eBay Dealers Sell Counterfeit Software, Lawsuits Allege

By John Pallatto  |  Posted 2006-05-16

eBay Dealers Sell Counterfeit Software, Lawsuits Allege

SAN FRANCISCO—The Software and Information Industry Association disclosed May 16 that it filed three separate lawsuits in federal district court in Los Angeles against individuals who were allegedly using the eBay auction site to sell pirated copies of popular software.

SIIA brought the copyright and trademark infringement suits on behalf of Symantec and McAfee after nine months of investigation that showed that people are apparently using auction sites such as eBay, Yahoo and others to sell pirated copies of many different kinds of commercial software, said Keith Kupferschmid, vice president, Intellectual Property Policy and Enforcement, with the SIIA in Washington, D.C.

The lawsuits filed May 15 are the first of a series of lawsuits that the SIAA plans on filing in the coming months against alleged illegal software dealers who are active on various auction sites. The SIIA hopes "that by years end, software piracy over auction sites will be greatly reduced," said Kupferschmid.

SIIA is bringing the lawsuits under a formal Auction Litigation Program, in which it is monitoring popular auction sites to identify individuals or groups who are allegedly selling pirated software, with the goal of filing a lawsuit to halt the practice, which Kupferschmid said is currently out of control.

"We conservatively estimate that over 90 percent of software sold on eBay is being sold illegally," based on a recent study by one of SIIAs member companies, Kupferschmid said May 16 at a news conference convened during the SIIAs Software Strategy Summit in the St. Francis Hotel.

The surveillance includes making test purchases to verify that the software is pirated and to try to confirm the identities of who is selling it and where it is being shipped from, he said.

SIIA has communicated with eBay about the problem, and the auction company responded when it received reports about suspicious software auctions, he said.

However, the SIIA believes that "they havent been responsive enough. We feel there is more that they could do to combat piracy," he said.

Click here to read what Microsoft is doing to try to remove counterfeit software from the dealer channel.

Even when member companies notified eBay about troublesome auctions, it often took several days before eBay would take action against the dealers, Kupferschmid said.

By that time, the auction is closed and it is too late to prevent the sales, he said.

Furthermore, since the software auctions show the identities of the bidders, this gives software pirates a chance to contact them off the auction site to offer to sell them the software directly, he said.

The SIIA contends that eBay should take down an auction immediately when the associates find evidence that a dealer is selling pirated software, he said.

Furthermore, the SIIA wants eBay to stop the practice of disclosing the identities of people bidding on software before an auction closes to prevent sales of more illegal software behind the scenes.

Next Page: eBay offers sympathy.

eBay Offers Sympathy

The lawsuit is seeking unspecified monetary compensation for Symantec and McAfee, Kupferschmid said.

Catherine England, an eBay spokesperson, said the company "applauds the efforts of the SIIA" to protect software companies against copyright infringement, and "we encourage rights holders to work with us" to prevent infringing software items from being sold on the auction site.

Software manufacturers can file reports of items that may be infringing, "and we will remove them immediately," England said.

Currently eBay lists an average of about 89 million different items for sale on its site, and 6 million new items are added each day, she said.

Despite this volume, eBay can usually respond within hours to remove an auction that violates its rules, she said.

The company has worked closely with the software industry for a number of years to guard against software infringement and understands its motivations for bringing the suits, England said.

"They need to be proactive to [protect] their rights, and we respect that," England said.

However, England noted that eBays VeRO program provides "a pretty comprehensive" process for protecting rights holders and verifying the validity of products sold on eBay, "and it has served us well," she said.

Click here to read about how eBay reacted when someone tried to use the auction site to sell the details about an Excel code execution flaw.

"We feel that our verification goes above and beyond what the law would require us to do, and we do it because it is in the best interest" of the eBay community to provide that assurance, she said.

The first suit was brought against Edward Comas of Bloomington, Calif., for allegedly selling pirated copies of McAfee anti-virus and security software.

SIIA alleges that Comas completed more than 400 auctions on eBay, including many sales of other pirated software products.

SIIA also filed two suits on behalf of Symantec, including copyright and trademark infringement charges against Grace Chan of San Jose, Calif., for allegedly selling pirated copies of Symantec products.

The lawsuit claims that Chan completed more than 3,000 auctions on eBay including sales of pirated Symantec, Intuit and McAfee software packages.

The second Symantec lawsuit was filed against Kevin Liu, Mary Tian and G.T. Tian for allegedly selling unauthorized copies of Norton pcAnywhere, Norton System Works and Norton Ghost.

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