June 30, 2005

Suspected file-swappers arrested in global raid

By Andy Sullivan

WASHINGTON (Reuters) - Police in a dozen countries haveseized computers and made arrests in a raid of groups thatillegally copied more than $50 million worth of software,movies, music and video games, U.S. and Dutch authorities saidon Thursday.

Investigators across the globe conducted 90 searches in aneffort to disrupt the sophisticated "warez" groups that areresponsible for the vast majority of copyrighted material thatis available illegally online.

The 22 groups distributed "Star Wars Episode III: Revengeof the Sith," Adobe Systems Inc.'s Photoshop software,and hundreds of other well-known titles that had been strippedof their copy protection, the U.S. Justice Department said.

Four people were arrested in the United States and threemore in the Netherlands, authorities in those countries said.

More computers were seized in Australia, Israel, Germany,South Korea, Norway, France, Sweden, Denmark, Russia, Poland,Canada and Hungary, according to the Dutch Finance Ministry.

"We have shown that law enforcement can find and prosecutethose who try to use the Internet to create piracy networksbeyond the reach of law enforcement," U.S. Attorney GeneralAlberto Gonzales said at a press conference.

Warez groups are responsible for 95 percent of thecopyrighted material that ends up on Internet "peer-to-peer"networks, according to U.S. Customs and ImmigrationEnforcement.

Motivated by fun rather than profit, warez groups rely onindustry insiders to steal movies, software and other worksbefore they're released, then strip them of their copyprotection and post them on secret server computers.

From there, the works spread quickly across the Internetand become available to millions through peer-to-peer networkslike Kazaa, or are burned onto discs to be resold byunscrupulous retailers around the world.

U.S. officials broke up a warez ring called DrinkOrDie in2001, and led an international effort in April 2004 that seized200 computers.

"One may wonder whether or not this is simply scraping thetip of the iceberg, but we believe it is very, very importantto show the community that we care very much about theprotection of intellectual property rights," Gonzales said.

"We believe that actions such as this are going to have, wehope, a significant deterrent effect."

In many countries it is not illegal to download certaindigital files such as music, but it is illegal to upload themand make them available to other computer users on theInternet.

Recording labels and movie studios sued thousands of peoplewho distribute their material through peer-to-peer networks,and have sued several peer-to-peer software makers forcopyright infringement.

On Monday, the U.S. Supreme Court ruled that peer-to-peernetworks can be held liable if they encourage users to copyprotected works. (Additional reporting by Lucas van Grinsvenin Amsterdam)