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As Technology Advances, Pirates Lay Siege to Software Industry

March 6, 1995

SANBORN, N.Y. (AP) _ Slade Sharpsteen knew something was up when a Canadian man walked into his print shop, talked in whispers and insisted on paying cash.

The man wanted Sharpsteen to print packaging for 15,000 copies of ``Rebel Assault″ and ``Myst,″ two popular CD-ROM computer games.

It didn’t sound right, a walk-in customer at an out-of-the way print shop near Niagara Falls. So Sharpsteen called the FBI, triggering a cloak-and-dagger operation at his work place that ended in two arrests and the biggest domestic seizure yet of pirated CD-ROM games.

It’s the newest scourge in copyright infringement, which costs U.S. companies billions of dollars a year.

As home technology becomes more sophisticated and less expensive, computer piracy of copyrighted games _ educational CDs, business discs and other software _ has become easier and cheaper.

``It used to be you needed a factory to be an effective pirate. Now anybody with equipment that’s easily available can do it,″ said Steve Metalitz, vice president of the International Intellectual Property Alliance, a consortium of trade groups.

``In theory, if you’ve got the right digital equipment, you can make digital copies of software that are just as good as the originals,″ he said.

The alliance and Economists Inc., a Washington, D.C.-based consulting firm, issued a study last month calculating that pirated software, bootlegged videos and music and other copyright theft costs legitimate companies $15 billion to $17 billion a year.

The study estimates U.S. computer companies alone lost $5.2 billion worldwide in 1994 because of pirated software.

The biggest offenders are in Asia and Europe. Software counterfeiters in Japan and Germany cost U.S. firms more than $1 billion each, the study said.

China, where copyright infringement cost U.S. industries an estimated $866 million in 1994, averted a U.S. trade war last month by agreeing to crack down on pirated goods.

While copyright piracy is concentrated overseas, where U.S. officials can’t intervene, more and more counterfeiters are operating in the United States and Canada.

The arrests at Sharpsteen’s print shop show how polished piracy has become since the early days, when computer users shared crude copies of software duplicated on floppy disk drives.

Peter Misko, 63, of Mississauga, Ontario, and his son, Bruce, 36, of Chicago pleaded guilty last month in federal court in Buffalo, admitting they smuggled 15,000 copies of ``Rebel Assault″ and ``Myst″ from Canada, intending to sell them in the United States.

Peter Misko pleaded guilty to one felony charge of copyright fraud, which carries a penalty of up to 18 months of prison. Bruce Misko admitted to one misdemeanor count of the same charge, which could put him behind bars for up to one year. Sentencing is scheduled for early May.

Legitimate copies of ``Rebel Assault,″ made by George Lucas’ firm LucasArts Entertainment Co., and ``Myst,″ made by Broderbund Software Inc., sell for up to $80, while computer pirates typically peddle them for $20 or less.

On the legitimate retail market, the discs seized from the Miskos were worth more than $1 million, FBI agent Paul Moskal said.

Martin Littlefield, the assistant U.S. attorney who prosecuted the case, said the Miskos are cooperating with investigators to catch other computer pirates.

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