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==Phrack Inc.==
Volume Four, Issue Forty, File 5 of 14
Pirates Cove
By Rambone
Welcome back to Pirates Cove. My apologies for not providing you with this
column in Phrack 39. However, in this issue we take a look at some recent
busts of pirate boards and the organization most to blame for it all... the
Software Publishers Association. Plus we have news and information about
Vision-X, game reviews, BAD Magazine, and more. Enjoy.
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FBI Raids Computer Pirate; SPA Follows With Civil Lawsuit June 11, 1992
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
BOSTON -- The Federal Bureau of Investigation raided [on June 10] "Davy Jones
Locker," a computer bulletin board located in Millbury, Massachusetts, which
has allegedly been illegally distributing copyrighted software programs.
The Davy Jones bulletin board was a sophisticated computer bulletin board with
paying subscribers in 36 states and 11 foreign countries.
A computer bulletin board allows personal computer users to access a host
computer by a modem-equipped telephone to exchange information including
messages, files, and computer programs. The system operator (or sysop) is
generally responsible for materials posted to the bulletin board.
For a fee of $49 for three months or $99 for one year, subscribers to Davy
Jones Locker were given access to a special section of the bulletin board that
contained copies of more than 200 copyrighted programs including popular
business and entertainment packages. Subscribers could "download" or receive
these programs for use on their own computers without having to pay the
copyright owner anything for them.
The business programs offered were from a variety of well-known software
companies, including: AutoDesk, Borland International, Broderbund, Central
Point System, Clarion Software, Fifth Generation, Fox Software, IBM, Intuit,
Lotus Development, Micrografx, Microsoft, Software Publishing Corp., Symantec,
Ventura Software, WordPerfect and X-Tree Co. Entertainment programs included
Flight Simulator by Microsoft, and Leisure Suit Larry by Sierra.
Seized in the raid on Davy Jones Locker were computers, telecommunications
equipment, as well as financial and other records.
"The SPA applauds the FBI's action today," said Ilene Rosenthal, director of
litigation for the Software Publishers Association (SPA). "This is one of the
first instances that we are aware of where the FBI has shut down a pirate
bulletin board for distributing copyrighted software. It clearly demonstrates
a trend that the government is recognizing the seriousness of software
copyright violation. It is also significant that this week the Senate passed
S.893, a bill that would make the illegal distribution of copyrighted software
a felony."
For the past four months, the Software Publishers Association has been
investigating the Davy Jones Locker bulletin board and had downloaded business
and entertainment programs from the board. The programs obtained from Davy
Jones Locker were then cross-checked against the original copyrighted
materials. In all cases, they were found to be identical.
Subscribers to Davy Jones Locker not only downloaded copyrighted software, but
were also encouraged to contribute additional copyrighted programs to the
bulletin board.
The system operator limited subscribers to four hours on the bulletin board
each day. He also limited the amount of software a subscriber could download
to his or her own computer each day. Those who "uploaded" or transmitted new
copyrighted software to the bulletin board for further illegal distribution
were rewarded with credits good for additional on-line time or for additional
software.
"Imagine a video store that charges you a membership fee and then lets you
make illegal duplicates of copyrighted movies onto blank video tapes,"
explains Ilene Rosenthal, SPA director of litigation. "But it limits the
number of movies you can copy unless you bring in new inventory -- copies of
new movies not already on the shelves. That was the deal at Davy Jones
Locker."
Davy Jones Locker was an international concern with paid subscribers in the
United States and 11 foreign countries including Australia, Canada, Croatia,
France, Germany, Iraq, Israel, Netherlands, Spain, Sweden and the United
Kingdom.
Whether it's copied from a program purchased at a neighborhood computer store
or downloaded from a bulletin board thousands of miles away, pirated software
adds to the cost of computing. According to SPA, software pirates throughout
the world steal between $10 and $12 billion of copyrighted software each year.
"Many people may not realize that software prices are higher, in part, to make
up for losses to the pirates," says Ken Wasch, executive director of the SPA.
"Pirate bulletin boards not only distribute business software, but also hurt
the computer game publishers by distributing so many of their programs
illegally. In addition they ruin the reputation of the hundreds of legitimate
bulletin boards which serve an important function to computer users."
The Software Publishers Association is the principal trade association of the
personal computer software industry. Its 900 members represent the leading
publishers in the business, consumer and education software markets. The SPA
has offices in Washington, D.C., and Paris La Defense, France.
CONTACT: Software Publishers Association, Washington, D.C.
