1. Making Anti- Counterfeiting Laws and Enforcement Work: A Case Study from China David Finn Associate General Counsel World-wide Anti-Piracy and Anti-Counterfeiting Microsoft Corporation Graphics Copyright © Seagrave (J. Bush) | Agency: Dreamstime.com

2. The software industrys counterfeiting problem Overall world-wide piracy problem Overall world-wide piracy problem35% average world-wide piracy rate for business software. More than 1 out of 3 copies of business software in use world-wide is counterfeited or otherwise infringing. Lost revenues: $39.6bn. IDC, The Risks of Obtaining and Using Pirated Software, Oct. 2006 Tier 1 - Piracy Rate Below 50% Tier 2 - Piracy Rate 50% to 80% Tier 1 - Piracy Rate Above 80% Guangdong: Center of China Counterfeiting Industry Source: BSA, IDC

3. The software industrys counterfeiting problem High-quality counterfeits are a growing problem High-quality counterfeits are a growing problem High-quality printing and packaging Replication of Microsoft product security features Disc holograms (edge to edge) Certificate-of-Authenticity (COA) labels Security threads for COAs Unique security keys – required for activation and validation Consumer fraud as well as other economic and societal harm COUNTERFEITgenuine

4. The Chinese counterfeiting syndicate 19 products in 11 languages found in 36 countries Forensics showed at least 30 unique production lines $2 billion+ estimated value of counterfeits produced UNITS FOUND IN TEST PURCHASES AND SEIZURES COUNTRYUNITS China 384,732 Taiwan 56,827 United States 56,638 Germany 54,288 United Kingdom 6,876 Austria 4,803 Spain 4,585 Switzerland 3,134 Ireland 2,040 Qatar 1,500 Canada 1,384 UAE 1,025 India 583 Israel 426 Australia 402 Korea 375 Italy 317 Pakistan 200 Indonesia 125 Malaysia 108 Thailand 96 Singapore 71 Netherlands 23 Poland 22 Egypt 16 New Zealand 14 South Africa 14 Nigeria 11 Philippines 7 Paraguay 2 Cyprus 2 France 1 Ethiopia 1 Czech Republic 1 Trinidad & Tobago 1 Croatia 1 WORLD-WIDE 580,381 # of Countries 36 36 # of Languages 11 # of Products 19 19 Units by Country 100,000 to 400,000 10,000 to 99,999 1,000 to 9,999 100 to 999 0 to 99

5. July 2007 arrests and seizures in China FBI and Ministry of Public Security meeting in June Raids and arrests July 6-16, 2007 24 raids and 25 arrests in three cities $500 million Value of counterfeit software and components seized, including 22 master replication discs, 70,000 units of counterfeit Vista, Windows XP and Office 2007; 250,000 counterfeit COA labels; 60,000 user guides, product cases, and security labels; and asset seizures totaling $7.7 million including equipment and raw materials Seized product CounterfeitCOAs Counterfeit COAs Security thread Fake holograms Fake activation keys

6. Lessons learned 1.Substantial investigative work is needed. Six-year investigation – begun in May 2001 Test purchases and raids - 580,000 counterfeits from 36 countries Test purchases from 2,033 on-line auctions in 17 countries Identification of major targets and distribution channels Wide expertise needed: traditional investigation, product ID, distribution channel expertise, business intelligence, lawyers All this on top of security features built into the products 2.Cooperation between the public and private sector, as well as between different public enforcement officials across borders, is vital. Michel Danet, WCO: Customs around the world, from Cairo to London, Vancouver to Hamburg, and New York to Beijing, seized dozens of shipments numbering thousands of counterfeit Microsoft software products produced by these criminals. Documentary evidence Alleged Mr. Big

7. Lessons learned 3.Cooperation with the supply chain and even consumers can provide invaluable evidence. More than 100 resellers helped to trace counterfeits, provide physical evidence including invoices, payment slips, e-mails More than 1,000 consumers sent physical copies of Windows XP for forensic analysis Tens of thousands of consumers used the Genuine Advantage security feature to identify their software as fake 4.Successes against counterfeiting can be achieved in China. The involvement and cooperation of the FBI with the Chinese Ministry of Public Security was key Range of products & components seized

8. 5.Public awareness of these cases is an indispensable part of the fight against counterfeiting. Lessons learned

9. Making Anti- Counterfeiting Laws and Enforcement Work: A Case Study from China David Finn Associate General Counsel World-wide Anti-Piracy and Anti-Counterfeiting Microsoft Corporation