CONSEQUENCES OF SOFTWARE PIRACY

Introduction Over the past several years, advances in computer software have brought us time-saving business programs, educational software that teaches basic skills and sophisticated subjects, graphics programs that have revolutionized the design industry, Internet applications that help connect us with other computer users, and an increasingly complex variety of computer games to entertain us. As the software industry grows, everyone stands to benefit. Compared to literature, music and movies, computer software is a relatively new form of intellectual property. Nevertheless, software is protected under the very same laws that govern music, literature, movies and other copyrighted content. Copying software illegally is not any different than illegally copying any of these forms of intellectual property and the punishments for doing so are equally harsh. All software comes with a license agreement that specifically states the terms and conditions under which the software may be legally used. Licenses vary from program to program and may authorize as few as one computer or individual to use the software or as many as several hundred network users to share the application across the system. It is important to read and understand the license accompanying the application to ensure that you have enough legal copies of the software for your organization's needs. Making additional copies, or loading the software onto more than one machine, may violate copyright law and be considered piracy. What is software piracy? It is the unauthorized duplication, distribution or use of computer software -- for example, making more copies of software than the license allows or installing software licensed for one computer onto multiple computers or a server. Copying software is an act of copyright infringement and is subject to civil and criminal penalties. It's illegal whether you use pirated software yourself, give it away or sell it. And aiding piracy by providing unauthorized access to software or to serial numbers used to register software can also be illegal. Types of Software Piracy Many computer users have found themselves caught in the piracy trap, unaware they were doing anything illegal. To avoid such unpleasant surprises, it may be helpful to know the ten basic ways one can intentionally or unintentionally pirate software: 1. Softlifting Softlifting occurs when a person purchases a single licensed copy of a software program and loads it on several machines, in violation of the terms of the license agreement. Typical examples of softlifting include, "sharing" software with friends and co-workers and installing software on home/laptop computers if not allowed to do so by the license. In the corporate environment, softlifting is the most prevalent type of software piracy - and perhaps, the easiest to catch. 2. Unrestricted Client Access Unrestricted client access piracy occurs when a copy of a software program is copied onto an organization's servers and the organization's network "clients" are allowed to freely access the software in violation of the terms of the license agreement. This is a violation when the organization has a "single instance" license that permits installation of the software onto a single computer, rather than a client-server license that allows concurrent server-based network access to the software. A violation also occurs when the organization has a client-server license, the organization is not enforcing user restrictions outlined in the license. For instance, when the license places a restriction on the number of concurrent users that are allowed access to that program and the organization is not enforcing that number. Unrestricted client access piracy is similar to softlifting, in that it results in more employees having access to a particular program than is permitted under the license for that software. Unlike softlifting though, unrestricted client access piracy occurs when the software is loaded onto a company's server - not on individual machines - and clients are permitted to access the server-based software application through the organization's network. 3. Hard-disk Loading Hard-disk loading occurs when an individual or company sells computers preloaded with illegal copies of software. Often this is done by the vendor as an incentive to buy certain hardware. If you buy or rent computers with preloaded software, your purchase documentation and contract with the vendor must specify which software is preloaded and that these are legal, licensed copies. If it does not and the vendor is unwilling to supply you with the proper documentation, do not deal with that vendor. SIIA offers assistance in finding qualified vendors through our Certified Software Reseller Program 4. OEM Piracy/Unbundling Some software, known as OEM (original equipment manufacturer) software, is only legally sold with specified hardware. When these programs are copied and sold separately from the hardware, this is a violation of the distribution contract between the vendor and the software publisher. Similarly, the term "unbundling" refers to the act of selling software separately that is legally sold only when bundled with another package. Software programs that are marked "not for resale" are often bundled applications. 5. Commercial Use of Noncommercial Software Using educational or other commercial-use-restricted software in violation of the software license is a form of software piracy. Software companies will often market special non-commercial software aimed at a particular audience. For example, many software companies sell educational versions of their software to public schools, universities and other educational institutions. The price of this software is often greatly reduced by the publisher in recognition of the educational nature of the institutions. Acquiring and using noncommercial software hurts not only the software publisher, but also the institution that was the intended recipient of the software. 6. Counterfeiting Counterfeiting is the duplication and sale of unauthorized copies of software in such a manner as to try to pass off the illegal copy as if it were a legitimate copy produced or authorized by the legal publisher. Much of the software offered for bargain sale at non-trade computer shows is counterfeit software. SIIA(Software and Information Industry Association) estimates that at least 50% of the software sales that take place at computer shows throughout the United States involve counterfeit software. 7. CD-R Piracy CD-R piracy is the illegal copying of software using CD-R recording technology. This form of piracy occurs when a person obtains a copy of a software program and makes a copy or copies and re-distributes them to friends or for re-sale. Although there is some overlap between CD-R piracy and counterfeiting, with CD-R piracy there may be no attempt to try to pass off the illegal copy as a legitimate copy - it may have hand-written labels and no documentation at all. With CD recording equipment becoming relatively inexpensive, the software industry is being plagued by this new form of end-user piracy. Just a few years ago, so-called "compilation CDs" (illegal CD-ROMs containing many different software applications) were selling for $400-$500. With CD-R's becoming more available, the price has dropped to $20 -- making illegal software available to a greater number of people. 