Exclusive Interview: Microsoft Russia and CIS Head comments on Ponosov case

March 08, 2007, Thu 11:27 AM  

CNews: In the first place I would like to ask about your approach to the court case against a rural school principal, Alexander Ponosov. The subject is being actively discussed by our readers now.

Olga Dergunova: Microsoft is the plaintiff in this case; its intellectual property rights have been violated. Meanwhile the whole situation with the illegal software at the school is not quite clear to us. The court will thoroughly examine the issue. The preliminary investigation didnt give any results as to who installed the illegal software. We hope the court will collect all the necessary information and come up with the right decision. I would like to remind here that Microsoft did not file a civil claim and we do not intend to do so. This cannot be compared to the Unitechplast case, when Microsoft had 2bln rubles ($75mln) damage from the plant. The case in Lobnya constitutes a blatant violation of legal norms, with the intention to make money. We do not think it is much the same in the case of Alexander Ponosov.

CNews: Did the Perm regions Prosecutors Office inform Microsoft on its plans to initiate a case? Could the case be heard without Microsofts participation?

Olga Dergunova: I would like to quote Alexander Strakh here, Microsofts legal expert. The case was initiated after the check-up conducted at the school. The first was in May 2006. Our representative was informed about that only after the check-up. As to the court procedure, this is a public prosecution. So, the companys complaint isnt required to initiate and investigate the case. That is why very often the right holder is not informed about check-ups and initiated cases.

CNews: Are you aware of any analogue precedents in Russia, when illegal software was installed at schools?

Olga Dergunova: No, I dont. As Mr. Strakh noted, Microsoft, being the right holder might not even be aware of the initiated case.

CNews: How about other countries?

Olga Dergunova: Neither in other countries.

CNews: We made a research within the CNews English website and it turned out that foreign readers are quite interested in the court case against the rural school principal. Was the European office of the company informed about the case and what is its approach to it? (Note: Microsoft Russia and CIS office is subordinate to the European office).

Olga Dergunova: It definitely is. Not just one office of the company is the plaintiff, but Microsoft itself. That is why we all have a common view on the issue. As to the first question, we should keep in mind what the audience is really interested in. Either it follows the developments of the case or it exchanges opinions on the illegal software use in Russia, nobility of Bill Gates and the quality of Microsoft products. And we should clearly understand what we are talking about. If we are talking about the case, we cant really say anything until the court unveils all the details. Theres nothing new we know about the case. All the information we have refers to the time the first hearing took place. That is why I think your readers are most likely to exchange opinions on the situation wilt illegal software use in Russia, how often and in what quantities it is used in Russian schools and in particular in the Sepych school. The principal might not now about it. If we know that the piracy level in this country is 83% it is quite weird that we are surprised with the fact illegal software was installed in an ordinary school. And then the discussion will be continuing on priorities, what the first steps would be to tackle it and by what means?

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Olga Dergunova: Microsoft is the plaintiff in this case since its intellectual property rights have been violated

CNews: That is true, but the discussion is now far behind backstairs gossip. Comments came from different organizat ions, government bodies and even the Russian President himself.

Olga Dergunova: During the recent conference Mr. Putin was quite right saying that in the first place manufacturers and distributors of counterfeit produce should be punished, who earn millions of dollars. This refers not only to software, but to boots, perfume, vodka The case in Lobnya is moving rather slow because the interests of large business are touched upon. That is why talking about priorities the problem should be tackled root-and-branch. And we all know how to do that - to advance the constitution. A good example is the fourth part of the Civil Code, which will soon come into force. That is the active implementation of the laws on rights protection and three significant steps on behalf of the right holder.

First, technology should be more available to consumers, i.e. to reconsider the price policy. Secondly the value of legal software should be popularized, i. e. to explain why it is better to buy legal software or any other products, services and intellectual property. And finally, improve supplies network, form authorized channels which would help to stop illegal software appear on the market.

Analyzing the school case we should pay attention to other significant factors. The countrys economy is currently in its transition period. Up to 1999 the definition of intellectual property phenomenon was quite different. Only in the 1990s people began to respect intellectual property rights. The economy structure is changing, its basics are changing. The legal basics are changing as well. And the school is changing too. At some point the school principal found himself in a situation when he became the manager of the facility he is responsible for. The illegal software at school might be explained with low funding of schools or the absence of knowledge that software is just as important as some other equipment. So, how can the problem be solved? By teaching! And here we find numerous ways to forestall such situations in the future. I would gladly look at your readers comments on it. Yet, I think the discussion is not about the very case but about the reasons and ways to tackle piracy.

CNews: One interesting statement came from Romanian President Trajan Basescu. He said recently that piracy allowed his countrys population to learn computing and made a great contribution to the development of the countrys IT-industry. Besides, counterfeit software boosted the creative potential of the countrys IT-specialists, many of whom are world-known professionals now. What is you personal approach to this kind of statements?

