Microsoft Condemns the Kremlin!

The Kremlin has lost a major battle and received another humiliating international black eye.  The Microsoft Website reports:

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.

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

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.

•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.

The New York Times reports:

It was late one afternoon in January when a squad of plainclothes police officers arrived at the headquarters of a prominent environmental group here. They brushed past the staff with barely a word and instead set upon the computers before carting them away. Taken were files that chronicled a generation’s worth of efforts to protect the Siberian wilderness.

The group, Baikal Environmental Wave, was organizing protests against Prime Minister Vladimir V. Putin’s decision to reopen a paper factory that had polluted nearby Lake Baikal, a natural wonder that by some estimates holds 20 percent of the world’s fresh water.

Instead, the group fell victim to one of the authorities’ newest tactics for quelling dissent: confiscating computers under the pretext of searching for pirated Microsoft software.

Across Russia, the security services have carried out dozens of similar raids against outspoken advocacy groups or opposition newspapers in recent years. Security officials say the inquiries reflect their concern about software piracy, which is rampant in Russia. Yet they rarely if ever carry out raids against advocacy groups or news organizations that back the government.

As the ploy grows common, the authorities are receiving key assistance from an unexpected partner: Microsoft itself. In politically tinged inquiries across Russia, lawyers retained by Microsoft have staunchly backed the police.

Interviews and a review of law enforcement documents show that in recent cases, Microsoft lawyers made statements describing the company as a victim and arguing that criminal charges should be pursued. The lawyers rebuffed pleas by accused journalists and advocacy groups, including Baikal Wave, to refrain from working with the authorities. Baikal Wave, in fact, said it had purchased and installed legal Microsoft software specifically to deny the authorities an excuse to raid them. The group later asked Microsoft for help in fending off the police. “Microsoft did not want to help us, which would have been the right thing to do,” said Marina Rikhvanova, a Baikal Environmental Wave co-chairwoman and one of Russia’s best-known environmentalists. “They said these issues had to be handled by the security services.”

Microsoft executives in Moscow and at the company’s headquarters in Redmond, Wash., asserted that they did not initiate the inquiries and that they took part in them only because they were required to do so under Russian law.

After The New York Times presented its reporting to senior Microsoft officials, the company responded that it planned to tighten its oversight of its legal affairs in Russia. Human rights organizations in Russia have been pressing Microsoft to do so for months. The Moscow Helsinki Group sent a letter to Microsoft this year saying that the company was complicit in “the persecution of civil society activists.”

Tough Ethical Choices

Microsoft, like many American technology giants doing business in authoritarian countries, is often faced with ethical choices over government directives to help suppress dissent. In China, Microsoft has complied with censorship rules in operating its Web search service, preventing Chinese users from easily accessing banned information. Its archrival Google stopped following censorship regulations there, and scaled back its operations inside China’s Internet firewall.

In Russia, leaders of advocacy groups and newspapers subjected to antipiracy raids said Microsoft was cooperating with the authorities because the company feared jeopardizing its business in the country. They said Microsoft needed to issue a categorical public statement disavowing these tactics and pledging to never cooperate in such cases.

Microsoft has not done that, but has promised to review its policies in Russia.

“We take the concerns that have been raised very seriously,” Kevin Kutz, director of public affairs for Microsoft, said in a statement. Mr. Kutz said the company would ensure that its lawyers had “more clearly defined responsibilities and accountabilities.”

“We have to protect our products from piracy, but we also have a commitment to respect fundamental human rights,” he said. “Microsoft antipiracy efforts are designed to honor both objectives, but we are open to feedback on what we can do to improve in that regard.”

Microsoft emphasized that it encouraged law enforcement agencies worldwide to investigate producers and suppliers of illegal software rather than consumers. Even so, it has not publicly criticized raids against small Russian advocacy groups.

With pirated software prevalent in this country, it is not surprising that some of these groups might have some on their computers. Yet the issue, then, is why the police choose to focus on these particular targets — and whether they falsify evidence to make the charges more serious.

Microsoft also says it has a program in Russia to provide free and low-cost software to newspapers and advocacy groups so that they are in compliance with the law.

But the review of these cases indicates that the security services often seize computers whether or not they contain illegal software. The police immediately filed reports saying they had discovered such programs, before even examining the computers in detail. The police claims have in numerous instances been successfully discredited by defendants when the cases go before judges.

Given the suspicions that these investigations are politically motivated, the police and prosecutors have turned to Microsoft to lend weight to their cases. In southwestern Russia, the Interior Ministry declared in an official document that its investigation of a human rights advocate for software piracy was begun “based on an application” from a lawyer for Microsoft.

