Digital software theft raises security dangers
Digital piracy, often thought of as the illicit trade in music, software
and games, has moved into more dangerous territory.
A black market has emerged for scientific and engineering software powerful
enough to fall under U.S. export restrictions. Such software can be used in
a variety of tasks, including designing rockets or nuclear reactors or
predicting the path of a cloud of anthrax spores.
Intellectual property "isn't just Napster," and it "isn't just copying
Madonna's songs," one Justice Department official said. "It's the software
that allows you to model the fuel flow in a fighter jet."
Much of the specialized software cannot be exported legally to "pariah"
countries such as Libya, North Korea or Iraq. Yet Steve Legensky, the
founder and general manager of Intelligent Light, an engineering software
company in Lyndhurst, New Jersey, has found bootleg copies of his company's
software, which is bound by the export controls, being offered on the
Internet alongside sophisticated engineering wares from 120 other
companies. Many of those companies are also subject to more stringent rules
against exporting their technology to a larger list of countries deemed a
military risk by the U.S. government.
The illicit copies of the software from Intelligent Light, which in
licensed versions typically sells for $12,000, was being sold by Chinese
entrepreneurs for $200. The posted advertisement for the wares promised
that a "step-by-step install guide and crack file make it easy to install
and use!" Which means that anyone with a modem and a little cash can evade
the export control rules, even those that apply to prohibited countries.
"All they need to do is get a wire transfer, and they can get the software
over the Internet," Legensky said.
Jeanne Mara, the company's president and chief executive, said, "It stinks
that people can get it for nothing - but it absolutely stinks that these
guys can get it for nothing."
But when companies want to take action against a breach of the export
controls, they often find themselves frustrated - whether because the U.S.
government is reluctant to crack down on emerging trade allies such as
China or because software piracy over the Internet is almost impossible to
stop, even when there are attempts to do so.
Mara said she had made the rounds in the Commerce, Justice and State
departments and the Small Business Administration. For her troubles, she
said, she got many sighs and apologies from officials who seemed averse to
addressing the delicate politics and economics of U.S.-China relations.
Black-market sales and violations of copyrights are not new, and China has
long been notoriously lax in its protection of international copyright. The
Business Software Alliance, an industry lobbying group with a vigorous
anti-piracy program, estimates that 92 percent of the business software
used in China is pirated. Robert Kruger, the group's vice president for
enforcement, said that despite small declines in the rate of piracy, the
dollar amount was growing as China developed.
"The bottom line is, we have still a tremendous amount of work to do to
make China a safer place for intellectual property, and software in
particular," he said.
Though the case against piracy is passionately argued by paid advocates for
the music and film industries and Silicon Valley, the Business Software
Alliance's own surveys show that most consumers find it hard to summon
outrage. They often see the fight as primarily a way to ensure that Bill
Gates and Britney Spears, or other wealthy executives and artists, get
every penny that is due to them.
Not all concerns about software piracy, however, are about ensuring that
the rich become richer. When software such as Visual Light shows up on the
wrong desktop, issues of national security come into play, said Tom Kurke,
vice president for business development and global alliances for Bentley
Systems, which helps companies collaborate on and manage projects in
architecture, engineering and construction.
"Piracy is bad enough, but piracy in these blacklisted countries is three
times worse," he said.
William Reinsch, president of the National Foreign Trade Council in
Washington, said, "If you're talking about bad guys - and Iraq is a classic
example - you don't want to give them the ability to get out of the Stone
Age if you can avoid it."
In Mara's case, "As soon as the word 'Chinese' came up, everybody ran in
the other direction," she said. At least at the Justice Department, she
said, the officials and agents recognized the threat her software posed if
it reached the wrong people.
The United States has made progress in recent years in setting up
agreements with China to address law enforcement issues, Justice Department
officials said. "The Department of Justice will review any matter and
consider taking appropriate prosecutorial measures" to combat software
piracy, said John Malcolm, deputy assistant attorney general in the
criminal division.
But in practice, mounting an international investigation is daunting and
reserved for prominent cases.
The biggest problem with policing software exports, current and past
officials said, is the ephemeral nature of the wares: With the Internet,
software can slip past national barriers with a simple click of a mouse.
When experts such as Reinsch talk of trying to restrict the movement of
software, they tend toward metaphors of genies and bottles, bubbles under
wallpaper and putting toothpaste back in tubes.
"This drove me crazy as an export official," said Reinsch, who led the
Bureau of Export Administration during the Clinton administration. "How do
you enforce this?"
Reinsch and the federal government learned the hard way in the 1990s, when
the Clinton administration tried to limit the export of strong encryption
software. U.S. high-technology industries argued that the policy only hurt
American businesses and honest buyers because the technology could be
developed anywhere and could be distributed illicitly with a computer
modem. Ultimately, the White House relented and softened export restrictions.
The idea of restraining other software is similarly quixotic, said Stewart
Baker, a former general counsel of the National Security Agency and a
prominent voice in the Clinton administration against the spread of strong
encryption technology internationally.
"In the crypto area, you had no real support from industry, and they were
delighted to see it escape" to other countries, he said. "But here, with
the best will in the world, you see it's escaped."
To his mind, Baker said, Intelligent Light's problems are part of a broader
trend of mistakenly looking at national security issues as problems for law
enforcement. "O.K., you can't prosecute 'em," he said. "Well, duh."
Instead, he said half-jokingly, the government could be exploring
alternatives: "Surely, this is the case where you ought to call a
government-funded hacker and say, 'Screw it up!'" and make it more
difficult for the black-market entrepreneurs to conduct their business.
Mara and Legensky say they used to receive handwritten letters occasionally
with postmarks and stamps from Iraq bearing Saddam Hussein's picture. "We
have heard of your beautiful software," the letters would typically say.
"We would like to buy it." Since the software became part of the illicit
Internet bazaar, Mara said, the stream of exotic postmarks has tapered off.
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