Computer Crime Problems Research Center

Andrey Belousov

Computer Piracy Fighting in Ukraine

A situation concerning an illegal distribution of computer products at the Ukrainian market is complicated. Ukraine has a high level of computer piracy and there are some reasons of it. On the one hand introduction and extension of the sphere of using computer equipment requires software of a different kind and on the other hand there are low wages and excessively high prices of legal SW. Therefore users have to purchase inexpensive piratical copies. But there is outlined a tendency to lowering this level due to improving an economical situation in the country, growing conscientiousness of its inhabitants, introducing new forms of selling products, manufacturing and localizing software and so on.

It is important that a work dealing with a problem of protecting intellectual property and, particularly, contiguous rights and copyrights (Article 176 of Ukraine Criminal Code “Infringement of copyrights and contiguous rights”) should not turn into “dirty campaign” when computer clubs and Internet-cafes are closed on a plausible pretext of fighting against “piracy”. It is worse when by “order of Bill Gates” Ukraine is started talking in terms of ultimatum and threats of economical sanctions without understanding and talking account of real economical potentialities (ratio of an average earning of an ordinary Ukrainian to cost of Microsoft Office licensed “box” product ($300) or Windows XP-operation system ($150). Hasty and thoughtless actions can result in preventing Ukraine from entering into the informational space…

Piratical disks can be produced and copied at any enterprise, which has a special equipment. There are many such underground workshops in Ukraine. It can be proved by visiting any information technology show. In view of heightening fight against piracy the most part of production was transferred from Ukraine to Russia, thereby competition was intensified on the piratical market. Production of unlicensed software is in Moscow, its province and other Russian regions with high economical development. Great pirates possess own workshops and studios for illegally localizing software. Production is made deeply secret or has a reliable “cover”. Products are sold off through a well-developed network, which consists of various wholesalers and retailers.

Methods of fighting against piracy are divided into three main groups:
• Compulsory. The law enforcement bodies identify a manufacture or dealer of piratical products and institute proceedings (criminal or administrative) against him.
• Preventive. Explanation of harm caused by piracy and responsibility for infringing copyrights, display of merits of licensed products. For this purpose mass media are used, subject seminars for experts are hold and other such measures are taken. It is necessary to use a combination of all legal methods for effectively fighting against piracy.
• Economical. Reduction of prices of legal software up to ones of piratical copies.

Experts and officials of the law enforcement bodies should elicit, first of all, violations of law in order to carry out an antipiratical raid. Militiamen often use the whole complex of search measures to establish customers, manufactures and distributors of counterfeit products.

Then a control purchase is conducted, infringement of copyrights is fixed and deeds of withdrawal are drawn. Withdrawn products are usually sent to specialized organizations to establish on the grounds of deeds of withdrawal and covering letters from the law enforcement structures a legal possessor and damage inflicted on him.

The most widespread varieties of computer piracy:
1. Software illegally copied by end users. One of the prevalent varieties of computer piracy is a process of copying programmes performed by users and employees of organizations without obtaining appropriate licenses. When a company has many licenses, an illegal copying by end users can take a shape of understating a real number of software copies used in the organization. Exchange of programs with friends and colleagues beyond their organization can enter this category as well.
2. Illegal installation of programmes on computer hard disks. There are some companies, which are engaged in illegally installing software on computer hard disks, i.e. selling computer techniques with preinstalled unlicensed copies of software. They expose their clients to risk while selling them computers without licenses to use software preliminary set there. While purchasing a new personal computer with Microsoft SW-preliminary installed there it is necessary to pay attention to availability of Certificate of Authenticity, COA.
3. Counterfeit. Counterfeit is called an extensive piracy, which implies an illegal duplicating of software and package, as well as their distributing in the guise of legal products. At such a duplicating everything is often done that a faked product should not differ from an original in appearance. Counterfeit of software can be highly produced with making considerable efforts to provide accuracy of copying a package, logotypes and elements of protection such as holograms. But counterfeits with polygraphy of low quality or even labels and carriers inscribed by hand and wrapped in plastic packages are widely practiced. Market or street vendors usually sell them. Any form of software counterfeit inflicts a great damage both to an owner of software copyrights and legal users.

As a rule distributors of false software attract buyers with low prices. But they never mention that there are some risks of using counterfeit products. Distributors of false software also usually conceal a fact of selling an unlicensed product, which actually does not give a legal right to a purchaser to use it.

Sometimes false software is difficult to tell from an original. Therefore it is necessary to inform a user about indications, which can help him to distinguish an original from a counterfeit. For this purpose Microsoft builds into its products some elements of protection against a piratical copying. These elements are intended for raising a lawful protection of a user who with their aid can make certain of authenticity of a product before buying it.

4. Breaches in a channel of sales. The essence of breaches in a channel of sales is that product versions to be sold with special rebates, for example, to computer manufacturers or academic establishments are resold to persons or organizations that do not have the right to purchase products with such reductions.

Selling academic versions of products as ordinary ones.

Academic versions are called Microsoft product ones of full value offered at cut prices only to use in academic establishments, which meet requirements set by Microsoft Academic versions of products, are marked with words Academic Edition or Academic Price and completed with full documentation, though in some cases these are not printed materials but a card containing references to electronic sources.

Selling distributives and sets of documentation supplied on Word Wide Fulfillment (WWF) program products of full value.

Organizations, which conclude license agreements of Open Licence and Subscription License can order necessary components of products on WWF-program. These types of licence agreements imply that a buyer does not obtain carriers and documentation for all software copies to be purchased; whereas he can get the rest of materials by a separate order if necessary.

