that's not what the law says at all. Here, the judge is correctly noting that make a huge inference from just the IP address to having enough for a lawsuit makes the plaintiff's claim not enough to move forward. This is only a district court ruling, but as a few other courts have made some similar claims, perhaps it can be useful in pushing back on standard copyright trolling, as courts become less willing to entertain fishing expeditions by trolls.

Filed Under: copyright, infringement, ip address

Little Evidence Of 'Infringement Risk' For 'Copyright Intensive' Companies

from the more-smoke-and-mirrors dept

For decades now, we keep hearing various "copyright intensive" companies whining to the press and politicians about how the "biggest threat" they face is continued copyright infringement. We hear about how it's undermining not just their business, but entire economic sectors, the basis of capitalism and the fundamental rule of law. Copyright infringement, we are told, is one of the largest risks to the economy and society that you could possibly imagine. We've long questioned the validity of those claims, especially since history has shown that the industry cries wolf fairly frequently and has always been wrong. Most famously, of course, the MPAA's Jack Valenti told Congress that "the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone." That was in 1982. In 1986, the home video market -- which the VCR created -- made more money for the MPAA's studios than the box office did. It's tough to believe the "threat" claims when they're always wrong.

But, the "copyright intensive" industries just keep on making those claims, and there's always some in the press and among elected officials who either don't know or don't care about the past (or technology or reality) and automatically believe those claims. They just assume that of course copyright infringement must be a huge threat because these companies say so.

A new study, however, found a pretty good way to evaluate the reality of that threat. Jonathan Band and Jonathan Gerafi realized that a good "independent" third party to evaluate the risk and threat of copyright infringement would be investment analysts. Their only stake in the game is whether or not the company is going to do well or poorly. If the perceived risk and threat was real, they'd certainly be letting everyone know. So, Band and Gerafi have produced a new research report studying equity research reports issued over the last quarter for eight of the top companies in the so-called "copyright intensive industries."

The choice of companies is interesting, because all eight are among those that regularly scream the loudest about the "threats" of infringement: Sony (owner of Sony Music and Sony Pictures), Vivendi (owner of Universal Music), Disney, Viacom (who also owns Paramount), Microsoft, Adobe, Pearson and Reed Elsevier. If you're keeping track, that's basically three of the largest movie studios, two of the largest music labels, two of the largest software companies and two of the largest publishers. If copyright infringement was really this existential threat they've all been screaming about, certainly it would show up in the equity analysts' reports, right?

Well, let's take a look at the findings:

• None of the 14 reports for Reed Elsevier and 18 reports for Pearson identified copyright infringement as a risk factor.
• Only 13% of the 15 reports for Sony and 22% of the 23 reports for Vivendi mentioned copyright infringement as a potential risk.
• Just 8% of the 26 reports for Viacom and 27% of the 26 reports for Disney referred to copyright infringement as a risk factor.
• 26% of the 19 reports concerning Adobe and 41% of the 27 reports concerning Microsoft identified copyright infringement as a risk factor.
• Cumulatively, only 19% (32) of the 168 reports referred to copyright infringement as a possible risk; 81% did not.

And, in case you were wondering, the reports that didn't list copyright infringement as a risk (i.e., nearly all of them) did list out a variety of other factors. It wasn't just a case where they weren't covering risks at all. They carefully looked at the market, and didn't seem to think infringement was a real risk at all.

And, it's important to note that since these are all public companies, the execs at those companies often spend a lot of time "educating" the analysts about the state of their business. In fact, in the annual reports for six of the eight companies listed, the companies themselves do list infringement as a major risk. It just looks like the analysts looked at the detail and simply didn't see any legitimate threat in most of the cases.

Filed Under: copyright, copyright intensive industries, equity analysts, infringement, jonathan band, jonathan gerafi, risk
Companies: adobe, disney, elsevier, microsoft, paramount, pearson, reed elsevier, sony, sony music, sony pictures, universal music, viacom, vivendi

US Hypocrisy: Pushing For Maximum Damages For Infringement, While Settling Its Own Piracy Bill For Less

from the but-of-course dept

You may have seen the story over the weekend that the US government had settled a copyright infringement lawsuit filed against it by Apptricity for $50 million. Basically, the Army licensed Apptricity's server and device software for $4.5 million in 2004, but with a limited number of licenses -- which worked out to $1.35 million per server and $5,000 per device. The Army completely blew through the limit and installed it on another 100 servers and 9,000 devices (the government then tried to hide this from Apptricity). Apptricity noted that, at the existing deal's terms, the Army would have owed it an additional $225 million. The government, of course, settled for $50 million, leading some to note that it appears that by infringing, the government effectively got a 73% discount. Not bad -- though that does assume that the government would have licensed the same number (and that there wouldn't have been some sort of bulk discount).

