Old as the Barbary Coast, New as the Internet

(Originally printed in Priority Read – Business Law Update, April 12, 2001)

No black flags with skull and crossbones, no cutlasses, cannons, or daggers identify today's pirates. You can't see them coming. There's no warning shot across your bow. Yet rest assured the pirates are out there, because today there is plenty of gold (and platinum and diamonds) to be had.

Software developers believe today's pirates operate not on the high seas but in homes and businesses around the nation - and the globe, for that matter. The industry-described pirate's credo is the old story: Why pay for it when it's so easy to copy? This manifesto is as wrong as it ever was, but one problem is that the ethical standard in this area is not intuitive. People may copy software with no intention of wrongdoing and be shocked when charged with software piracy. That's why you should make it a priority to understand the rules and make sure everyone else in your organization does, too.

In the software industry, "piracy" generally means the illegal duplication and distribution of computer software. It includes several specific forms: the unauthorized duplication of legitimate computer software as opposed to all the packaging (the original art, label, title, sequencing, combination of titles, and so on); counterfeit software, which is the unauthorized duplication of legitimate software as well as original artwork, label, trademark, and packaging); bootleg software (or underground software), which is the unauthorized duplication of software from a computer network or system; and online piracy, which is the unauthorized uploading or downloading of software over the Internet, with the software then made available to the public even if it isn't resold. Online piracy may now also include certain uses of "streaming" technologies from the Internet.

If you purchase software, the law permits you to make one backup copy of each program, in case a problem arises with the original software media. However, many individuals and businesses believe that since they purchased the software, they are free to load it on more than one computer. There's that counterintuitive ethical line again - and crossing it is the most common mistake made by ordinary software users.

The software industry has recently joined forces with some watchdog organizations and associations (the Software Publishers Association and the Business Software Alliance) whose sole purpose is to ferret out illegal copying of software and collect damages for it, always at a multiple of the original purchase price. Indeed, that's how these organizations are funded.

To help the industry identify companies that may be improperly copying software, the watchdog groups offer rewards to informants and agree to keep their identities confidential. It's usually disgruntled former employees who report their employers to these agencies. Irrespective of motives, upon receipt of the information the organization looks into the allegation and demands an audit of the business's software inventory and proof of ownership. These demands are often accompanied by threats of litigation should the company fail to cooperate. The costs of settling software piracy claims, even if unfounded, can be astronomical. Moreover, there is risk of criminal prosecution if the claims are truthful.

Don't assume you know what's right and wrong with your company's software use. Get informed about the rules and make sure you're following them. The alternative could be ugly! Please contact us for more information.