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Exclusive: Microsoft comes down hard on local channel pirate

Online auction trader OnlineSale Computers has been stung with $15,000 in penalties after admitting to hardloading unlicensed Microsoft software on PCs.

The Auckland-based company was busted after Microsoft investigators purchased a personal computer via Trade Me. The computer was analysed and found to have an unlicensed copy of Windows 7 Home Premium preinstalled.

While Microsoft declined to comment on how much Microsoft software OnlineSale Computers is believed to have illegally hardloaded, Clayton Noble, legal counsel for Microsoft, says the $15,000 damages paid by OnlineSale Computers is indicative of 'quite a substantial volume of sales'.

However, he adds that the damages are also much higher than the cost of the software installed, and that the company would have been better off paying the cost of the legal software upfront.

“[$15,000] is a substantial hit for a business and it is certainly substantial enough to deter businesses looking to engage in piracy.”

The $15,000 sum was agreed on by Microsoft and OnlineSale Computers, without court action, after the company and its directors admitted infringing Microsoft's copyright and apologised for doing so.

Noble says while Microsoft's key focus in enforcing copyright is to look after Microsoft revenue and business, the company is also fully aware of the impact of pirated software on the New Zealand reseller channel.

“We want to keep the channel clean and fair for honest and reputable resellers of our software, and ensure a level playing field,” Noble says.

“Obviously those using unlicensed software have a cost advantage and unfair advantage over legitimate resellers who comply with the copyright law by supplying genuine licensed software.”

Paul Kao, general manager of Playtech, one of Microsoft New Zealand's largest system builder partners, has applauded the move, saying it is tough as a reseller trying to compete with others who try to bend the rules to get prices down.

“Customers mainly look at price and would never think the pre-installed software wasn't genuine, so we appreciate the effort Microsoft invests to discourage the use of pirated software, as well as educating customers on the risks of using unlicensed software,” Kao says.

Noble says non-genuine software is also often full of spyware, malware and viruses that can lead to identity theft, loss of data and system failure for those purchasing the systems.

“Some strains of counterfeit software products contain hidden key-logging software that allows criminals to steal passwords, bank account details and other personal information,” he adds.

BSA figures suggest 22% of New Zealand software is unauthorised, a figure which is low on a global comparison, but still means more than one in five are pirated.

Meanwhile, Trade Me says it works with Microsoft and a range of other rights holders across many industries to prevent counterfeit items being listed on the site.

Microsoft's Digital Crimes Unit continually searches internet auction sites, like Trade Me, for sellers offering pirated Microsoft software.