Terri Childs or Ilene Rosenthal, 202/452-1600
_______________________________________________________________________________
PC Bulletin Board Hit by FBI Raid June 14, 1992
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
By Josh Hyatt (Boston Globe)(Chicago Tribune, Section 7, Page 3)
BOSTON -- In one of the first reported crackdowns of its kind, six FBI agents
raided a computer bulletin board based in a Millbury, Massachusetts, home last
week. Authorities said the bulletin board's operator had been illegally
distributing copyrighted software.
Executing a criminal search warrant, the agents seized several computers, six
modems and a program called PC Board, which was used to run the bulletin board.
Authorities also seized documents that listed users of the service.
No arrests were made, according to the Software Publisher's Association, a
trade group that brought the case to the FBI's attention. The association
estimates that, as of March, the bulletin board had distributed $675,000 worth
of copyrighted software; software pirates, it says, annually steal as much as
$12 billion this way.
The FBI will not comment on the case except to confirm that a raid had taken
place and that the investigation is continuing. The alleged operator of the
bulletin board, Richard Kenadek, could not be reached for comment.
Around the same time as the raid, the software association filed a civil
lawsuit against Kenadek, charging him with violating copyright laws. Ilene
Rosenthal, the group's director of litigation, said that "the man had
incriminated himself" through various computerized messages.
"There's plenty of evidence to show that he was very aware of everything on his
bulletin board," she said.
Bulletin boards let personal computer users access a host computer via modems.
Typically, participants exchange information regarding everything from computer
programs to tropical fish. They may also, for example, obtain upgrades of
computer programs.
The association said its own four-month investigation revealed that this
bulletin board, called Davy Jones Locker, contained copies of more than 200
copyrighted programs.
Rosenthal said users also were encouraged to contribute copyrighted software
programs for others to download or copy.
According to Rosenthal, subscribers paid a fee, $49 for three months or $99 for
one year. She said Davy Jones Locker had nearly 400 paying subscribers in 36
states and 11 foreign countries.
_______________________________________________________________________________
Cracking Down On Computer Counterfeiters July 1992
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
By B.A. Nilsson (PC-Computing Magazine)(Page 188)
Popular bonding rituals usually aren't criminal. Admire a friend's new car,
and you're likely to swap a few stories and a can of STP. You may be invited
to take the car for a spin. You can pass recipes back and forth or lend your
copy of the latest best-seller to a fellow fan.
Sharing computer programs is another common practice among friends. It's
great to help someone who's daunted by the challenge of learning to use a new
machine, and sometimes that includes a gift of some of your favorite software.
"Here. Why don't you get started with WordPerfect?" And, later, inevitably,
"The Norton Utilities will get that file back for you."
Copying a set of disks is so simple and such a private action that you'd hardly
think it's also illegal. The legality part is easy to overlook. The copyright
notice is a complicated critter, often printed on the seal of the software
package that is torn away as you dig for those floppy disks. You may not even
be the one who ripped the original package open (in which case, you're yet
another who's ripped the program off).
But whether or not you're aware of it, unless you either broke the shrink-wrap
or received the package with all disks, documentation, and licensing
information intact, you're breaking the law. The good news is that if you're
an individual with pirated software on your home computer, you probably won't
get caught. But if you're a boss with an angry employee, the Software
Publishers Association (SPA) may get tipped off. When the SPA comes to call on
your business, it's with U.S. marshals and lots of official paperwork. And the
association has an annoyingly good history of winning its copyright-
infringement cases.
Perspectives on Piracy
"Computers give us a kind of technical sophistication that never used to
exist," says Ken Wasch, the voluble head of the SPA. "In the old days, if you
wanted to make your own copy of something like a pencil, you'd need a
complicated manufacturing center. But the very fact that you can run a
computer program means that you can make a flawless copy of it. This is the
only industry in the world that empowers every customer to be a manufacturing
subsidiary."
The regulations are spelled out again and again in the software manuals:
You're allowed to make one or two copies of the program for backup purposes.
Other rules vary slightly from company to company. Some license agreements
demand that the software package be used only with a single machine; others,
most notably Borland's, let you use the program on as many computers as you
wish, provided no two copies of the program are run concurrently, just as a
book can be read by only one person at a time.
"If all software developers took the same approach as Borland International,
people wouldn't steal so much," says avowed pirate Ed Teach.
(Note: The names and locations of all interviewed pirates have been changed.)
"Borland gives you that book license. Of course, they'll drive you insane with
upgrades. They wholesale the software, then make their money on all the
subsequent releases."