In another city, Samara, the police seized computers from two opposition newspapers, with the support of a different Microsoft lawyer. “Without the participation of Microsoft, these criminal cases against human rights defenders and journalists would simply not be able to occur,” said the editor of the newspapers, Sergey Kurt-Adzhiyev.

The plainclothes officers who descended upon the Baikal Wave headquarters said they were from the division that investigated commercial crime. But the environmentalists said they noticed at least one officer from the antiextremism department, which tracks opposition activists and had often conducted surveillance on the group.

The officers said they had received a complaint from a man named Dmitri Latyshev, who claimed that he had been in the headquarters and spotted unlicensed Microsoft software on the computers. The police produced a handwritten complaint from Mr. Latyshev, dated Jan. 27. The raid occurred the next day.

People at Baikal Wave said they had never seen or heard of Mr. Latyshev. Located in Irkutsk recently, Mr. Latyshev said by phone that he had filed the complaint but would not say why.

Baikal Wave’s leaders said they had known that the authorities used such raids to pressure advocacy groups, so they had made certain that all their software was legal.

But they quickly realized how difficult it would be to defend themselves.

They said they told the officers that they were mistaken, pulling out receipts and original Microsoft packaging to prove that the software was not pirated. The police did not appear to take that into consideration. A supervising officer issued a report on the spot saying that illegal software had been uncovered.

Before the raid, the environmentalists said their computers were affixed with Microsoft’s “Certificate of Authenticity” stickers that attested to the software’s legality. But as the computers were being hauled away, they noticed something odd: the stickers were gone.

In all, 12 computers were confiscated. The group’s Web site was disabled, its finances left in disarray, its plans disclosed to the authorities.

The police also obtained personnel information from the computers. In the following weeks, officers tracked down some of the group’s supporters and interrogated them.

“The police had one goal, which was to prevent us from working,” said Galina Kulebyakina, a co-chairwoman of Baikal Wave. “They removed our computers because we actively took a position against the paper factory and forcefully voiced it.”

“They can do pretty much what they want, with impunity,” she said.

A Company’s Pollution

The paper factory is located on Lake Baikal, the world’s oldest and deepest lake, which is home to hundreds of species that exist nowhere else, including a freshwater seal. Over the years, the factory has spewed mercury, chlorine, heavy metals and other pollutants into the water.

Baikal Wave rejoiced when the factory closed in 2008, having succumbed to sizable losses, as well as pressure from environmentalists. But after the financial crisis hit, the Kremlin worried about unrest from unemployment. In January, Mr. Putin reopened the factory, which has employed as many as 2,000 people, saying that it no longer polluted the lake.

Baikal Wave, which was founded in Irkutsk, one of Russia’s largest cities, as the Soviet Union was collapsing, began planning a protest. That was when the officers showed up.

In a statement, the Irkutsk police said the raid was proper. “The inspection of Baikal Environmental Wave was intended to protect intellectual property and had no connection whatsoever with the activities of the advocacy organization,” the statement said.

It said a forensic examination of the computers in February showed that several contained illegal software that would have cost more than $3,300. Baikal Wave said the examination was fraudulent.

Prosecutors say they are now weighing whether to press charges against Baikal Wave or its leaders. It is possible, though unlikely, that they could face jail time if convicted.

Neither Microsoft’s Moscow office nor its local lawyer contacted Baikal Wave to hear its side. The lawyer did provide testimony to the police about the value of the software that Baikal Wave was accused of illegally obtaining.

Baikal Wave sent copies of its software receipts and other documentation to Microsoft’s Moscow office to show that it had purchased the software legally. The group said it believed that the authorities would be under pressure to drop the case if Microsoft would confirm the documents’ authenticity.

Microsoft declined to do so. In a letter to Baikal Wave, the company said it would forward the materials only to the authorities in Irkutsk, which already had copies of them.

“A determination of the actual circumstances of this case and the question of whether a violation of the law took place is the duty of the court,” Microsoft said.

The company also told Baikal Wave that it was willing to have its specialists assist the police in Irkutsk in evaluating the computers.

In response to written questions, Alexander Strakh, Microsoft’s chief antipiracy lawyer in Moscow, said that in all these cases, Microsoft assisted the authorities only as called for under Russian law.

Mr. Strakh was asked whether Microsoft believed that these raids were a tool to suppress the opposition. “We have no direct knowledge of decisions by authorities to use investigations in that manner,” he said.

