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Antipiracy allies: Watch out for the mob

Hollywood and Microsoft are uniting to warn Congress that their intellectual property is being stolen and resold by organized-crime gangs around the globe.

WASHINGTON--Hollywood and Microsoft are uniting to warn Congress that their intellectual property is being stolen and resold by organized-crime gangs around the globe.

Software and movie DVD counterfeiting is an acute problem, with criminal gangs operating factories in Russia, Malaysia and other countries that have weak copyright laws, Microsoft and the Motion Picture Association of America (MPAA) said Thursday. Jack Valenti, president and CEO of the film industry group, and Richard LaMagna, a manager of Microsoft's antipiracy investigations, testified before a House Judiciary subcommittee.

"Large, violent, highly organized criminal groups are getting rich from the theft of America's copyrighted products," Valenti said. "Only when governments around the world effectively bring to bear the full powers of the state against these criminals, can we expect to make progress."

John Malcolm, a Justice Department official who oversees the computer crime division, warned the panel about the connections between copyright piracy and terrorism.

"Organized crime syndicates are frequently engaged in many types of illicit enterprises, including supporting terrorist activities," Malcolm said. "All components of the Justice Department...will do everything within their power to make sure that intellectual property piracy does not become a vehicle for financing or supporting acts of terror."

LaMagna said Microsoft has developed anticounterfeiting features, including an edge-to-edge hologram that covers an entire side of a CD-ROM and is etched into recent versions of Microsoft Office.

"So far, counterfeiters have found it impossible to replicate the edge-to-edge technology," LaMagna said. "As an alternative, they have developed holographic stickers that, when attached to the CD-ROM, closely resemble the look of the edge-to-edge hologram. Recent versions of these fake stickers found in Asia are of such high quality, few consumers would be able to detect the counterfeit."

LaMagna expressed cautious support for a change to federal anticounterfeiting laws that would close what he called a "loophole." Currently, federal law covers only "counterfeit labels," not fake holograms or other packaging material. It has long been illegal to sell copyrighted products, such as the discs themselves.

Last year, as previously reported, a bill was introduced to Congress that originally was designed to address the hologram issue. But it morphed into something that would make it a federal felony for people to try and trick devices into playing their own music or running their own computer programs.