Title of Paper : Software Piracy : A Worldwide Problem
Grade Received on Report : 98

Software Piracy: A Worldwide Problem

	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 
nusance having to locate the manual everytime. 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 intrest 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 enforement 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 packagers 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, coldhearted 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 devistated 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 excedding 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 nintey-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 cop!
ies 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 
discoverd 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 sitll 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 
behing 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 
sucessfully 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 headquartes of Rusty and Edie'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. 

Works Cited

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.