Software piracy is defined as the illegal copying of software for commercial or

personal gain. Software companies have tried many methods to prevent piracy,

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with varying degrees of success. Several agencies like the Software Publishers

Association and the Business Software Alliance have been formed to combat both

worldwide and domestic piracy. Software piracy is an unresolved, worldwide

problem, costing millions of dollars in lost revenue. Software companies have

used many different copy protection schemes. The most annoying form of copy

protection is the use of a key disk. This type of copy protection requires the

user to insert the original disk every time the program is run. It can be quite

difficult to keep up with disks that are years old. The most common technique of

copy protection requires the user to look up a word or phrase in the program's

manual. This method is less annoying than other forms of copy protection, but it

can be a nuisance having to locate the manual every time. Software pirates

usually have no trouble "cracking" the program, which permanently

removes the copy protection. After the invention of CD-ROM, which until lately

was uncopyable, most software companies stopped placing copy protection in their

programs. Instead, the companies are trying new methods of disc impression. 3M

recently developed a new technology of disc impression which allows companies to

imprint an image on the read side of a CD-ROM. This technology would not prevent

pirates from copying the CD, but it would make a "bootleg" copy differ

from the original and make the copy traceable by law enforcement officials

(Estes 89). Sometimes, when a person uses a pirated program, there is a

"virus" attached to the program. Viruses are self-replicating programs

that, when activated, can damage a computer. These viruses are most commonly

found on pirated computer games, placed there by some malignant computer

programmer. In his January 1993 article, Chris O' Malley points out that if

piracy was wiped out viruses would eventually disappear (O' Malley 60). There

are ways that a thrifty consumer can save money on software without resorting to

piracy. Computer companies often offer discounts on new software if a person has

previously purchased an earlier version of the software. Competition between

companies also drives prices low and keeps the number of pirated copies down

(Morgan 45). People eventually tire or outgrow their software and decide to sell

it. Usually, there is no problem transferring the program from one person to

another unless the original owner had been bound by a license agreement. In

order for the new owner to legally own the software, the old owner must tell the

company, in writing, that he would like to transfer the license to the new

owner. Most people fail to notify the company when selling software, thus making

the unsuspecting new owner a software pirate (Morgan 46). Consumers must be

careful when dealing with used software. United States copyright law allows

consumers to place a copy of a program on their computer and also make another

copy for backup purposes, in case the original disk fails or is destroyed. Some

software companies use licensing agreements to restrict people from making more

than one copy of a program. Such use of agreements can make an average consumer

into a software pirate, in his effort to make sure his expensive software is

safe (Murdoch 2). Before 1990 movie rental stores could rent computer software.

People who rented the software would copy the software before returning it. In

defense, Congress passed the Software Rental Act, outlawing the rental of

software. Even though illegal, many stores and even some software companies

still rent software. Since retail space in stores is extremely limited,

companies could rent older software that did not have a good showing in retail

stores (Champion 128). Software companies could take an idea from the home video

industry. The larger video makers found that if they sold videos in foreign

countries through their own dealerships, the amount of piracy decreased (Weisband

33). A rather unique strategy used by American software manufactures helps raise

local interest in stopping software piracy. Companies invest money to begin

software corporations in foreign countries. After a few years, the US companies

hope that the new, foreign companies will initiate their own anti-piracy

organizations (Weisband 30). Microsoft has led the venture by creating small

software companies to help battle piracy. By doing this, the companies would

want to report piracy because they would be losing money just like American

companies are doing now (Weisband 33). The Software Publishers Association,

based in Washington, D.C., was developed to combat software piracy. As of 1993

the SPA has brought more than 1300 court cases against software pirates. The SPA

has a toll-free number that has helped catch many pirates and prosecute them (O'

Malley 50). The SPA is not merely a law enforcement agency. It meets twice a

year with representatives from software companies. Together they decide how to

make their software better and also how to better serve the consumer. In the

spring 1993 conference the SPA decided that if software packages could develop a

standard way to clearly label a software box, the consumer would immediately

know if the program would run well on his computer. This labeling would help

reduce the number of software returns in stores (Karnes 4). Since software

stores cannot resell returned software, the software companies lose money on the

software. Even though only a few of the larger corporations have been prosecuted

by the SPA, the penalties are extremely severe. A company that is caught making

or owning illegal software can face jail time and fines of double the cost of

the software or fifty thousand dollars, whichever is greater (Mamis 127).

