IT's high seas: Software pirates plunder away

Even more pirates are prowling IT's high seas, according to the Business Software Alliance. You may have some of the "booty" and not even know it. If you do, and you get caught, get ready to pay the piper.

Windows administrators may hate Microsoft's new licensing plan, which is due to go into effect later this summer, but one of the benefits that Microsoft will itself enjoy is the ability to keep better track of who's paying (or not paying) for their software licenses.

Software piracy continues to be a headache for Microsoft and all software vendors worldwide, especially today as more illegal software can be found and transferred easily from Internet auction sites, news groups, and peer-to-peer systems. Compression and speedy broadband services make downloading easy and quick for everyone.

A study released this week by the Business Software Alliance (BSA), a watchdog group made up of software companies including Microsoft, showed that the industry lost almost $11 billion in sales to software piracy in 2001. The amount of black market business application software installed by business customers on PCs grew from 37% to 40% in 2000.

The BSA says Eastern Europe and Latin America are the biggest bastions of software piracy, with rates of 67% and 57% respectively. Though piracy throughout Asia was down overall, rates in Malaysia, India and the Philippines increased slightly. Piracy in North America (United States and Canada) is comparatively low, but it did increase from 24% to 25%.

The BSA study only considers business applications running on PCs. It includes productivity tools such as databases, presentation graphics, project management software, spreadsheets and word processors. It also includes professional applications, like C-languages, programming tools, and utilities like Internet access software, e-mail and calendaring software.

To arrive at its figures, the BSA study compared the amount of demand versus the amount of software shipped. Demand was calculated by conducting an inventory of PCs shipped to businesses compared with consumers. The amount of software shipped was provided by BSA member companies.

Though software piracy is less a problem in the U.S. than in other parts of the world, businesses here that continue using illegal software have proven to be a group whose illegal habits are tough to change.

"It may be only 25%, but we have found that that last 25% is a stubborn group," said Bob Kruger, vice president of enforcement at the BSA.

The BSA blamed increases across the board on lax tax laws and on increased availability of bootlegged software on the Web.The worldwide figures had been decreasing during the 1990s. The fact that the rate of piracy has risen over the past two years may reflect the tougher market conditions, according to the study's authors, who said that software compliancy may be viewed as a luxury that can be abandoned in more difficult economic times.

Software piracy tends to be more of a problem in small and medium-sized companies, not within enterprises, Kruger said. This is because most enterprises have compliance practices in place and have the resources available to take on the task.

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  • Alvin Park, an analyst at Gartner, said he thinks most companies don't intend to have illegal copies of software. Rather they usually fall out of compliance simply because they have sloppy installation or deployment techniques.

    "Occasionally it does happen where the technician in charge of deploying software may inadvertently load more copies than were procured," he said.

    Some companies, notably Microsoft, send out internal software review kits to customers and request self audits. Overall, better self auditing techniques are some of the surest ways to track legal software licenses within a corporation.

    But according to a separate study released last week by Gartner, the Stamford, Conn.-based consulting firm, only about 25% of companies have a good asset management plan in place to track software and hardware.

    So what happens when real or inadvertent software pirates get caught? Most of the time, the companies both work it out, and few piracy cases ever go to trial. For those companies that dig their heels in, the potential penalties can be high, said James Burger, an intellectual property attorney at Dow, Lohnes & Albertson PLLC in Washington.

    The statute for piracy gives infringers a choice of paying the copyright owner's actual damages and any additional profits made by the infringer, or they can collect statutory damage, which is a sum for each copy a person makes.

    The fees are not less than $750 and no more than $30,000, for every copy a person makes. If a company is proven to be making a willful violation, the ceiling escalates to $150,000 per copy, so the fines can really add up, Burger said.

    The most effective enforcement tool is usually a toll free number offered by the software vendor, and a disgruntled employee who works for the company that pirated the software, Burger said.

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