Key Takeaways:
- Pirated and fraudulent software subscriptions harm businesses and reduce innovation.
- Illegitimate software downloads may contain malicious software, leading to data breaches and risk of identity theft.
- Strong licensing, legal enforcement, and anti-piracy technology help combat counterfeiters.
The issue of software counterfeiting touches on complex questions like ethnicity, law, politics, sociology, technology, and culture, stemming from the unauthorised reproduction and distribution of software for commercial gain.
From simple illegal copies to sophisticated imitations, counterfeited software is almost everywhere.
In the following article, we will discuss counterfeiting in greater detail, what methods counterfeiters use, laws related to such activities, impacts on consumers and businesses, as well as the mechanisms of detection and possible preventive measures.
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What is Software Counterfeiting?
As the name suggests, software counterfeiting means reproduction and distribution of software without authorisation, albeit with a certain degree of skill used to deceive potential clients into thinking that they are dealing with legitimate products.
Most of these versions are distributed without appropriate licenses, while some of them tend to bundle malware with itself, or simply do not take the effort to offer the necessary support and updates.
Distributing or selling these low-quality products tends to result in revenue loss to legitimate software developers and companies across the board.
Forms of Software Counterfeiting
Software counterfeiting can take several forms, including:
Pirated Software: Unauthorised copies of legitimate software distributed without permission.
Cracking and Keygen Software: This involves bypassing or removing copy protection measures (such as correct product key or licensing keys) from software, rendering it usable without the need for the original activation process.
Fake Software Distributions: Counterfeit software can also appear as a legitimate product but is, in fact, a malicious copy. The counterfeiters will most often use product packaging and branding that is almost identical to the original, making it hard for users to differentiate between the authentic and the fake.
License Key Generators: Programs designed to generate fake product keys to activate pirated software.
OEM Counterfeiting: Original Equipment Manufacturer (OEM) counterfeiting is reselling unauthorised copies of software packaged together with hardware, e.g., computers or printers. These copies frequently are not licensed properly, resulting in legal and functional problems for companies.
The Scope of Software Counterfeiting
Global Scale of Software Piracy
Software counterfeiting is a global issue that impacts businesses, governments, and individuals.
According to the Business Software Alliance (BSA), it is estimated that 37% of all software in use worldwide is unlicensed or pirated.
In 2016, a survey conducted by BSA and The Software Alliance revealed that 39% of all software installed on computers was not properly licensed. This statistic represents billions of dollars in losses for software developers, particularly in countries with weaker intellectual property laws and enforcement mechanisms.
Additionally, each year, tens of thousands of people report to Microsoft that they bought software that they later learned was counterfeit.
The impact is especially severe in emerging markets, where counterfeit software is often the most affordable option for consumers and businesses.
Major Contributors to Software Counterfeiting
- Developing Markets: Many developing nations have high rates of software piracy due to economic factors and a lack of enforcement.
- Online Marketplaces: Counterfeit software is frequently sold through unauthorised online platforms.
- Peer-to-Peer Sharing: Torrent sites and other file-sharing platforms facilitate the distribution of illegal software copies.
- Dark Web Transactions: Some software counterfeiters operate on the dark web, selling hacked software and stolen licenses.
Industry Sectors Affected by Software Counterfeiting
Software counterfeiting affects a wide range of industries, with the most notable being:
Technology and Software Development: Companies that create operating systems, productivity software, and applications are hit hardest by piracy and counterfeiting, as counterfeit versions undermine their revenue streams.
Gaming: Video game piracy and counterfeit software are rampant, especially in the digital space where cracking game protection mechanisms is a common method.
Healthcare and Financial Services: Both industries rely heavily on specialised software for their operations, and counterfeit versions can pose significant security risks, such as data breaches and non-compliance with regulatory standards.
Education: Educational institutions, particularly in lower-income regions, may be more susceptible to using counterfeit software due to the high cost of legitimate licenses, putting students at risk of using outdated or insecure software.