That said, what strikes me about this is that at the very same time that the Army was ignoring all of this and clearly infringing on the terms of its license, the US government has been pushing a zero tolerance approach to copyright infringement both at home and around the globe. You have Homeland Security and the Justice Department both ramping up prosecutions of intellectual property violations. You have the US State Department going around the globe pushing for stricter and stricter enforcement. And, of course, you have the USTR trying to negotiate draconian criminal penalties into international agreements for copyright infringement.

Hell, if we count each excess installation as a separation copyright violation (and, for what it's worth, there's a reasonable argument that under copyright law multiple installations of the same file only counts as a single violation, rather than multiple -- but the DOJ itself has argued that each copy should count as an individual infringement), and then multiply by the $150,000 that's the top of the line for statutory damages for willful infringement (which this appears to be), the government would have had to pay somewhere around $1.4 billion. And, again, the DOJ itself has regularly argued in court that $150,000 per infringement is perfectly reasonable.

And yet, here, when the US government itself has to pay up, suddenly it gets to do so at a great discount? And this won't change a damn thing in how the rest of the government goes around the globe pushing for extreme punishment for infringement, insisting super high statutory rates are needed to "teach a lesson." Apparently, though, it's a lesson that doesn't apply to the US government itself.

This is part of what's so ridiculous with statutory damages. Copyright holders and maximalist defenders insist they're reasonable... until they realize that they're also infringers. And then suddenly they think it's reasonable for a much, much, much lower number. What a bunch of hypocrites.

Filed Under: copyright, infringement, statutory damages, us army, us government
Companies: apptricity

Surprise: MPAA Told It Can't Use Terms 'Piracy,' 'Theft' Or 'Stealing' During Hotfile Trial

from the a-bit-of-good-news dept

I knew that Hotfile had been pushing for this, but I'm somewhat happily surprised to see Judge Kathleen Williams of the US district court in Southern Florida grant Hotfile's motion to bar the MPAA from using "pejorative terms" in its copyright infringement case against the company. Among the words that the movie studios cannot use in describing Hotfile's activity: "piracy," "theft" and "stealing." We've been pointing out for many years how the industry has been using these kinds of misleading terms to influence pretty much everyone to their side, even though the terms are not even remotely accurate. Hotfile had reasonably argued that such terms could negatively influence the jury:

In the present case, there is no evidence that the Defendants (or Hotfile’s founders) are ‘pirates’ or ‘thieves,’ nor is there evidence that they were ‘stealing’ or engaged in ‘piracy’ or ‘theft.’ Even if the Defendants had been found to have directly infringed on the Plaintiffs’ copyrights, such derogatory terms would add nothing to the Plaintiffs’ case, but would serve to improperly inflame the jury.

The MPAA tried to argue that these were commonly used, but apparently the judge realized that using these misleading words really would be unfair. Hopefully other courts follow suit.

Filed Under: copyright, infringement, juries, pejorative, piracy, stealing, theft
Companies: hotfile, mpaa

Increasing European Moves To Block Access To Websites Accused Of Helping People Infringe Copyrights

from the slippery-slope dept

In their obsessive war on piracy, the copyright industries have tried various approaches. For a while, the "three strikes and out" was popular, until it became clear that it was completely ineffectual. At the moment, the preferred method is to try to force ISPs to block access to sites holding material that infringes on copyright. The UK led the way, and has now made the whole process pretty routine, as a recent post on the TechnoLlama blog explains:

The blocking order follow a now familiar pattern established in 20th Century Fox v BT: lawyers for the film and/or music industry go to court against UK ISPs to try and obtain an injunction that will block access on those to a specific website. The subject websites are not included as co-defendants, and their guilt tends to be assumed, or dealt with separately. The websites are then blocked at the ISP level, meaning that any person who enters "www.thepiratebay.sx" into their browser will receive a notice stating that the site is not available.

The fact that it is easy to circumvent these blocks doesn't seem to worry the industry much: either the only concern is to make it hard for less tech-savvy users to access a site, or maybe a symbolic victory is all that is required. In any case, the approach is beginning to spread in Europe. For example, Switzerland is currently reviewing the operation of copyright in a digital world, and blocking content is likely to be one of the recommendations from the AGUR12 working group -- following the usual heavy-handed hints by the USTR, as TorrentFreak explains:

According to a report obtained by NZZ am Sontagg, AGUR12 have concluded that Swiss Internet service providers should be forced to delete content if hosted on Swiss-based sites. Most controversially their final report, which is now being sent to the Justice Minister, states that ISPs should display warnings when users attempt to access unauthorized content sources while "obviously illegal sites" should be rendered entirely inaccessible.

