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EYE ON THE INDUSTRY
By Darrell Sitarz

EYE ON THE INDUSTRY

SOFTWARE PIRACY AND THE LAW
Information on software piracy in the United States

What is the law?
United States law, based on a Constitutional provision, protect a person’s right to control the reproduction and distribution of his or her creative works like books, songs and movies. The law describing these rights and limitations is included in Title 17 of the U.S. Code. Potential penalties for infringement are listed in both Title 17 and Title 18 (which provides for criminal penalties).

The Digital Material Copyright Act (DMCA) signed into law on October 28, 1998, amended the Copyright law to provide limitations for service provider liability relation to material online.

Copyright protection is not limited to books, songs or movies. It includes many types of creative works, including computer software. That means that the owner of the copyright is entitled to say how and under what circumstances the software may be reproduced, distributed and installed. The “owner” of the copyright is usually the software publisher. You do not become the copyright owner by purchasing a copy of software. Instead, when you buy software, you are purchasing the right to use it, under certain restrictions imposed by the copyright owner. Generally, the precise rights you are purchasing are described in the license or other documentation that accompanies the software. If you copy, distribute or install software in ways that the license does not allow, you are violating federal copyright law.

For example, if the license says that you may not make more than a certain number of copies, then making more that that number is a violation of the law. Regardless of any other copyright restriction, however, the law does permit you to make a back-up copy.

Making unauthorized copies of software is a violation of the law, no matter how many copies you are making. For example, whether you are making a few copies for friends or you are a company buying a single copy of a program, but installing it on 100 PCs, you are still violating federal law if you do not have written permission to make those copies. You are exposed to potential civil and criminal penalties. In other words, you can be sued by the copyright owner and be held liable for monetary damages and/or the federal government could charge you with a criminal offense.

What are the penalties?
If caught with pirated software, you or your company may be liable under both civil and criminal law.

The copyright owner can bring civil action against you. In that action, the owner can seek to stop you from using pirated software (injunction relief) and can request an award of money (damages). With respect to damages, the owner chooses between actual damages, which includes the amount the owner has lost because of your infringement, plus all amounts you have profited and statutory damages. Statutory damages can be as much as $150,00 for EACH work copied. Federal judges have shown their intolerance of copyright violators by handing down increasingly large damage awards against infringers. Additionally, in some circumstances, a court may authorize the U.S. Marshals and local law enforcement officials to conduct an unannounced raid of your premises and seize evidence of the infringement.

The government can criminally prosecute you for copyright infringement. If you are convicted, you may be fined up to $250,000 and /or be given a jail term of up to five years. In 1997, President Clinton signed into law the No Electronic Theft (NET) Act, making it easier to prosecute software pirates on the Internet. Now you can be prosecuted even if you do not make money from your infringement.

What are your responsibilities as a user?
Your first responsibility as a software user is to purchase genuine software products and install them in accordance with the license agreement. Since license agreement differ from publisher to publisher, you need to read carefully the license agreement that comes with your software.

When you are buying software, make sure you get genuine disks, manuals and license documentation. Avoid loose or hand-labeled disks or software that is offered at prices “too good to be true”. When purchasing software that is installed by someone else, be sure your vendor provides you with all original disks, manuals and certifications, as well as proof that your use is properly licensed.

Be aware of what is going on at your company! A company is liable for the actions of its employees. Therefore, if an employee is installing unauthorized copies of software on company computers or illegally downloading software from the Internet, the company can be sued for infringement. This is true even if the company’s management was not aware of the employee’s actions.

Don’t help someone else break the law: You are also liable if you know someone else is going to make unauthorized copies and you help him or her, contributing to the infringement. You don’t have to be the person making the copies to be liable under the Copyright Law.

Purchasers and users of counterfeit or copied software face unnecessary risks, such as 1) Viruses, corrupt disks or otherwise defective software; 2) Inadequate documentation; 3) Lack of technical product support available to registered users; and 4) lack of software upgrades offered to registered users.

In addition, if you purchase or use software that is counterfeit or copied, you not only deny the software developer its rightful revenue, you harm the industry as a whole. All software developers, both large and small, spend years developing software. A portion of every dollar spent in purchasing original software is funneled back into research and development so that better, more advanced software can be produced. When you purchase counterfeit software, your money goes directly into the pockets of software pirates. The company that developed the original product never sees a dime.

Estimated level of software piracy in the United States.
In 1999, worldwide illegal copying cost the software industry more than $12 billion, with losses exceeding $3.1 billion in the United States alone. Approximately 25% of the business software in the U.S. is obtained illegally.

Government commitment to legal software.
In September, 1998, the Clinton administration reinforced its commitment to the use of legal, licensed computer software throughout the Federal Government by signing an Executive Order (EO) on computer software piracy that underscores the United States leadership in software management and legalization practices.

U.S. anti-piracy resources.
If you want to report software piracy, you can call the Business Software Alliance (BSA) Anti-Piracy Hotline at 1-888-NO-PIRACY or report online to www.nopiracy.com. If you would like more information about software piracy in the United States, or to obtain software management materials, please contact the BSA at 1150 18th Street NW, Suite 700, Washington, DC 20036. Telephone: 202.872.5500; Fax: 202.872.5501.

END

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