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Counterfeit Software Cases
Fugitive’s $15 Million Investment Account Seized in Connection with Counterfeit Software
In a major case involving counterfeit software, U.S. authorities seized nearly $15 million from the Swiss bank account of Shaileshkumar Jain, a fugitive linked to a scheme selling counterfeit antivirus software.
Jain lured customers via fraudulent websites and email spam, selling fake Symantec software.
The funds were traced to a Swiss investment account linked to Jain’s operations.
The seizure is part of ongoing efforts to bring Jain to justice, who fled the U.S. in 2009 after being indicted on charges including trafficking counterfeit goods and money laundering.
Lakewood Man Sentenced for Trafficking Counterfeit Computer Software
Bennett Harper, a Lakewood, CA resident, was sentenced to 37 months in prison for trafficking over 1,000 counterfeit Microsoft Office software CD-ROMs.
He operated an online scheme, misleading eBay sellers to sell counterfeit goods under the guise of legitimate software.
In addition to his sentence, Harper was ordered to pay $370,000 in restitution to Microsoft, reflecting the retail value of the seized counterfeit software.
His case underscores the serious consequences for individuals involved in product counterfeiting and piracy, which pose significant economic damage.
The Impact of Software Counterfeiting
Economic Impact on the Software Industry
Counterfeiting software results in huge financial losses for software firms.
From several reports, the cost of software piracy globally is in billions of dollars annually. This denies developers and companies equitable returns for their intellectual property, affecting their capacity to innovate and finance future developments.
For less established firms and businesses, the economic impact can be exceptionally far-reaching and can severely stifle their growth opportunities.
Security and Privacy Risks for Users
Fake software rarely has the security patches and updates that are required, which makes users vulnerable to all kinds of attacks, ranging from malware infection to ransomware and data breaches.
Such issues are particularly concerning when software counterfeited is used in high-risk sectors like healthcare, finance, and government, where privacy and integrity of data are most critical.
Apart from this, deceptive software may inadvertently grant illegal access to individual information, credit card numbers, or confidential business information. This might result in identity theft or financial loss to individual users and companies.
Legal and Ethical Consequences
Software piracy is not only a legal offence—it is also an ethical lapse in respecting intellectual property.
Software piracy is tantamount to stealing, robbing creators and developers of their deserved revenues.
The legal consequences for selling or utilising counterfeit software range from country to country but include heavy fines, jail time, and the risk of a negative reputation.
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Technological Measures to Combat Counterfeiting
As a software counterfeiting threat arose, many companies came up with several technological measures to protect their products.
Digital Rights Management (DRM)
DRM is responsible for restricting the unauthorised usage and distribution of digital content and is usually adopted by a company wishing to prevent counterfeiting piracy of its products.
Within the software field, DRM systems have several components like:
- License Key: A software activation code.
- Activation Sever: A server that verifies if a license is valid.
- Encryption: A software code modifying technique that makes reverse engineering difficult.
Although DRM is helpful in many ways, it is not without controversy. Many people believe that overly complex DRM systems disruptsthe ease of use of the software for consumers and blocks reasonable use.
Watermarking and Fingerprinting
Identification and classification markers are inserted in software copies through digital watermarking and fingerprinting.
These markers enable the tracing of the sourced software and make it easier to locate counterfeit copies.
These approaches may be less effective against a determined and skilled counterfeiter who would attempt to remove or alter these markers.
Blockchain and Distributed Ledger Technologies
New technologies such as blockchain hold out new hopes for fighting counterfeiting.
By using decentralised ledgers, software developers are able to create tamper-evident records of software licenses and transactions.
Blockchain solutions could transform software distribution by making every copy verifiable and traceable.
Code Obfuscation
Code obfuscation is a process of intentionally making the source code of programs complex and not readable.
Obfuscation of code can prevent reverse engineering attempts by counterfeits, thus making it more difficult for them to produce effective replicas of the product.
