Management

Hot on the Trail of the Software Pirate

6 Jan, 2005 By: Nancy Spurling Johnson


Cadalyst MCAD Tech News All it takes is one disgruntled employee making an anonymous report, and a company could be looking at tens of thousands of dollars in fines and legal fees, not to mention embarrassment and a damaged reputation.

The issue is software piracy. Copying software, in nearly all cases, is illegal. Yet in 2003 alone, U.S. software developers lost about 22% of their potential market to theft, leading to revenue losses of $6.5 billion, according to BSA (Business Software Alliance). Worldwide, the loss that year amounted to more than $29 billion. For companies like Autodesk, which estimates that five of every six copies of AutoCAD in use today are unauthorized, the hit is huge.

Last month at Autodesk University, we spoke with Autodesk about its Piracy Prevention Program, which educates consumers about software law, helps companies better manage their software use, and relentlessly pursues software thieves -- be they individuals or companies -- often levying fines and fees that can amount to $50,000 to $100,000, or more.

Sandy Boulton, director of piracy prevention at Autodesk, says, "Eighty percent of piracy reports against a company come from current or former disgruntled employees." Autodesk accepts anonymous piracy reports over its Web site, via e-mail, and by phone. At any given time, Autodesk has around 250 companies under investigation for software theft, and it settles an average of 350-400 cases each year.

Know the Law
A large part of the piracy problem, Boulton says, is lack of knowledge about software copyright law. U.S. law specifies that software is copyrighted material and states, "It is illegal to make or distribute copies of copyrighted material without authorization" of the copyright owner. (The only exception for software is a user's right to create one backup copy for archiving.) In other words, companies and users must have a valid license for every copy of a software application in use; if they don't, they are breaking the law. According to Autodesk, even a user ordered by company management to install unauthorized software is committing a crime.

The law allows software developers to recover damages for copyright infringement (as much as $150,000 per product if the crime was willful), destruction of the illegal copies, and attorney's fees. Boulton says Autodesk typically seeks twice the retail price of the stolen software plus attorney's fees, or it can charge the company a fee to delete the stolen software from its systems.

Most software users don't know the law, or they believe it's OK to break it under certain circumstances. BSA — a global organization that represents software developers before governments and in the international marketplace — commissioned a survey in 2004 in which Ispos Public Affairs questioned 300 architects and 300 engineers about software piracy.

Though 51% of the architects and 80% of the engineers said they know it's wrong to distribute unlicensed software to coworkers, 57% of architects and 78% of engineers also responded that software cost is a justifiable reason to use unlicensed products. Nearly half of the architects and 13% of the engineers said at least some unlicensed software is in use in their organizations.

Boulton and her staff also queried Autodesk users about their knowledge of copyright law. At Autodesk University, only 8% of respondents answered all five questions correctly, and in an online contest that ran during AU, less than half of respondents to the survey were completely correct. "This indicates to me that we still have some educational work to do around the issue of software compliance," Boulton comments.

Auction Sites and Pirated Software
Software sold on Internet auctions sites is a particular problem. BSA estimates that 90% of software sold on such sites is pirated. In the case of Autodesk products, Boulton said, any version sold via auction is illegal, because every Autodesk software product sold legally — by either Autodesk itself or an authorized reseller — is licensed for use on a single workstation, and transferring the license is not allowed. (Some Autodesk products can be purchased under a network license agreement that allows companies to move a purchased copy from one workstation to another, but those products also are not authorized for resale of any kind.) Boulton believes that most other major CAD software vendors have similar licensing policies.

Piracy Prevention Program
In addition to communicating the risks and damaging effects of software piracy, Autodesk also provides resources to help companies remain compliant, including a Software Asset Management Toolkit, Autodesk Subscription Service to keep licenses up to date, payment plans through some of its resellers, and Autodesk Product Activation — also known as a software lock.

The software lock exists on all copies of AutoCAD 2005, tying each licensed copy to one machine, so it can't be transferred without Autodesk authorization. Boulton reports that this feature — a technology common in Europe and Asia but resisted in the United States in the past — has been generally accepted this time around. "We haven't received too many complaints from users," Boulton says.

Unrelenting Pursuit
Since it launched the Piracy Prevention Program in 1989, Autodesk has recovered more than $63 million in North America through settlements with companies using unauthorized software. In October 2004 alone, the company announced that BSA had settled for a total of $536,000 with seven U.S. companies found to be using unlicensed Autodesk and other software. Autodesk posts examples of recent actions on its Web site — including company names and details of their illegal activity.

In other antipiracy activity, the company is currently pursuing criminal charges against an individual in Petaluma, California. "The man was arraigned in mid-December on five felony counts of selling pirated software," Boulton explains. "Four of the counts involve the sale of Autodesk software and the fifth count involves the sale of Adobe software." A preliminary hearing is set for January 20.

The potential losses are so substantial for the software industry that law enforcement agencies go to great lengths to nab the most grievous copyright infringers. Boulton recounts one case in which a man in the Ukraine was selling pirated software over the Internet. Ukrainian law doesn't prohibit the activity, so although the FBI knew the man's location, it was helpless to stop him. Agents waited until the man went on vacation to Thailand, followed him, and arrested him there.

Piracy Prevention: What You Can Do
To obtain Autodesk's Software Asset Management Toolkit or other information regarding software piracy, or to report cases of unauthorized use of Autodesk software, go to the Autodesk Piracy Prevention Program Web site or call 1.800.662.6743.

Links
Autodesk Piracy Prevention Program: http://www.autodesk.com/piracy
Business Software Alliance: http://www.bsa.org
U.S. Copyright Office: http://www.copyright.gov


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