February 26, 1999 5:00 PM PST

Microsoft hunts pirates on auction sites

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Microsoft is turning a sharp eye on Web auction sites such as eBay, looking to stem the sales of pirated software online.

As part of its long-standing anti-piracy efforts, Microsoft will begin monitoring eBay's software auctions as soon as next week, asking the company to shut down auctions of software it believes to be counterfeit.

"We are in the process of kicking off a program where we will be actively monitoring auction sites," said Nancy Anderson, a senior corporate attorney at Microsoft. "We're just about to launch a cooperative program with eBay."

Microsoft has already conducted "test purchases" on eBay and other sites in an attempt to determine the scale of the piracy problem there, Anderson said. These trials have unearthed pirated material sold through these sites, though the company won't know how large the problem is until the new monitoring campaign begins, she added.

The test purchases have also helped Microsoft investigators learn what to look for in auctions of potentially counterfeit software, she said.

eBay has had a similar anti-piracy program in place since late 1997 with an assortment of other software companies. Under the program, eBay and copyright holders have worked together to identify what they believe might be pirated software, and then worked to shut down those bids, the company said.

Microsoft has not been an official part of eBay's "legal buddy" program, but the two companies have had contacts on the issue stretching back "many months," eBay spokesman Kevin Pursglove said.

Shaky legal ground?
The kickoff of Microsoft's new campaign will intensify the pressure on eBay and other Web auction sites to control the flow of illegally copied or counterfeited material through its services. But the software company's program, which it will extend to other sites, also underscores the tenuous legal position of Web auctions.

A law passed last year by Congress protects "online service providers" from responsibility for pirated material on their servers, as long as they register with the U.S. copyright office, and follow a strict set of guidelines for allowing copyright holders to notify them.

An online auction site could fall under this "safe harbor" provision, Internet attorneys say. But if it came to any kind of legal dispute, courts could rule that sites like eBay are more like real-world swap meets or flea markets, which do have responsibility to make sure that no illegal or counterfeit items are sold.

eBay says it is not responsible for the actions of its sellers. The company does not actively monitor any of its auctions until a user or outside company has complained, Pursglove said.

But Microsoft said that if there were a serious piracy problem with eBay or any other auction site, the company would likely argue that the sites were like their real world counterparts, and thus subject to fines of up to $10,000 per copyright violation.

"Our inclination is to say that these people who have a commercial marketplace, whether it's on the Internet or down the street, have a responsibility to ensure that the products sold are legal," Anderson said.

Both companies stressed that the current monitoring arrangement was friendly, and was not likely to lead to a legal confrontation, however.

"eBay has been very proactive in seeking out companies like Microsoft to help with piracy issues," Anderson said. "The whole thing is being handled very cooperatively."

eBay today won a temporary restraining order against a dealer who was allegedly using the site to sell banned software and CD-ROMs.

he firm obtained the court order after an unsuccessful attempt last month to stop Jim Douglas, a Cincinnati-based dealer, from using its site. Douglas simply re-registered under different names and email addresses, then independently contacted bidders to avoid paying eBay's auction fees, eBay attorney Vincent Colianni said.

"I think the vast majority of users are honest and play by the rules, but certainly this isn't the only one out there," he said. "I wouldn't say it's a major problem, but it is something that is there and we will take appropriate action."

Among the items Douglas allegedly sold through eBay were counterfeit software and CD-ROMs containing instructions on how to intercept cable-television signals. He failed to appear for a hearing in federal court today, and could be fined or imprisoned if he violates the court's order.

eBay's effort to stop Douglas from using its site is part of a larger effort by the company to crack down on legally questionable transactions. Starting next month, eBay will ban the sale of guns over its Web site, since it is impossible to ensure that bidders are legally permitted to own guns.

According to the Business Software Alliance, software piracy costs businesses around the globe more than $11 billion a year in lost revenues.

 

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