8. Internet Piracy Internet piracy is the uploading of commercial software (i.e., software that is not freeware or public domain) on to the Internet for anyone to copy or copying commercial software from any of these services. Internet piracy also includes making available or offering for sale pirated software over the Internet. Examples of this include the offering of software through an auction site, IM, IRC or a warez site. Incidences of Internet piracy have risen exponentially over the last few years. Internet piracy is discussed in greater detail below. 9. Manufacturing Plant Sale of Overruns and 'Scraps' Software publishers routinely authorize CD manufacturing plants to produce copies of their software onto CD-ROM so that they can distribute these CD-ROMs to their authorized vendors for resale to the public. Plant piracy occurs when the plant produces more copies of the software than it was authorized to make, and then resells these unauthorized overruns. Piracy also occurs when the plant is ordered by the publisher to destroy any CDs not distributed to its vendors, but the plant, in violation of these orders, resells those CDs that were intended to be scrapped. While most plants appear to be compliant, and there are compliance procedures in place, there have been several instances of these forms of piracy. 10. Renting Renting software for temporary use, like you would a movie, was made illegal in the United States by the Software Rental Amendments Act of 1990 and in Canada by a 1993 amendment to the Copyright Act. As a result, rental of software is rare. Consequences of Software Piracy The legal consequences of software piracy are same for other crimes and include fines, imprisonment and confiscation of equipment. Those working in computer industries also face the possibility of their reputation being damaged. The losses suffered through software piracy directly affect the profitability of the software industry. Because of the money lost to pirates, publishers have fewer resources to devote to research and development of new products, have less revenue to justify lowering software prices and are forced to pass these costs on to their customers. Consequently, software publishers, developers, and vendors are taking serious actions to protect their revenues. Using pirated software is also risky for users. Aside from the legal consequences of using pirated software, your organization forfeits some practical benefits as well. Those who use pirate software: • Increase the chances that the software will not function correctly or will fail completely; • Forfeit access to customer support, upgrades, technical documentation, training, and bug fixes; • Have no warranty to protect themselves; • Increase their risk of exposure to a debilitating virus that can destroy valuable data; • May find that the software is actually an outdated version, a beta (test) version, or a nonfunctioning copy; • Are subject to significant fines for copyright infringement; and • Risk potential negative publicity and public and private embarrassment. It is also worth noting that the use of pirated software also drives up the costs for legitimate users - which gives legitimate users all the more reason to help SIIA(software and information industry association) fight piracy by reporting to those companies that are not "playing by the rules”. Software piracy is stealing. If you or your company is caught copying and/or distributing illegal copies of software, you could be held liable under both civil and criminal laws. If the software owner decides to sue you or your company, the owner can seek to stop you from using/distributing its software immediately and can also request monetary damages. The software owner may then choose between actual damages, which includes the amount it has lost because of your infringement (as well as any of your profits attributable to the infringement), and statutory damages, which can be millions of dollars in cases of willful infringement. In addition, the government can criminally prosecute copyright infringement. If convicted, infringers can be fined up to $250,000, and/or sentenced to prison for up to five years. Also some Business users of pirated software can be face legal action taken by employees. That is if an employee is encouraged to used pirated software, they might face action from unions, colleagues and other parties in such an event, so an employee may take legal action against the company for exposing him to such risk. In addition to legal consequences, users of pirated or counterfeit software could experience: • Exposure to software viruses, corrupt disk or defective software • Inadequate or no product documentation • No warranties • Lack of technical support • Ineligibility for software upgrades offered to properly licensed users Also in the United States of America, a first offence can call for at least five years of imprisonment and/or a two hundred thousand dollar fine. And if the convict is convicted as a facilitator or have been convicted for software piracy in the past he can face up to ten years in prison and/or fines of up to two hundred and fifty thousand dollars per convicted infringement. Piracy harms all software publishers, regardless of their size. Considering the fact that software publishers spend many years and finance developing software for the public to use, a portion of every dollar spent in purchasing the original software will funneled back into research and development so that better, more advanced software products can be produced. Unfortunately when one purchase pirated software the money goes directly into the pockets of the pirates instead of the producers. Conclusion According to federal law duplicating software for profit, making multiple copies for use by different users within an organization, and giving an unauthorized copy to someone else is prohibited. Under this law if anyone is caught with the pirated software, an individual or the individual’s company can be tried under both civil and criminal law. Therefore in a corporate setting or business, every computer must have its own set of original software and the appropriate number of manuals. It is illegal for a corporation or business to purchase a single set of original whenever you use a piece of software that is unlicensed, you are depriving software companies of their earnings. More importantly, you are depriving the creative teams who have developed the software (e.g., programmers, writers, graphic artists) of compensation for the thousands of hours they have spent working on a particular program. In a very real sense, software piracy adversely affects the world economy by diverting money that stimulates further product development. Piracy particularly affects the United States, which currently provides approximately 80 percent of the world's software. Therefore it is advisable that in a corporate setting or business, or even in our houses, every computer must have its own set of original software and the appropriate number of manuals. It is illegal for a corporation or business to purchase a single set of original software.