As usual, that begs the question which sites are "obviously illegal." Meanwhile, in Belgium, the authorities continue their forlorn attempt to shut down The Pirate Bay and its proxies:

The Supreme Court of Belgium has ordered local Internet providers to proactively search for Pirate Bay proxies, and block subscribers' access to these sites. The order is one of the most far-reaching decisions when it comes to website blocking based on copyright infringement grounds. A spokesperson for Belgacom, one of the largest ISP, describes the verdict as disproportionate and unacceptable.

But perhaps the most important news on the Web blocking front concerns Europe's highest court, the Court of Justice of the European Union. The Austrian Supreme Court had sought guidance on whether injunctions could be brought against ISPs whose users were accessing sites that infringed on copyright. As is usually the case, before the Court of Justice hands down its opinion, a kind of pre-opinion is given by the Advocate General (pdf), in this case Pedro Cruz Villalón. Here's his view on the situation:

In his Opinion today, Advocate General Pedro Cruz Villalón takes the view that the internet provider of the user of a website which infringes copyright is also to be regarded as an intermediary whose services are used by a third party -- that is the operator of the website -- to infringe copyright and therefore also as a person against whom an injunction can be granted. That is apparent from the wording, context, spirit and purpose of the provision of EU law.

This bad news that ISPs can be regarded as intermediaries is tempered slightly by the following:

The Advocate General is also of the view that it is incompatible with the weighing of the fundamental rights of the parties to prohibit an internet service provider generally and without ordering specific measures from allowing its customers to access a particular website that infringes copyright.

The Advocate General adds one other qualification:

It is for the national courts, in the particular case, taking into account all relevant circumstances, to weigh the fundamental rights of the parties against each other and thus strike a fair balance between those fundamental rights.

This is not the final ruling of the Court of Justice of the European Union itself, which could take a completely different view of things, but that is unlikely. So we can probably expect to see even more Web sites blocked in Europe at the behest of film and music companies. That's a huge pity. It imposes costs on ISPs that have nothing to do with the infringement, and it distracts copyright companies from the real solution: providing better access to legal offerings at fair prices.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: access, blocking, censorship, copyright, eu court of justice, eucj, europe, infringement, secondary liability

Antigua Still Threatening To Launch Its WTO-Endorsed Legal Piracy Site, But We've Heard That Before

from the any-day-now dept

In a dispute that's dragged on for over a decade, it appears that Antigua is, once again, making noises about how this time it's really, really, really going to do what the WTO has said it can do: set up a legal platform to infringe on American copyrights as a form of official payback for the US clearly violating a trade agreement with Antigua by outlawing online gambling. We've covered this dispute and all its twists and turns for years, but the short summary is that Antigua won at every turn, even as the US tried to once declare victory where it had lost. The US even tried to just say it could unilaterally change the trade agreement, which is not how those things work.

Of course, Antigua is a small country, so how does it "get back" at the US after such a win, when it's clear that the US doesn't care at all about the WTO saying it violated the agreement? Well, some folks had the bright idea that perhaps Antigua could just violate American copyrights, and pirate their way to the equivalent value of what the US should be paying. That idea was first floated around 2006, and it seemed like a joke. However, it continued to gain steam. Of course, the real idea behind these sorts of things is that Antigua and the WTO hope that this will make the RIAA and MPAA go running to the US government and beg them to come to some sort of settlement in which gobs of cash are sent from the US Treasury to Antigua. It's a well-known trick in trade wars: co-opt some powerful lobbyists who really shouldn't have any dog in the actual fight, and get them on your side. It happens in trade disputes quite often.

Of course, in the years since the WTO first gave its stamp of approval to this plan, what we've seen is every so often, Antigua makes a public statement along the lines of, "Hey! we're really going to do it!" and the US responds with "You'd better not!" and then there's silence for a year or two, and the dance starts all over again. Apparently it's time for that dance again, because Antigua is making very public that it's really, no really (do you hear that USTR?) really, really, really planning to move forward this time. No, really. They even had a meeting about it. And they're going to set up a body to "manage and operate" the platform. They also claim that they'll soon let private companies bid on participating. And... of course, they knock the US for "failing to negotiate."

I imagine that at some point the US will do another "Oh no, you'd better not!" statement, and then we'll be waiting around for another six to nine months before Antigua insists that it's really, really, no really moving forward with it this time. Really. Guys. Really. We mean it this time.

Filed Under: antigua, copyright, infringement, piracy, trade wars, wto