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Madison, Wis. -
Software piracy remains pervasive in American and foreign businesses, but those who track it are getting better at cracking down, and violators have been paying a stiff price.
Research indicates that one in five software programs in use in the United States is unlicensed, but commercial software companies and copyright owners are increasingly taking measures to protect their assets, primarily through rewards for those who report cheaters.
And that means businesses can no longer take a blasé attitude toward compliance. "It's definitely a real threat," said attorney Jennifer Racine, an associate at LaFollette Godfrey & Kahn
in Madison. "I think it's one thing that businesses need to be aware of because they often think, `Yeah, it's against the law, but as long as nobody finds out, what's the big deal?'"
A Texas company recently found out that it's a very big deal. In April, the Business Software Alliance
(BSA), a watchdog group representing the nation's largest software manufacturers, announced that it had reached a settlement with Gexa Corp
. in which the Houston-based retail electricity provider agreed to pay BSA $400,000. The settlement came after an audit revealed that Gexa had unlicensed Microsoft, Sybase, and Symantec software programs installed on office computers.
BSA has no technological tools to uncover software piracy, just a program in which it offers rewards of up to $200,000 for qualifying reports. Most of its leads come from California, Texas, Florida, Ohio, Illinois, and New York. In 2005, it announced a total of $14 million in settlements with violators in the United States and Canada.
While global statistics for 2005 are due out next week, BSA has reported that 35 percent of the software installed on personal computers worldwide was pirated in 2004, a slight reduction from 36 percent in 2003. However, losses due to piracy increased from $29 billion to $33 billion, according to the study, which was conducted by IDC
, the global technology research organization.See no evil
Racine, a registered patent attorney, believes that most of the businesses with unlicensed software don't realize they have a problem. "Most of the violations that you probably see are not a typical pirated software problem, where you've got a bootleg copy, or you've copied it from somebody else," she said. "What happens is the businesses end up exceeding the terms of their license agreement."
What they exceed is the number of copies they are allowed under their license agreement with Microsoft or Adobe or Cisco.
"Most of the companies tell us it's a surprise," said Jenny Blank, director of enforcement for BSA. "Most of the callers say it isn't."
That does not prevent the organization from trying to work cooperatively with violators. When BSA receives an anonymous tip, it investigates the merits of the complaint, including a call to the software manufacturer to make sure there aren't any licensing agreements the informant was unaware of. If the complaint is deemed legitimate, Blank said BSA tries to avoid litigation by giving violators the opportunity to conduct their own internal investigations.
Blank noted the free tools that are available to companies that think they are in violation of software copyright, including the Guide to Software Management, audit tools, and fact sheets available on the BSA Web site.
Racine said the most important protective steps would be a mechanism to ensure the company is in control of what's on its computers, and a system for tracking software license documentation to avoid burdensome administrative costs in the event it receives a letter from BSA.
"That is going to involve having a policy that says your employees are not able to download or install software on the computer without company approval," Racine said. "The policies can vary, but you want to have control over that."