Software Piracy Earns Big Prison Sentences was a popular website offering serious discounts on copyrighted software like Microsoft Windows, Adobe Photoshop, and others. Was being the operative word. If you hit the site today, you’ll find an enormous red and yellow warning:
“THIS SITE HAS BEEN PERMANENTLY SHUT DOWN BY THE FEDERAL BUREAU OF INVESTIGATION AND THE DEPARTMENT OF JUSTICE. The individual responsible for the operation of the iBackups website has pleaded guilty to two counts of criminal copyright infringement in the U.S. District Court for the Eastern District of Virginia and faces up to 10 years in prison, a $500,000 fine, and restitution of over $5 million.”

In fact the website owner, 27-yr-old Nathan Peterson, was given sentence of more than seven years. So far, it’s the longest sentence ever given for software piracy.

Peterson has also been ordered to pay restitution of more than $5.4 million – which is a pretty good deal, considering that the software pirate plead guilty in December of illegally copying and selling more than $20 million in software.

What’s the big deal? Well, let’s look at another case that was recently judged on … Danny Ferrer of Lakeland, Florida, plead guilty to copyright charges very similar to Peterson’s. Ferrer sold CD copies of Autodesk, Adobe Systems, and Macromedia software complete with pirated serial numbers for activation.

Ferrer’s website,, has been redecorated in the same striking red-and-yellow design as Peterson’s and a hefty sentence has been handed down: 6 years in prison and $4.1 million in restitution. The courts also tossed in a third penalty – Ferrer must sell all the possessions he purchased with illegal money. According to the FBI, BuysUSA earned Ferrer enough to purchase a Lamborghini, a Hummer, two Corvettes, two Cessna planes, a helicopter, a motor boat, and – of all things – an ambulance.

Who says crime doesn’t pay, huh?

What Is Software Piracy?

Law is long behind the rapid advances of cyberspace. While the Information Superhighway continues to grow by leaps and bounds, law makers are still trying to catch up with what is possible, and decide how law concepts apply to crimes on the Internet.

A fundamental concept in law has always been physical location. Depending what city, county, or state you live in, you are subject to different laws. The Internet breaks all physical bounds – location isn’t relevant online. Determining which laws govern certain transactions online becomes difficult or impossible because of this.

Let’s make matters even more fun – copyright law on the Internet becomes muddier. In the U.S. copyright is given to the creator of a work the second it’s created. So even as I write these sentences, they’re copyrighted to me (until I sell the copyright to someone else … but let’s not get that complicated) and the moment I save them, the fixed digital date assigned by my computer will satisfy courts.

Anything that is copyright can’t be copied in whole or in part … but every time we view a web page, we do just that. Our computer downloads a complete copy of whatever we’re looking at and stores it. We can also make copies by hitting the Print command in our browser, or by doing a File – Save As. The thing is, courts say that this is okay because authors have put the work in the public for the purpose of being read and understand the abilities of technology.

Here’s where it becomes muddy. Images aren’t included in this “public display” understanding. The second you save an image (beyond what your browser does), print it, or post it to another website or use it in a for-print work, you’re committing serious copyright violation that can cost you thousands of dollars. The law states that you must get express permission of the copyright owner before copying, saving, or displaying any copyright work.

So what does this have to do with software piracy? Everything. Questions like these are being tackled by our legal system who have been charged with developing new laws and refining exisiting ones that govern the ownership of software, data, images, trespassing, and sabotage. Intellectual property rights are almost impossible to define or protect on the Internet. As a computer user, you are responsible for being aware that every program, document, image, and even idea that you come across are – almost without exception – the property of someone else.

Software piracy becomes the most pressing legal problem because it is so widespread – and so easy to do. It is defined as the illegal copying or use of software programs. The simplest method for software to be pirated is by copying the software from its original disc. These copies are exchanged over email, rogue websites, ftp servers, news groups, and IRC chat rooms.

Software Piracy Laws

The main law that applies to software piracy, or warez, is the Copyright Act of 1976. An amendment was added in 1983 specifically addressing Software Priacy and Counterfeiting.

More recently, priating commercial software was changed from a misdemeanor crime to a felony. Remember this carefully, because every felony goes into the “3 Strikes” idea that criminal sentences in the U.S. are now based on.

The FBI has this to say about software piracy and how copyright laws can affect those committing the crime:

“Unauthorized reproduction or distribution of copyrighted material is investigated by the Federal Bureau of Investigation and prosecuted by the Department of Justice. Individuals who willfully infringe copyright by distributing or reproducing infringing material risk criminal prosecution under 18 U.S.C. Ã?§ 2319. First-time offenders convicted of a felony violation of copyright laws face up to five years in federal prison, plus the payment of restitution, forfeiture, and fines.”

Report a Software Pirate, Earn Big Money

Because software piracy is so difficult to catch unless the criminals are advertising their work on a website like Ferrer and Peterson did, the government has started to rely on the average joe. They intend to fight software piracy – which resulted in a loss of $34 billion worldwide in 2005, a $1.6 billion increase over 2004, according to a study commissioned by the Business Software Alliance – by using information received from tipsters.

What do tipsters get out of turning people in? Cash. A lot of cash.

Organizations under the government like SIIA (The Software & Information Industry Association) are offering rewards of up to $200,000 to people who report piracy of software, content, and entertainment (video games, music and movies).

To be sure that tipsters are reporting true piracy, SIIA offers these guidelines:

  • By law, anyone who purchases software can load that software onto a single computer.
  • One copy of any software can be made for archival or repair purposes – for the original single computer.
  • It is illegal to install a single piece of software on more than one computer without specific permission from the software publisher.
  • It is illegal to make or distribute copies of software for any other purpose without specific permission from the software publisher.
  • The 24-hour rule allowing a user to download a program and use it for 24 hours before deciding to purchase it is an URBAN LEGEND.
  • Abandonware – software that a copyright holder has ceased distributing or supporting for more than five years – is an URBAN LEGEND.
  • Claiming ignorance of software piracy or the fact that it is a crime is not a defense. You will be found guilty.

How do you go about reporting a software pirate? If you’re certain that software piracy has occurred (or, for example, your employer has instructed you to take software home and install it on your computer – ignoring their responsibilities under copyright law), you can report the piracy on the Internet at or call the Anti-Piracy Hotline at (800) 388-7478. Any follow-up contacts are done discreetly so that no one will ever know why you’ve contacted SIIA.

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