Companies need to keep good records in order to survive a suprise audit by the

SPA. The SPA is not without heart; they offer companies amnesty if the companies

confess and pay for all illegally copied software (Davis 50). Unfortunately,

there are some people who support software piracy. These people see software

companies as rich, cold-hearted businesses who make so much profit that they can

afford to take a loss. While this statement might prove true for large companies

like Microsoft or IBM, smaller businesses can be financially devastated by even

a few pirated copies (Hope 40). Supporters of software piracy do not consider

their actions wrong. They argue that software needs to be freely distributed in

order to speed economic development (Weisband 30). The Software Publishers

Association and its sister company the Business Software Alliance have succeeded

where the US government has failed. The SPA handles cases in the US, while the

BSA works in over thirty foreign countries. In cooperation with local law

enforcement, these two organizations have attacked individual companies with

moderate success (Weisband 31). The toughest obstacle the BSA faces is trying to

get local governments to make copyright laws and to get local law enforcement to

cooperate in investigations. The BSA has to rely on diplomatic threats in

countries like China and Thailand where the governments are totally

uncooperative. While the US government has the power to impose trade sanctions

on guilty countries, they rarely use this power (Gwynne 16). Many Asian

businesses are not used to copyright laws, so the consider violations as minor

infractions, much like exceeding the speed limit. The BSA tries to educate these

companies by holding software seminars (Gwynne 16). Asian retail centers also

frequently give away pirated copies along with their new computers. These

crooked dealers are the main targets of Microsoft, developer of MS-DOS, the most

widely used operating system in the world (Gwynne 15). Asian software pirates

are so good that they are able to release pirated software copies before the

real copies are released to the market. Pirate prices, which are usually

ninety-five percent lower than retail, still nets the pirates a good profit. In

most countries, including the US, the public is more interested in a lower price

instead of a clear conscience (Gwynne 15). The largest case of Asian piracy

involved Microsoft in Taiwan. A large pirate ring had made perfect copies of

Microsoft's MS-DOS. Microsoft traced the copies through five Asian countries

until they found the source in a Chinese government supported "research

institute." Microsoft confiscated 450,000 fake MS-DOS stickers. Microsoft

was shocked when they discovered these stickers, which were made out of metal

embossed with a hologram and thought to be uncopyable. Microsoft also found

records showing orders for three million more copies (Weisband 33). After this

monumental case, China introduced a copyright law. The law is very weak and only

protects Chinese produced software. Microsoft is still tying to recover some of

the millions of dollars they and many other companies lost in China (Young 42).

In most foreign countries software costs more than a worker would make in a

month. These high prices combined with a disregard for copyright laws, drive the

amount of software copied in foreign countries into the high thousands. The main

question to be asked is: "Why would anybody want to pay seventy dollars for

an original copy when they could buy the same program for fifteen dollars on the

street?" (Weisband 30). Extremely expensive hardware in the United Kingdom

has led to mass piracy by most of the computer users. The main problems are the

high costs that software vendors have to pay for American software. IBM brand

PCs are not the mainstay as they are in the US. In the UK technology tends to

lag behind the US by two to three years. This lag, combined with high prices for

American hardware, has led Europeans to purchase older Amiga brand computers.

Piracy between the one million Amiga owners has forced manufacturers to stop

producing software for the Amiga. Since the Amiga software and the IBM software

are incompatible, the software companies have shifted to producing software for

the smaller IBM market (Nelson S-15). Mexico's software police is a

government-sponsored agency called the National Association of the Computer

Program Industry. In conjunction with large software firms like Microsoft and

Lotus they have successfully prosecuted over thirty companies. The Association

has made other Mexican companies better educated on software laws and has gotten

many companies to confess and pay for their pirated software before the

Association prosecuted them (Hope 40). One of the most blatant examples of

government supported piracy is in Cuba, where any Cuban can call the National

Software Interchange Center and download any foreign software for free (Weisband

30). The US government has failed, in most cases, to act against countries found

guilty of software piracy. Fear of starting trade wars and the US need to keep

good relations with hostile countries keep the government from trying to

prosecute these countries. Even when the US acts on countries with large scale

piracy, America's actions are! so weak they have no effect on the offending

country (Weisband 30). Piracy is not just a foreign problem. The largest example

of US piracy happened in 1993 when the FBI and the SPA joined together to raid

the headquarters of Rusty and Eddy’s Bulletin Board System, a private

operation, one of the largest in the world, with 124 phone lines. The FBI

received tips from the SPA's 1-800 line that the bulletin board was distributing

pirated software. The FBI confiscated the equipment and arrested the owners (Chamption

128). As more people buy computers, software piracy will increase. When software

companies develop new ways to protect their software, software pirates will find

ways to defeat these protection schemes and ways to avoid weak copyright laws.

Perhaps in the future the US government will help the software designers by

passing stronger laws and penalizing countries that do not abide by

international copyright laws.


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