In such cases carriers and documentation are supplied in packaging cellophane with a label of Word Wide Fulfillment on CD-ROM disk boxes and at present marked with a phrase: Not for Retail or OEM Distribution. Purchasing such products by persons, who do not possess Open Licence or Open Subscription Licence, is illegal.

It is important to realize that these materials are only components of an authentic product but not a licence for its use. Licenses can be obtained separately within the framework of an agreement of Open Licence or Open Subscription Licence and serve as lawful grounds to purchase subsequently other components. While taking orders on WWF-program, a vendor must demand produce a purchaser’s Open Licence or Open Subscription Licence and check information on gained licenses. Unlawful distribution of software OEM-versions.

Software OEM-versions (OEM – Original Equipment Manufacturer) are special product ones intended for distributing only with computer hardware.

Microsoft never gives permission to distribute OEM-versions of its products separately from computer hardware.

5. Internet-piracy. A special term of “Internet-piracy” is used to designate a wide practice of applying the global network to make illegal copies and distribute counterfeit software. This definition particularly includes a using of Internet as advertisement, offer to sale, purchase and distribution of piratical software.

Increasing a scale in sales of false SW through Internet-companies and electronic auctions over last years has become a real problem for users, lawabiding Internet-companies and software industry.

Laws of software copyrights.
Any discussion of questions of using software touches upon such terms as “copyright” and “licence agreement”. Most experts in information technologies even cannot imagine what a term of “copyright” really means and how it is bound up with licenses to use software.

In the most direct sense “copyright” means “right to copying”. Copyrights are one of the forms of protecting intellectual property. Intellectual property means an exclusive right to results of intellectual activity. Intellectual property is considered to be not only patent inventions (for example: technological processes or devices) but also such object as trade-marks, logotypes and published works as well. In the general sense copyright means protection of “works” of a certain type including computer programs, books, choreographic performances, pictures, audiovisual images, sound records and architectural constructions.

Though most copyright works are not subject to compulsory state registration to protect themselves, but at present many authors have their works registered. Registration makes it easier to prosecute any breaker of copyrights, who makes illegal copies, and compensate damage and law expenses (lawyer’s fee).

Understanding of juridical principles of copyright protection allows establishing rules and procedures, which avert the use and distribution of illegal program copies and result in reducing risks of being prosecuted.

The last part of this section is dedicated to discussing the laws of copyrights, which are currently in force in Ukraine.

A program product as an object of copyright is under the protection of Ukraine Law “About copyright and contiguous rights ” from December 23, 1993 (edited from July 11, 2001). Since this law took effect, Ukraine has protected both programs manufactured after this date and those, which were produced earlier but are still used now.

Copyright applies to works of science, literature and art, which are a result of the creative activity independently of their purpose and a way of expression as well. In Ukraine computer programs being protected as works of literature with all lawful consequences, which come from it. According to Article 18 of the Law such protection applies to computer programs independently of a way and form of their expression.

Copyright to a work appears on the force of its creation therefore it does not require to be officially registered (the Law, Article 11, Part 2). A work is expressed in the objective form and obtains protection if other people except an author can look through it. So, since a computer program took an objective form, it has been under the lawful protection and not only the whole work being protected but also its parts if they bear a creative character and can be used independently (the Law, Article 9). An author (or another person, who possesses copyrights) has the right to transfer his property rights to another person fully or partially, whereas such rights are transferred on the grounds of an author agreement (the Law, Article 32).

Copyright and contiguous rights are protected in an order established by civil, administrative and criminal laws of Ukraine. It means that subject of copyright and contiguous rights in an established order can appeal to the court or other government bodies in accordance with their competence.

Article 512 of Ukraine Administrative Infringement Code specifies that an illegal using of an object of intellectual property right (including a computer program) or appropriation of copyright to such an object involves fines from 10 to 200 of untaxed minimum incomes of people with confiscation of made products , equipment and materials which are intended for their manufacture.

In conformity with Article 176 of Ukraine Criminal Code (UCC) criminal proceedings are instituted against persons who infringed copyright or contiguous rights. Such an infringement means an illegal recopying, distributing of works of science, literature and art, computer programs and data bases, as well as this or that using, if these actions inflicted large material damage. Article 176 of UCC provides for such kinds of punishment as a fine from 100 to 1000 of untaxed minimum incomes people, either correctional labor within two years or deprivation of liberty within two years with confiscation of all product copies, material carriers of computer programs, data bases, equipment and materials intended for their manufacture and reproduction.

Ukraine laws of intellectual property include not only home normative acts but also international treaties, which they joined. Ukraine legislation establishing priority of international treaties in respect of home normative acts.

For example, on April 9, 1995 Ukraine entered the Word Organization of Intellectual property (WOIP). Besides, according to the Law from May 31, 1995 Ukraine joined Bern Conference of Literature and Art Work Protection. Ukraine is also a member of Word Convention on Copyright (Geneva, 1952). On December 23, 1993 Ukraine ratified the Convention. Finally, on January 27, 1995 the Parliament of Ukraine legally ratified Treaty of Cooperation in protecting copyright and contiguous rights of CIS-countries.

Taking into consideration a situation being established on the information market in Ukraine, legislative acts alone do not suffice to effectively counteract computer piracy. The analysis shows that shortage of legal software, lack of a mechanism of protecting intellectual property and a difficult socio-economic situation result in prosperity of counterfeit products. Therefore major components of counteraction to piracy are economic measures turned to creating those conditions, which will make a manufacturing of false software unprofitable.

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