Anti-Counterfeiting Measures in Software and Digital Security
| Company/Organisation | Anti-Counterfeiting Measures |
|---|---|
| Adobe | Implements a “counterfeit deterrence system” within programs, runs validation checks to identify non-genuine software, and educates users about spotting illegitimate copies. |
| Central Bank Counterfeit Deterrence Group (CBCDG) | Developed the Counterfeit Deterrence System that stop digital imaging tools and personal computers from taking or replicating images of secured banknotes. |
| Personal Computer Hardware & Software Manufacturers | Many voluntarily adopted the CBCDG system to prevent counterfeiting of currency, ensuring customer security without tracking user activities or affecting product performance. |
| Intuit (QuickBooks, TurboTax) | Uses product activation, license keys, and online verification to ensure only licensed users can access the software, preventing unauthorised use and piracy. |
| Microsoft | Uses product activation keys, online activation, and tamper-resistant packaging. Integrates software tightly with hardware (e.g., Windows) and promotes subscription models (Microsoft 365). |
| Autodesk | Employs product activation, online licensing, and sophisticated license management tools to secure its high-value software from counterfeiting and unauthorised use. |
What’s Next?
Software counterfeiting poses significant risks to individuals and businesses alike.
Becoming a victim of software counterfeiting can lead to encountering malicious software, experiencing activation issues with reputable software programs, and even facing the risk of identity theft.
Fraudulent software subscriptions and illegitimate software downloads contribute to the proliferation of counterfeit products, jeopardising system security and data integrity.
Strong action against software pirates is crucial to curb these threats. Instead of resorting to risky alternate solutions, procure software from authorised vendors.
Bytescare offers an industry-leading brand protection solution designed to monitor, detect, and remove counterfeit threats at scale. Book a demo today to see how we can protect your software from counterfeiting and intellectual property infringement.
Protect your intellectual property and ensure the safety of your digital environment by choosing legitimate software and leveraging effective anti-counterfeiting solutions.
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FAQs
What does “victim of counterfeit software” really mean?
Being a victim of counterfeit software means you’ve unknowingly purchased, installed, or are using software that’s an illegal copy, passed off as genuine. It can also mean your legitimate license has been compromised and is being used by others without your knowledge. You may experience malfunctions, lack of support, security vulnerabilities, and potential legal issues.
What is an example of software counterfeiting?
Imagine buying a physical copy of Windows from an unauthorised online marketplace at a significantly discounted price.
The packaging looks almost identical to the real thing, but the disc contains a copied, potentially modified version of Windows. This copied version might lack critical security updates or include malware. This is a prime example of software counterfeiting.
Another example is downloading “cracked” software from torrent sites – these are unauthorised copies designed to bypass activation.
How to stay safe from counterfeit software and fraudulent subscriptions?
To stay safe from counterfeit software and fraudulent subscriptions, always purchase from reputable sources, keep your software updated, and use strong, unique passwords. Monitor your accounts regularly and be cautious of offers that seem too good to be true. Report any suspicious activity to the software provider and educate yourself about common scams. Utilise security software to detect threats and ensure your devices are protected. Always verify the authenticity of websites before making purchases and consider using payment methods that offer fraud protection.
What causes the “you may be a victim of software counterfeiting” error?
This error, often seen in Windows 7, indicates that Windows has detected a problem with your software license. Several factors can trigger it:
Non-genuine license: Your product key may be invalid, counterfeit, or blocked by Microsoft.
Overuse of a license: Using the same product key on more computers than the license allows.
Missing or corrupted registry keys: Issues within the Windows registry related to your software license.
Insufficient permissions: The Network Service account may lack the necessary permissions to access license information.
Incorrect system time: A significantly incorrect system time can interfere with license validation.
Hardware changes: Significant hardware modifications can sometimes trigger the error.
What should I do if I suspect I have counterfeit software?
If you suspect you’ve purchased or installed counterfeit software, immediately uninstall it. Contact the legitimate software vendor to report the issue and explore options for obtaining a legitimate copy. You should also run a full system scan with a reputable antivirus and anti-malware program.
How can I protect myself from software counterfeiting?
Purchase software directly from authorised retailers or the software vendor’s official website. Be wary of unusually cheap deals. Register your software after purchase. Keep your software up to date with security patches. Educate yourself and your employees about the risks of software counterfeiting.
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