First Felony Indictments Issued for Software Piracy

Acting U.S. Atty. Michael Yamaguchi on Wednesday announced the nation’s first indictments for software piracy under a new federal copyright law that made commercial counterfeiting a felony instead of a misdemeanor.

In two separate cases, defendants allegedly made thousands of copies of computer software belonging to Microsoft Corp. of Redmond, Wash., Assistant U.S. Atty. Kent Walker said.

Indictments were returned by a federal grand jury against two Silicon Valley companies and several individuals.

Abba Systemations Inc., doing business as Prosys Inc. of Fremont, allegedly counterfeited more than 20,000 copies of Microsoft MS-DOS and Windows software, as well as the manuals and packaging, and sold them.

The defendants then allegedly laundered approximately half a million dollars through Avenue Systems Group, a corporation they established, Walker said.

Named in the indictment are Prosys Inc., Avenue Systems Group, Joseph Wu, Henry Siu Kwan and William Alvin Hay.

Copyright and conspiracy counts carry maximum penalties of five years and $250,000 for the individual defendants and $500,000 for the corporate defendants, Walker said.

In the second case, Ever Supply Inc. of Milpitas, Roland Tsai and Tony Shen allegedly agreed to sell an FBI informant several thousand copies of Microsoft MS-DOS and Windows software earlier this year. The FBI seized more then 1,000 copies of the programs with a retail value of more than $300,000, the Department of Justice said.

Former President George Bush signed the bill in November to elevate commercial software piracy from a misdemeanor to a felony.

Bootlegging results in an estimated loss of $1.2 billion to U.S. software publishers each year out of annual sales of $6 billion to $7 billion.