Olga Dergunova: I am of a different opinion. Piracy harms the economy, it damages the software industry. All this leads to specialists with high creative potential leaving the country, while they could create something new in the country. And the Russian IT-industry is a good example of it, though it probably surpasses the Romanian IT-industry ten-folds. Yet, you can count producers of legal software, which is sold in hundreds of thousands in this country, on fingers of two hands. There is one simple reason for it. When we started our business in Russia we couldnt develop it on the background of 99% piracy level. We came up to a certain level but then the business was framed with incredibly high prices for extra services. That is why I am of a different opinion. I think the Russian president and the Russian government who are in charge of innovation economy development and at least leading Russia in that direction, are as well of a different opinion. To observe the law is very important. The potential development lies not only in the creative aspect, but in the ability to implement it within the country.

CNews: Who announced the companys damage at 266 thousand rubles ($10 thousand)? Are these the estimates of the Prosecutors office?

Olga Dergunova: The estimates were made according to alleged Microsoft products found in the computers. That is the average software market price, under more OS and office programmes.

CNews: What is the price for the Windows XP operational system for education facilities?

Olga Dergunova: The price varies sharply. It depends in the first place on the OS version, whether it is Windows XP Home Edition or Windows XP Professional. The easiest and safest way for the first-time users is to buy software together with the computer. As is known the operational system is the part of the appliance and the PC cannot operate without it. In this case the Windows XP Home Edition would cost about $70-$80. The average cost of PCs in Russia is $800-850 now, and the consumers should not be surprised with the above price. Half of the computers supplied to Russia are sold together with the legal Windows OS. So, the situation has radically improved in the recent three years.

The attitude to the component that makes the device operate is changing. The OS must operate stably, users need technical support, and they need innovation. These are the requirements of customers when they come to the shop to buy computers. That is why the easiest way for schools to obtain software is to buy it together with the equipment.

If you buy the Windows XP Professional version, it is better to buy an upgrade license also, Windows Upgrade for its software. There are special license programmes for education facilities, the price of which is 80% less than the price offered by commercial organizations.

If the software isnt preinstalled, academic licenses for box products are available. However, that would be more expensive. There is yet another way to implement modern license models aimed at organizations. That is the Microsoft Campus and School Agreement, which is used by a number of education facilities, under more Russian schools. It is actually a one-year subscription on a number of licenses.

CNews: But is there a guarantee that computers with preinstalled OS indeed have legal software?

Olga Dergunova: Our partners now warn consumers of the possible copyright infringement. In the Ponosov case computers were delivered by an authorized supplier, who works with Microsoft as well. He provided documents stating that the computers didnt have any programmes installed and containing a paragraph warning of copyright infringement in case of illegal software installed. Why is it so important? Because the partner warns the consumer might be cheated if the computer gets into middlemans hands at some point. That move on behalf of the partners indicates two things. Their reputation is quite significant to them; they do not want to be accused of favouring piracy. And they find it necessary to warn the conscientious consumer during the purchase. When the partner introduces such paragraphs he makes another step towards a civilized market.

CNews: So, it is known who the supplier was? The company which supplied computers to the school?

Olga Dergunova: The court will see to the supply chain. One of the chains links was Microsofts authorized partner, who presented all the necessary documents. They complied with legal requirements.

CNews: So, he wasnt responsible for the software installed?

Olga Dergunova: We cannot suppose anything. The court is now collecting all the required material. And it will define who installed the software.

CNews: And one more question. Nikolay Karpushin, the regions Education Minister said he planned to minimize the use of commercial software at schools. The statement was most likely made in co nnection with the recent developments. Do you think that might in some way affect Microsofts business in the education segment? Will it have any negative consequences in the future? If children are taught to use free software they will continue using it in the future and refuse from Microsoft products.

Olga Dergunova: The competition is not in the price aspect but in the quality. We are confident in the high quality of our products, in the way Windows develops, in our superb Microsoft Office product. Considering the fact that the right price policy is chosen, when education facilities might have a special software price offer, the competition is quite decent. We will continue our work to bring all the necessary information on our price policy on Microsoft products for schools to educational departments.

Microsoft products are being successfully used at schools, they help children become literate computer users.

CNews: And the last question. Microsofts official statement on the Ponosov case was made on Saturday (February 3rd). Why so late?

Olga Dergunova: To tell the truth we did not intend to make any statements. We didnt file a criminal appeal and were quite surprised the press got so interested in Microsofts role in the case. When facts were replaced by comments, journalists started making comments on other comments, and we decided it was necessary to explain our position. We think it is quite clear. When the court presents additional facts, we might comment again. There is nothing to comment on at the moment, since there are no additional facts. We hope the court will find the real supplier of counterfeit software. Microsoft doesnt blame anyone.

Alexander Levashov / CNews

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