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Software Piracy

Software piracy is defined as the illegal copying of software for commercial or
personal gain. Software companies have tried many methods to prevent piracy,
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).

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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.

Champion, Jill. “Not Such a Glorious Thing.” Compute! May 1993:
128. —. “Software Rental.” Compute! July 1992: 128. —Davis,
Stephen. “The Crackdown on Corporate Pirates.” Working Woman March
1990: 50. —Estes, Billy. “3M Technology Helps Prevent Piracy.”
CD-ROM Professional February 1995: 89. —Gwynne, Peter. “Stalking Asian
Software Pirates.” Technology Review February/March 1992: 15-17. —-Hope,
Maria. “Mexico vs. the Software Pirates.” World Press Review December
1993: 40. —Karnes, Clifton. “Editorial License.” Compute! May 1993:
4. —Mamis, Edward A. “Don’t Copy That Floppy.” Inc. June 1992: 127.

—Morgan, Phillip. “The Great Software Bargain Hunt.” Compute! May
1994: 42-47. —Murdoch, Guy. “Sneaking Software.” Consumers’ Research
Magazine February 1993: 2. —Nelson Mike. “How PC Games Play In
Europe.” Compute! January 1994: S-15–S-16. —O’Malley, Chris.

“Copying the Floppy.” Popular Science December 1993: 50. —
—“Stalking Stealth Viruses.” Popular Science January 1993: 54-60.

—Weisband, Suzanne P. and Seymour E. Goodmannery. “Subduing Software
Pirates.” Technology —Review October 1993: 30-34. — Young, Jim.

“China’s New Wall.” World Press Review Feburary 1992: 42.


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