A court in southern China convicted 11 people on Wednesday of violating national copyright laws and participating in a sophisticated counterfeiting ring that for years manufactured and distributed pirated Microsoft software throughout the world.
The men were sentenced by a court in the city of Shenzhen to terms of 18 months to six and a half years in prison, according to court papers released late Wednesday.
Microsoft applauded the sentence in a statement released late Wednesday Beijing time, saying they were the stiffest sentences ever handed down in this type of Chinese copyright infringement case.
Microsoft has called the group part of "the biggest software counterfeiting organization we have ever seen, by far" and estimated its global sales at more than $2 billion.
The case is considered by some legal specialists to be a landmark because it involved a joint antipiracy effort by the Federal Bureau of Investigation and the Chinese Ministry of Public Security.
Law enforcement officials said it was also notable because the group operated like a multinational corporation, producing and distributing high-quality counterfeit software that was created and packaged almost identically to the real products, despite Microsoft's antipiracy measures.
The counterfeit goods, like
American and Chinese officials say they broke up the criminal ring in July 2007 with the arrest of 25 people in China, the dismantling of several manufacturing facilities and the confiscation of counterfeit software valued at more than $500 million.
"This is absolutely unprecedented," David Finn, Microsoft's associate general counsel for worldwide piracy and counterfeiting issues, said. "The size and scope of the operation is unlike anything we've seen before. We found their products in 36 countries."
A separate trial involving nine suspects in Shanghai has not yet reached a verdict. That group has been accused of counterfeiting Microsoft and Symantec software and distributing it worldwide.
Legal specialists say that software pirates are becoming increasingly sophisticated and that the two court cases show that China is capable of exporting high-quality, fully packaged software that could easily be sold as if it were the real thing.
Even customs officials have been fooled by the counterfeits, which contained hologram markings and Microsoft's difficult-to-replicate "certificates of authenticity," investigators say.
Counterfeiting experts say the ring appeared to be less interested in selling its products inside China, where counterfeit Microsoft software can be purchased for as little as $3. They were seeking the higher-value export market.
Microsoft said its 75-member antipiracy team had been tracking the ring since 2001. The FBI began its operation, code-named Summer Solstice, in 2005 and cooperated with Chinese officials.
American politicians and corporate executives have been pressing China for years to crack down on piracy and intellectual property rights abuses involving everything from music and film to expensive software products. Software piracy is rampant in China, where about 80 percent of computers are believed to use counterfeit software, according to the Business Software Alliance.
The counterfeiting has caused some friction between American and Chinese officials, but China insists that it has made significant progress in its fight against intellectual property violators. The successful prosecution of one of the biggest software counterfeiting rings is seen by the government as a major breakthrough.
Shenzhen officials declined to comment Wednesday on the court verdict. While the FBI and Chinese officials say hundreds of millions of dollars worth of material were seized in a variety of international raids, the Shenzhen court found on Wednesday that the suspects on trial there had sold less than $200,000 worth of counterfeit products overseas.
It is unclear whether others pocketed much greater sums or whether many more ringleaders are still at large.
Most of those convicted Wednesday had completed only middle school, according to court documents. But members of the group had access to one of China's biggest disk manufacturing companies in Shenzhen through the use of fake licenses, court papers said.
The counterfeit Microsoft software was produced using manufacturing equipment that costs millions of dollars, investigators said, and appeared in English, German, Italian, Korean, Spanish as well as other languages.
The Chinese government found warehouses filled with molding machines, gilding machines, sealing machines and air compressors.
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