A story in yesterday’s New York Times reports on anti-piracy enforcement actions in Russia that have been used for more nefarious purposes than protecting intellectual property rights. 

As General Counsel for Microsoft, it was not the type of story that felt good to read.  It described instances in which authorities had used piracy charges concerning Microsoft software to confiscate computers and harass non-governmental organizations (NGOs) and others engaged in public advocacy.  It suggested that there had been cases when our own counsel at law firms had failed to help clear things up and had made matters worse instead.
 
Whatever the circumstances of the particular cases the New York Times described, we want to be clear that we unequivocally abhor any attempt to leverage intellectual property rights to stifle political advocacy or pursue improper personal gain.  We are moving swiftly to seek to remove any incentive or ability to engage in such behavior.

Some of our internal teams around the world were already looking at these issues, and they had turned to human rights advocates to ask for advice.  We pulled these internal teams together to assess the issues raised in the New York Times story, and yesterday morning we had our internal counsel in Moscow, Paris, and London on the phone with a number of our senior Legal and Corporate Affairs personnel from the Seattle area.

Our first step is clear-cut.  We must accept responsibility and assume accountability for our anti-piracy work, including the good and the bad.  At this point some of the specific facts are less clear than we would like.  We will retain an international law firm that has not been involved in the anti-piracy work to conduct an independent investigation, report on its conclusions, and advise us of new measures we should take.

We don’t, however, want simply to wait for the outcome of this review.  Yesterday we therefore focused on two principal questions:

  • Can we do more with our existing software donation program for non-government organizations to protect human rights groups and journalists from unwarranted piracy accusations in these situations?
  • Are there additional steps that we can take to stop individuals who are fraudulently pretending to act on our behalf in order to extort organizations with threats of piracy charges?

As we talked through each issue, it became clear that there are some immediate steps we can take to start to improve the situation markedly.  We therefore decided to pursue the following:

To prevent non-government organizations from falling victim to nefarious actions taken in the guise of anti-piracy enforcement, Microsoft will create a new unilateral software license for NGOs that will ensure they have free, legal copies of our products.

This step makes sense for a couple of reasons.  First, it builds on our existing work to provide NGOs with donated software, which we’ve been doing for many years in the United States and have expanded over the past few years to over 30 countries, including Russia, where we launched the Infodonor program last year.  Under our existing program each NGO can obtain free of charge six different Microsoft software titles for up to 50 PCs.  They can then obtain 300 new licenses every other year.  In the past year, we donated software with a fair market value of over $390 million to over 42,000 NGOs around the world.  (Clearly, we’re trying to donate our software to NGOs, not focus on them as anti-piracy targets.)

One challenge, however, is that some NGOs in a number of countries, including Russia, are unaware of our program or do not know how to navigate its logistical processes, which involves ordering the donated software through a Microsoft partner.  We’ll solve this problem by providing a unilateral NGO Software License that runs automatically from Microsoft to NGOs and covers the software already installed on their PCs.  We’ll make this new, non-transferable license applicable to NGOs in a number of countries, including in Russia.  We will also make it available to appropriate journalists’ organizations in order to include small newspapers and independent media.  Because it’s automatic, they won’t need to take any steps to benefit from its terms.

We’d still like to move NGOs to our existing donation program over time, because it better enables organizations to keep their software up-to-date and secure.  For this reason, this new unilateral software license will last until 2012, giving us plenty of time to help them move to the standard program.  (And if we learn that they need more time, we can always make that arrangement.)

The second reason this step makes sense is because it cuts in one swoop the Gordian knot that otherwise is getting in the way of our desired handling of these legal issues.  The law in Russia (and many other countries) requires that one must provide truthful information about the facts in response to a subpoena or other judicial process.  With this new software license, we effectively change the factual situation at hand.  Now our information will fully exonerate any qualifying NGO, by showing that it has a valid license to our software.

Of course, to be effective this information needs to make its way through the legal process and into the courtroom.

For this reason, we’re creating in Russia a new NGO Legal Assistance Program focused specifically on helping NGOs document to the authorities that this new software license proves that they have legal software.

To distribute information broadly across the country, we will publish and circulate to relevant authorities in Russia the terms of our newly announced NGO Software License and provide information about it on the web.  We’ll also publish contact details so NGOs and others can alert Microsoft to any questions from authorities regarding how its coverage applies to them.

In addition, upon request by an NGO, the relevant authorities or, as appropriate at our own initiative, Microsoft, will provide a letter setting out the terms of the NGO Software License and will affirm that the NGO is covered by its terms.  This will thereby make clear that the NGO is not using illegal Microsoft products and that there is no basis for any claim of copyright infringement in the matter.

We’ll also implement a number of other specific steps to ensure that our outside lawyers are well-trained in administering the NGO Software License.  During the past year we instituted mandatory training for our 40 outside counsel in Russia, and this will take that work a step further.  Finally, Microsoft internal counsel in Russia will take a more direct role in engaging with relevant authorities and will travel wherever necessary in Russia to meet personally with local authorities to explain the coverage of the NGO Software License.

Finally, we will undertake new steps to protect against third parties pretending to represent Microsoft in order to extort money for illegal software use.  Our team in Russia had already started work to address this by creating a list on the web of our authorized counsel, so that anyone can review this and readily check someone’s claim that they represent Microsoft.  This is a good step, but we can and should do more.  For that reason, I’ve asked our team to develop a new program that can begin functioning next month, and I’ve told them that we’ll provide the budget and resources needed to get this working effectively.

Ultimately, our goals are straightforward.  We aim to reduce the piracy and counterfeiting of software, and we aim to do this in a manner that respects fundamental human rights.  Piracy is a very real problem.  It costs jobs and business growth and can cheat consumers who think they’re paying for genuine products.  We know for a fact that the reduction of software piracy has breathed new life into Russia’s own software industry and has created new jobs in our industry, both at Russian software companies and for U.S. software exporters.  But none of this should create a pretext for the inappropriate pursuit of NGOs, newspapers, or other participants in civil society.  And we certainly don’t want to contribute to any such effort, even inadvertently.

At the end of the day, it’s clear that we have a responsibility to take new steps to address this situation, working in partnership with the various stakeholders concerned about this issue.   The steps described above should start to move us in that direction.  If needed, we will take further steps to ensure that they are effective.

Posted by Brad Smith
Senior Vice President and Microsoft General Counsel