Teach is the systems administrator for a residential health-care company in
the Southeast. "I believe in piracy," he says. "I like to borrow something to
play with it. If I like it, I'll buy it."
He dismisses demos and limited versions of programs as inadequate for the
testing he prefers; similarly, he considers the typical 30-day return agreement
too restrictive. "It's not a realistic time period for an evaluation," Teach
says. "I just got a copy of FormTool Pro, and it's a powerful program with a
very steep learning curve. I can't devote myself to it and learn what I'd need
to know in 30 days."
Teach has spent six years recommending and configuring programs for his
company. He does not fit the image of a lawbreaker, and he believes that what
he does is morally justified. "I buy the software eventually. My company
bought licenses to use WordPerfect 5.1 after starting with a pirated copy of
the program. Everything on the company machines is legit."
Copying wasn't always so easy. Old-timers remember the copy-protection schemes
that pervaded the computer industry, requiring key disks or special
initialization procedures. But users unanimously demanded an end to it, and
when Lotus, the last significant holdout, gave in, that era was over. Today
you find protection only on games and niche-market programs.
How much has the end of copy protection cost software companies? It's
impossible to figure accurately. In August 1991, the indefatigable Software
Publishers Association released figures on corporate-use losses that suggest
both a staggering financial loss and a possible decline in piracy. In 1987,
1.31 DOS-based software programs were sold for every office computer. The
expected proportion is three packages per computer, meaning that more than half
of the programs in use were probably pirated. In 1990, the number of
legitimate packages jumped to 1.78. But prices have gone up, too, so that the
dollar losses haven't changed much: The 1987 liability was $2.3 billion, and
the number rose to $2.4 billion in 1990.
The numbers for private-use piracy, on the other hand, can't be calculated. If
all the computer users who have never pirated software got together, they
wouldn't need a very large hall. Wasch concedes that it's difficult to
actually catch and prosecute the individual pirate. "Nobody is actually doing
time for piracy," he says, citing the exception of a retailer who was caught
running what amounted to a pirated-software storefront.
The Software Police
Although the SPA is targeting home abuse in a current study, Wasch believes
that the greatest financial losses are due to corporate piracy. And corporate
pirates are easier to apprehend because an angry employee is frequently willing
to turn in the boss. "We get about 20 calls a day," says Wasch, who set up a
special number (800-388-7478) for reporting piracy. "Ninety percent of the
calls we follow up on come from disgruntled employees."
It's the kind of visit most of us have only seen in the movies, and it's
usually an unexpected one. A receptionist with one targeted company was so
shocked by the arrival of the SPA posse that she asked if it was a "Candid
Camera" stunt.
Founded in 1984 as an educational and promotional group, the SPA evolved into
a software police force five years ago as more and more software vendors
joined. Now almost 800 are in the fold. The SPA began to woo whistle-blowers
in earnest about two years ago, after a tip led to the successful bust of a
large corporation in the Midwest.
"Business is too good," Wasch says. "We're doing far more lawsuits and far
more audits than ever before, and the numbers are continuing to grow."
If your corporation is busted by the SPA, hope that it's done by mail. "What
happens then is that we write the CEO a letter explaining that we want to do an
audit," Wasch says. "If we find illegal software, the company pays twice: Once
for the pirated copy, once for a new one.
"That's a lot better for the company. The fine is much lower, and they don't
face the adverse publicity that results from a lawsuit. Still, 60 percent of
them promise they won't destroy software before they report it, and then they
go and do it anyway."
That was the case with a recent SPA visit to a medium-size defense contractor
in Washington, DC. "They agreed to an audit, and then they tried to wipe
pirated programs off all the hard disks," Wasch says. "But we knew. Why do
they think we called them in the first place? Someone on the inside was
talking. I couldn't believe they'd sit there and lie to us about it, we had
them over a barrel!"
The increasingly ominous specter of the SPA breaking down the door is making
more companies go legit, but some continue to spout excuses. "I don't want to
break the law, but I also don't want to go out of business," says Howell Davis,
the CEO of an accounting firm in a New England capital. "We can't afford to
work without computers, but I can't pay the high price of registering every
copy of every program we use. I had to borrow a lot of money to get this
business off the ground, and I think of this as just another form of borrowing.
It's another loan I'll repay when I can afford to."
Some corporate pirates operate with a sense of entitlement.
"Nobody's going to catch us," says Charles Vane, the managing director of a
nonprofit theater company in the Northwest, "and nobody should even be trying
to. We're on the brink of bankruptcy. Companies should be giving us software
packages as a gesture of support for the arts." He admits that almost all of
the software his theater uses is pirated. "We have some nice programs,
including an accounting package developed for Ernst & Young that we swiped and
a copy of SuperCalc with a bunch of extra modules. And WordPerfect, of
course," Vane says.