Microsoft has hired numerous private lawyers across Russia who represent the company in piracy cases. Several of the lawyers have cropped up in these politically sensitive inquiries.

This year, prosecutors in the southwestern city of Krasnodar brought a piracy case against an immigrant rights activist named Anastasia Denisova. She said in an interview that she was surprised at the aggressive posture of Microsoft’s local lawyer.

In an official document, the Interior Ministry said the case against Ms. Denisova was begun “based on an application” from the lawyer. (Microsoft’s Moscow office said that statement was not correct.)

Ms. Denisova said the lawyer overestimated the value of the allegedly pirated software. As a result, the accusations were more serious.

“The Microsoft lawyer was very active, coming to the court all the time, even though he was not summoned,” she said. “He also claimed that he was going to sue me, despite the fact that Microsoft had publicly stated that it would not do so against an advocacy group.”

In May, after Ms. Denisova had spent several months under the threat of a prison sentence, the charges were dropped. Prosecutors acknowledged that the investigation had been mishandled.

Samara, in Russia’s industrial heartland, has been a focal point for these raids. In May 2007, when Mr. Putin was holding a summit meeting there with European leaders, the police sought to prevent protests by seizing computers from several organizations, including Golos, an election monitoring and human rights group, and the local edition of Novaya Gazeta, the country’s most influential opposition newspaper.

Last year, they took computers from another newspaper, Samarskaya Gazeta. According to case records, the police conducted that search based upon a complaint from a man who admitted that he had never been in the newspaper’s offices or seen its computers.

Mr. Kurt-Adzhiyev, the editor of both newspapers, said Microsoft’s lawyer in the case regularly appeared at court hearings to back prosecutors and the police. He said the lawyer testified that seized computers contained pirated software even though it was later shown that the computers had never been examined.

“Microsoft says publicly that they have no claims in these cases, but then their lawyers come into the court and say whatever the police want them to say,” Mr. Kurt-Adzhiyev said.

The Damage Is Done

Prosecutors eventually dropped or suspended the charges against Mr. Kurt-Adzhiyev after he was able to discredit them. But he said the damage was done. He said the newspapers lost computers and data, and he spent an enormous amount of time ensnared in legal proceedings. The local edition of Novaya Gazeta had to close.

Mr. Kurt-Adzhiyev said he now realized that the authorities were not so much interested in convictions as in harassing opponents. Even if the inquiries are abandoned, they are debilitating when they require months to defend.

Microsoft’s Moscow office said its lawyers had conducted themselves properly in the cases in Krasnodar and Samara.

In Irkutsk, Baikal Environmental Wave has also struggled to recover from the raid. It located some old computers and was still able to hold protests against the paper factory.

The seized computers were not returned by the police until July, five months after they were removed. Their hard drives had been inspected by police experts in February. The environmentalists do not know whether all their data remain, and they are sure that files were copied.

Ms. Rikhvanova, one of the group’s co-founders, who has been fighting to defend Lake Baikal since the 1960s, was unable to use her computer. When she got it back, she discovered that it had been disabled by a virus.

7 responses to “Microsoft Condemns the Kremlin!

  1. @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.


  2. YES!!!! That’s the response the Kremlin should get!

  3. Judging by the NYT article, damage is already done in cases such as when computers were confiscated from a newspaper office.

    Microsoft should confirm its willingness to stop being an uninformed third party. Not only it should Microsoft take control of its piracy cases, but also recall the “aggressive” lawyers such as one who attended all court proceedings against Ms. Denisova and refund the damage.

    It will take a while open source software will catch the usability requirements, after which the role of software coprorations in software ownership or their philantropic ideas about giving the closed-source software for free will diminish.

  4. The open source software meets all usabilty requirements it’s been years. It relates to Linux, Open Office, Firefox, etc. The only issue with it is too few users were trained to work with it. However, when the open source program needs not much training to use, it wins market from MS software very fast. Example is the success of Firefox and fast decline of MS IE share during last several years. Most younger users in Russia and across Europe use their IE copy preinstalled in Windows once: to download FF.

    • I seriously doubt this topic is about Microsoft vs. Open Source. You see, Dmitry, it’s rather about Microsoft vs. Russian-gone-nuts government – you are violating the comment policy of this blog by trying to change the subject of publication.

  5. Now it’s turn for Ketchum and Omnicom to stop glossing the image of Russia abroad. It appears a recent article in Le Monde says Kremlin contracted these PR agencies in 2006 to change its skin after murders of Politkovskaya and Litvinenko. (subscription required)

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