Is your organisation breaking the law?
For every three legitimate software packages being used in business, another is an illegally copy reports the Business Software Alliance, BSA, the global voice of the software industry
Almost half of the software now sold throughout the world – 40 per cent - comes not from the original developer, such as Adobe, Autodesk, Microsoft or Symantec, but has been illegally copied or distributed. To put this figure into perspective, most retail outlets would regard more than three per cent of goods being lost to theft as a crisis.
Within the UK, the software theft rate stands at 26 per cent – which means that almost one in every four business software applications is being used today without a licence. The cost to the UK software industry was £450 million in 2000 and worryingly no region of the country or sector of business is immune to this problem.
In the recent past, institutions such as local authorities, schools and even parts of the prison service have found to their horror that they have broken the law.
Who suffers most from illegal software?
The software industry is not the only loser from unauthorised copies of software. So too is the British economy. Research by PriceWaterhouseCoopers indicates that as many as 31,000 new jobs and £610m in taxes could be generated if the software theft rate were brought down to the US level of 24 per cent. It is important to remember that creating and protecting legitimate jobs in the software industry has implications up and down the supply chain. According to PriceWaterhouseCoopers, for every single job in the software industry there are seven in supporting industries. At a time when our traditional manufacturing industries are struggling to maintain employment, we need to turn to new industries, like the software industry, to maintain a balance.
At a purely practical level, the use of illegal software opens up an organisation to software viruses and to lost productivity because unlicensed software is not eligible for technical support or upgrades. But the effect on a company’s reputation brought about by the negative publicity that follows legal action is potentially far more serious.
How can an organisation fall into this trap?
When we buy a software package, many of us do not realise that what we purchase is a licence to use the software - not the actual software itself.
A licence agreement from the software publisher comes with each software package, which goes into effect when you begin using the software. This licence typically gives you the right to use the software on just one machine. If you need to use the software on more than one machine, you need to purchase multiple copies or a multiple-user licence from the publisher.
You break the copyright law if the number of copies of software in use exceeds the number of licences that you have purchased - something frequently forgotten by organisations as they grow.
Types of Software Piracy
Around the world, illegal software can be found both in the shadiest of black markets and in the most legitimate of businesses and sales channels.
There are many forms of software piracy:
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End-user Copying This is the most prevalent form of piracy, which occurs when businesses and other institutions, large and small, make unauthorised extra copies of software for use at the office or home. To remain on top of this problem an organisation needs to put in place a proper software management policy which treats software as an asset and sets out clear policies for its purchase and use. The BSA has a very helpful booklet called "A Guide to Software Management" which takes you through the basic ingredients of a software management policy. You can find it on their website www.bsa.org/uk. Counterfeiting Counterfeiting is the illegal duplication of software by organised or petty criminals and is passed off to an often unsuspecting customer as being the real thing. Some counterfeit products are almost impossible to tell from the real article. They find their way into the legitimate distribution channel or appear on Internet auction sites. Use of counterfeit software is illegal and the buyer is unlikely to be able to seek recourse from the organisation that sold it to them because they are likely to have disappeared. Compilation CD-ROMs CD-ROM technology has led to the "compilation" CD, whether duplicated on professional equipment ("silver CDs") or on low-cost CD burners ("gold CDs"). Compilation CD-ROMS are those in which multiple programs - typically of competing manufacturers - are copied and sold on a single disk in street markets or over the Internet. Hard-Disk Loading This is a form of piracy committed by computer dealers who in their efforts to sell their hardware, offer free unlicensed software as an "incentive" to make their equipment appear to be cheaper than it really is. Once again, using this software breaks the law. Internet Piracy There are numerous types of Internet piracy, which range from sites that allow direct download of copyrighted products, to those that advertise counterfeit CD-ROMs for mail-order delivery. Auction sites pose a major risk to the buyer. In test purchases conducted by the BSA in the past 12 months over 90% of software purchased from Internet auctions broke copyright law in some way. |
How to avoid being duped
There are several ways of distinguishing between legal and illegal products. Looking out for the following indicators will reduce the risk of buying illegal software:
Every legal software package is supplied with the appropriate licence, whether you are buying software for use on a single machine, software for networked use across the office, or software preloaded onto computer hardware. Make sure the software you purchase has a valid licence with it.
Look for full documentation, including loading instructions and user guides, they generally accompany the software.
Other signs are suspiciously low prices, and packaging that does not contain the publisher's trademarks and logos, is of low quality, or looks as if it has been tampered with.
If you are in any doubt call the manufacturer for advice.
Why should software theft be different from any other theft?
Computer software is considered intellectual property and is protected by copyright law and international treaties. Software developers are legally protected against unauthorised copying, reproduction or use of their product in the same way as those who create films, music and books are safeguarded.
The 1991 European Union directive for the Legal Protection of Computer Programs, implemented in 1993, has further strengthened the legal position. The directive requires that all member states provide copyright protection for software, provide appropriate remedies against acts that infringe software copyrights and establish legal procedures for the seizure of infringing software copies.
The BSA’s role in combating software theft
It is this law that the BSA is seeking to uphold. As a not-for-profit global organisation set up to eradicate software theft, the BSA acts on behalf of its members – leading software companies include Adobe, Autodesk, Bentley Systems, Corel, Lotus Development, Microsoft, Network Associates, Novell, Symantec and Visio. With power of attorney for its members, the BSA is fully empowered to take legal action against those who flout the rules set up to protect the software publisher. Everyday, the BSA settles with at least one company, somewhere in the world.
However, the BSA is not just about settlements and court cases. A pivotal role of the BSA is to educate the end user and to discourage organisations from breaking the law in the first place.
Through a series of awareness raising initiatives such as the annual
Software Audit Return programme and by publicising incidents of legal
action taken and penalties meted out, the BSA aims to alert organisations to
the consequences of software abuse. With each of these campaigns, the BSA
provides free advice and support tools to those who are in doubt of their
software’s legitimacy.
For some of the organisations caught using illegal software, a flagrant disregard for the law will be the reason. But for just as many, a simple ignorance of the software regulations will have put them on the wrong side of the law. It is a chief executive’s responsibility to become familiar with the requirements of the laws governing the legitimate use of software and to ensure that the organisation has the proper software controls in place. It is the BSA’s right to point out these responsibilities and the penalties that are likely to be incurred if the director does not live up to these responsibilities.
If you want to avoid these penalties, but you suspect your company might well be at risk, then contact the BSA hotline now on 0800 510 510 for advice. Alternatively, you can visit its web site on www.bsa.org/uk and download a free copy of the Guide to Software Management and some useful support tools that will allow you to take action before BSA takes action against you.
Mike Newton is Campaign Relations Manager for the Business Software Alliance (BSA) UK.