Where do the packages originate? "Our board members get them for us," Vane
says. "Of course, that means we can't be choosy. We have to wait until a
particular program comes our way. And what they like to give us the most are
games. We have a kazillion games."
Games and piracy are natural partners. Games themselves encourage piracy.
Unlike business-oriented programs, they engender intense, short-lived
relationships. Or as pirate-BBS operator John Rackam puts it, "Games get
boring. That's why you see so many of them on the pirate boards."
Online Piracy
Rackam runs a BBS straight out of "The Man from U.N.C.L.E." It looks like any
other medium-size board in the country, with a standard collection of shareware
and message bases. Gain special access which only takes $50 and a friend's
recommendation and you pass through the secret door into a 600MB collection of
the latest applications, including 10 zipped files of the complete dBASE IV, 11
of AutoCAD, and 6 of MS-DOS 5.0.
"Most of the people who use my board are collectors," he says. "They have to
have the latest copy of everything." Rackam isn't deterred by the threat of
getting caught. "I don't think it's going to happen to me. I'm not doing
anything that's really terrible. I mean, I'm not hacking up bodies or
anything. I make no money off this. The fee is just for keeping up my
equipment. I consider myself a librarian."
Novell takes a dim view of that attitude, as evidenced by an August 1991 raid
of two California bulletin board systems accused of distributing Novell NetWare
files. Such systems are another target the SPA would like to hit, and Wasch is
looking for FBI cooperation.
That makes the Humble Guys Network ripe for the picking. Study the high-
resolution GIF file of these buccaneers, and you see a collection of ordinary-
looking folks who happen to traffic in pirated game software. The founder, a
hacker who called himself Candy Man, has since skipped the country; now The
Slave Lord, a student at a southern college, is at the helm.
"The whole point of the network is to get games before the stores have them,"
says Bill Kidd, a computer consultant in Manhattan. "This is like proof of
manhood, how fast you can get them." Kidd professes little personal
involvement with piracy, but he knows where the bodies are buried.
"First there are the suppliers who can get a program from a manufacturer well
before it's released," Kidd says. "Often the supplier works for the
manufacturer. The game goes to the head person, who delivers it to the
crackers. They're the ones who remove the copy protection. From there it goes
to the couriers, and each has a list of pirate BBS's. The program then makes
it all over the country in minutes."
Speed is an obsession. These pirates are armed with 9,600-bit-per-second
modems and a must-have-it-now mentality. "The week before MS-DOS 5.0 hit the
stores," says Kidd, "most of the pirate boards had already deleted it because
they had been offering beta versions six months before."
As far as revenues are concerned, pirate bulletin boards may be more of a
nuisance than a threat. "Those people are never really going to buy that
software," says John Richards, a product manager with Lotus. "Nominally, it's
bad, but it's not as if they're buying one copy of 1-2-3 to put on the office
workstation for ten users."
Pirates at Home
While an office environment allows for regular, rigorous audits, the home
user gets away with pirating software. Peer under the hoods of a few hard
disks, and you're liable to find something illicit.
"It can happen innocently enough," says Symantec's Rod Turner. As general
manager of the Peter Norton Group, Turner has the distinction of overseeing one
of the most frequently pirated pieces of software: The Norton Utilities.
"Someone puts a copy of the software on someone else's machine to test it out
and leaves it behind. The other user assumes it's there legitimately," Turner
says.
"Often, someone gets software from a friend who got it at work," says Tony
Geer, service manager at Computer Directions, a retail outlet in Albany, New
York. Geer looks at hundreds of user-configured hard disks every month.
"Someone buys a machine from us, then turns around and calls us to say that
he's got all this software now, could we tell him how to run it," Geer says.
"What am I supposed to do? The customer wants me to spend hours on the phone
teaching him or he gets mad. When I tell him he has to buy the program, too,
he gets annoyed."
Geer also receives a huge number of requests for pirated software. "A lot of
users think that we can load up their hard disks with programs, even though
they know they ought to be paying for them and just want to duck the fee."
A few requests come from the truly naive, Geer says. "I'll get a call for
software support and I'll ask, What did the manual say?' I didn't get a
manual,' the person tells me. A friend gave this to me.' And then I have to
explain that software isn't free."
