Hard facts about software piracy

What’s the cost of such piracy? Who does it the most? Can anyone control it? William Crittenden, Christopher Robertson and Victoria Crittenden report on a growing problem.

Software piracy is generally defined as the illegal or unauthorized copying of computer software, including unauthorized copying of an organization’s internally developed software or illegal duplication of commercially available software. As once noted by Adobe’s General Counsel, Colleen Pouliot, “Most of us would never think of shoplifting a box of software from the store, yet many people do not think twice about copying a CD-ROM from a friend or making multiple copies of a programme for use in their business.”

Software piracy, however, has grown beyond individual copying and has become a part of the global counterfeit business that the World Customs Organization valued at $512 billion in 2004, accounting for five to seven per cent of world trade. Basically, the accessibility of software, and the ease of duplicating it, makes it highly vulnerable to unauthorized copying.

The Business Software Alliance delineates five common types of software piracy. End-user piracy occurs when a person reproduces copies of software without authorization. Client-server overuse happens when too many people on a network are using a central copy of a programme at the same time – a company has to be licensed for the number of users who can access the programme simultaneously. Internet swapping, or the downloading of unauthorized copies of copyrighted programmes from the Internet, is illegal if the software is accessed via pirate websites or peer-topeer networks. Hard-disk loading occurs when a reseller loads software illegally with the aim of making the machine more attractive to customers. Commercial counterfeiting of software is the illegal duplication of copyrighted programmes with the express intent of directly imitating the copyrighted software.

These five types of software piracy collapse into three degrees of criminal intent. Petty piracy occurs when private individuals load purchased software on an additional site, for personal use, beyond that allowed by the licensing agreement. Grand piracy happens when private individuals or individuals within organizations (for-profit, government, or non-profit) share purchased software beyond that allowed by the licensing agreement. This also includes trading or swapping software openly on websites. Commercial grand piracy occurs when software, regardless of how obtained, is illegally copied, distributed and sold for commercial gain.

Opposing piracy

The three principal reasons to oppose software piracy are legal, financial, and diminished productivity. At the country level, the most significant costs relate to intellectual property protection as well as lost sales and income tax revenues. At the firm and individual levels, costs related to down time, time spent enforcing intellectual property policies, and unhappy computing experiences are pervasive. End-users, especially, risk exposure to viruses, incompatibility, lack of technical support and warranties, and inadequate documentation.

The simplistic argument against software piracy is that it is, as the name implies, illegal. Software is protected under the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights. Creating, allowing others to create, or obtaining any unauthorized copy of software, regardless of commercial or financial benefit, is considered copyright infringement and can be prosecuted under civil and criminal law. In a serious indictment of counterfeiting of any type, the secretary general of Interpol has even made the connection between counterfeiting and both organized crime and terrorism.

And while it’s easy to find impressive statistics on the enormous amount of money lost due to software piracy, an oft-overlooked element of software piracy is the information technology risk associated with the pirated product. Pirated software is more likely than legal software to carry viruses that can corrupt a company’s entire technology system. Both employee and organizational productivity decrease when system problems are caused by pirated software.

Pirates versus buccaneers

Unfortunately, this problem is more complex than it might seem. While unauthorized copying of software is illegal, the free era software buccaneer argues in support of software sharing and/or limiting the copyright protection of software. Additionally, some industry pundits clearly distinguish between “recreational piracy” and the selling of bootleg programmes, viewing the former as a civil matter and the latter as a criminal infraction.

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