South Korea's cat-and-mouse with piracy

Residents with pirated software have resorted to an old-fashioned method for skirting Microsoft and the authorities. They scram.

Michael Kanellos
Michael Kanellos Staff Writer, CNET News.com
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas.
4 min read
SEOUL, South Korea--Residents here with pirated software have resorted to an old-fashioned method for skirting Microsoft and the authorities. They scram.

Recently in a city near Seoul called Incheon, police investigators who were empowered to audit software on PCs snuck in through an office building's back exit, according to a source who worked for an Internet service provider inside the facility at the time. A receptionist immediately began to call all the businesses in the building.

"Everyone closed their doors," the former ISP employee said. The ISP wasn't so lucky. Its employees didn't get out in time, and the company had to pay $42,000 (50 million won) in software licenses and fines.

The cat-and-mouse game among the police, the U.S. software giant and businesses here is fairly common, according to several sources. The situation is in some ways reminiscent of the U.S. Prohibition experience; the government is simply trying to enforce the law, but many people sympathize with the violators.

With a piracy rate of 40 percent to 50 percent, according to various estimates, South Korea has become one of the hot spots for cracking down on illegal software. The government, concerned about the potential effect on exports and its own software industry, has responded by passing a number of reforms.

The Computer Program Protection Act, for instance, strengthened existing copyright laws, Eun Hyun Kim, senior legal manager at Microsoft Korea, said in an interview here. Last October, the government also passed a law that allows the Ministry of Information and Communication (MIC), which governs the information technology industry, to conduct piracy investigations. Before that, he said, only the prosecutor's office and the police could do so.

No laughing matter
The reforms have been cutting the rate of piracy, according to the government. Still, because of the potential liability and the prevalence of ripped software, South Koreans try to avoid getting hit.

At one networking company, for example, employees ducked out to their cars and locked the front door to the entire office building when investigators were coming.

The company then asked other offices' employees who had to get into the building to keep the lights off so investigators couldn't tell if there were people inside.

To the government and Microsoft, the situation isn't a laughing matter.

"It has been the biggest trade issue, so the MIC has been actively involved in cracking down on ripped software. Now, the U.S. is actually quite satisfied with the improvements," Sang Kyoo Choi, director of the IT Industry Cooperation Division of the International Cooperation Bureau of the MIC, said through a translator.

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"This is not just a trade issue. We do need to promote our domestic software market. Through the crackdown on piracy, there are signs of growth in the (domestic) software market," Choi added.

A Microsoft representative stated: "They (the government) lead, and we support their activities. Nowadays, we don't lead."

The Microsoft representative asserts that the cut-and-run tactics are on the decline, but both he and Kim acknowledged that people do it. "They just close the door, because they know it is the fastest way to get away," the representative said.

Ordinary people like to swap these war stories.

One of the more popular methods to avoid the law apparently comes in making friends with someone in the government who can divulge the timing of a pending raid. A companywide holiday is then declared.

Or for a while, when investigators armed with a warrant came into an office, people would simply turn off their PC, because a wrinkle in the law prevented police from turning it on. In response, the government passed a law that allows investigators to take the hard drive out or impound the computer.

Not always allies
While some of the stories--like one about employees pitching PCs--seem a bit exaggerated, most of the comments from ordinary IT workers were consistent.

Another tactic involves using Linux, said another source. Linux is run as the base operating system, while Windows is run on top of it through an external device. Some assert that this prevents the pirated software from leaving a trace on the hard drive.

Tempers flare when South Koreans speak about the fines for using pirated software.

Microsoft Korea asserts that the size of the fines is reasonable. "In most cases, the fines are less than $5,000 U.S. If it is $10,000, it is a big fine," Kim said. The government, not Microsoft, retains all of the fines. To recover money for copyright violations, Microsoft has to file a civil action. Sometimes, companies craft a global settlement before trial that resolves both the fines and civil penalties.

The government and Microsoft, meanwhile, are not allies all the time. The MIC has begun to experiment with Linux and will spend $7 million on an open-source software trial at universities and government agencies. By 2007, the goal is to switch 20 percent of desktops and 30 percent of servers to open source.

"Dependence on foreign software is very high," Daeje Chin, the chief minister at the MIC and the former president of Samsung Electronics, said at a lunch meeting with reporters here last week. "There is support in the budget for open source. The president himself made orders on this."

Some of Chin's comments on the issue could not be obtained. Before speaking on relations with Microsoft, he replaced the translator retained by CNET News.com with one of his own and told the room he didn't want all of his comments translated, according to bilingual sources in the room.