High software prices are a common user complaint. Former WordPerfect executive
vice president W.E."Pete" Peterson thinks the $495 list price of WordPerfect's
best-selling word processing program is justified, however. "WordPerfect sells
about 150,000 copies a month at that price, so quite a few users think the
price is justified, too," says Peterson. "A computer costs anywhere from a few
hundred to a few thousand dollars. Without the software, the computer is
worthless. WordPerfect goes to a lot of work to write and support the
software."
The latter includes a costly policy of toll-free phone support, handled by
operators who would just as soon not ask for a registration number. It's an
expensive way of showing trust, but it has paid off in excellent public
relations.
"We try to sympathize with people," says Jeff Clark, public relations director
at XyQuest, the company that publishes XyWrite, a word processing program
popular among journalists. "We sell replacement manuals as a service to
registered users, but there's a call at least once a week from someone who's
obviously trying to get manuals to go with a pirated copy."
The challenge then is to educate the caller, who may not even know that a law
has been broken. "All we ask of a registered user is to run the program on one
machine at a time," Clark explains. "If you're using it at work, yes, you can
use it at home. But don't buy one copy to use in an office of eight people."
"A lot of people seem to think copying disks is OK because it's easy to do,"
says Turner, who is also chairman of the SPA's companion organization, the
Business Software Alliance, which fights international piracy. "Then they call
our tech line, and we're in the delicate position of telling them they're using
a product illegally."
Microsoft is even more benevolent. "We like to know where the pirated copy
originated," says Bill Pope, associate general counsel for the company. "It's
not always possible to learn over the phone who's pirating something, because
we don't require that registration cards be returned. But if we do identify a
pirated copy, we'll help the user get it legally, and we may even supply a free
copy of the program if we can learn where it came from."
A highly publicized amnesty program was launched by the XTree Company in July
of 1982. For $20, anyone with a pirated copy of an XTree program was allowed
to buy a license for the entry-level version of the program, thus getting
access to the upgrade path. Response was enthusiastic during the 90-day
period, but the offer won't be repeated. "You can't offer amnesty over and
over," says Michael Cahlin, who markets the XTree products. "You lose the
respect of dealers and users who paid full price for it."
Turner is more blunt about it. "Amnesty encourages piracy. I don't think it's
been successful."
While the SPA will continue to make headlines with Untouchables-style raids
of corporate offices, Wasch also acknowledges that education is the key to
fighting piracy. A 12-minute, SPA-produced videotape entitled It's Just Not
Worth the Risk spells out the message as a congenial corporate manager is made
wise to the ways of the company pirate.
"That tape has been a huge success," says Wasch. "American Express bought 300
copies, and Kimberly-Clark just ordered 100. We've distributed about 10,000 of
them so far."
A self-audit kit, also available from the SPA, includes a program that
determines what software is in use on your PC as well as sample corporate memos
and employee agreement forms to promote piracy awareness.
Seeing the Light
Fear of being caught keeps many people honest, but some pirates will wait until
they're forced to walk the plank before giving up.
John Rackam says his BBS users are innocent. "They can't afford the software,
and they shouldn't have to pay," he says. "They're downloaders. They un-ARC it and say, This is nice!' Then they never use it again."
Charles Vane believes that software companies should give nonprofit
organizations like his theater a break. "If they give us packages, we'll give
them publicity. We'll print it in the program, we'll post it in the lobby.
It's an upscale crowd that comes through here. We just don't have the luxury
of money. I bought one program, ReportWriter, because it was cheap and good."
For casual users, piracy may simply be a phase. "I own 90 percent of the
programs I use," says systems administrator Ed Teach. "That's a big reverse
from about four years ago, when 90 percent of them were bootlegs."
And there's always the problem of well-meaning friends. Henry Every, a
journalist at a Florida newspaper, received pirated programs from friends when
he bought his first computer five years ago.
"I had all these programs and no idea how to use them," Every says.
"Fortunately, the bookstore had guides that were even better than the manuals,
and I became something of a power user. Then I became the guy that a friend of
a friend would call for help with his machine. Next thing I know, I'm the one
giving away pirate copies.
"But I won't do it anymore. I'm sick and tired of getting those calls all hours
of the day and night asking me how to use the damn things."
No Excuses Accepted
"When I'm sitting across the table from them and they're looking really
dog-faced, when I can see the whites of their eyes, it's hard to pull the
trigger," says Ken Wasch, the head of the Software Publishers Association.
"Nevertheless," he says, "I pull the trigger."
Wasch is not a tender man when it comes to dealing with software pirates. He
has no patience for the typical excuses given by those who copy and use
unlicensed software, and he offers the following responses to the common
complaints he hears from the outlaws: