Software Piracy Grows, As Do Efforts to Stop It

AT the recent Comdex computer trade show in Las Vegas, one attraction was a mock pirate ship where visitors were given whistles. The message: ``Blow the whistle on software pirates.''

It is a message that appears to be getting through in the United States because of strong education and enforcement efforts, says the Software Publishers Association, which staffed the Las Vegas booth.

``We believe software piracy is declining and actually declining quite rapidly'' in the US, says Ken Wasch, executive director of the 1,050-member trade group in Washington. American losses have dropped from around $2 billion in 1990 to $1 billion last year, he says.

Yet copyright violations remain an enormous problem, especially outside the US.

In Thailand and Taiwan, more than 90 percent of all software in use has been obtained illegally, according to the Business Software Alliance (BSA) in Washington. The figure is only a few percentage points lower in Japan, Italy, and Mexico.

Worldwide losses to piracy last year totaled more than $12 billion in an industry that did $38 billion in sales, the BSA says.

``Asia is by far the hotbed of piracy,'' with estimated illegal copying of $5.5 billion last year, says Diane Smiroldo, spokeswoman for the group, whose 10 major sponsors - all US-based - account for 75 percent of world software sales. ``This year we saw a decrease ... in Europe somewhat.'' Unlike the larger Software Publishers Association, the BSA sees the problem holding steady in the US, rather than declining.

The most common way piracy happens, experts say, is when corporate managers allow or encourage illegal copying of software for use within the company. ``Regrettably, it often comes down from the top,'' says Bob Kruger, head of the BSA's North American enforcement operations.

Another way is when retailers sell copied programs in their shops, often to unwitting customers. Sometimes the packaging is counterfeited so few users can tell the difference. A third method is illegal sharing of software code on electronic bulletin boards on computer networks.

SOME software companies have tried creating ``locks'' to prevent making multiple copies of a program, but Ms. Smiroldo says this wrongly inhibits legitimate uses, such as by someone who wants to use a program on two computers he owns.

The good news is that as the magnitude of the problem becomes clearer, efforts to deal with it have been growing on three fronts:

Policy. ``Over 50 countries have fairly substantial copyright protection laws,'' having signed the so-called Berne Convention, Smiroldo says. These standards are likely to be included in a new worldwide liberalized trade deal under the General Agreement on Tariffs and Trade, which promises to double that number of countries. The North American Free Trade Agreement, meanwhile, has the toughest intellectual property provisions of any trade deal to date.

Last year Congress passed legislation making it a felony to buy 10 or more unlicensed copies of a program, if the combined value of the contraband is more than $2,500. Penalties can include a fine of up to $250,000 and up to five years in prison.

Enforcement. Policies mean little unless illegal-software users are held accountable. The BSA and the Software Publishers Association have toll-free phone numbers that receive dozens of calls daily. Mr. Kruger says the response is often to contact offending companies directly, sometimes resulting in a settlement paid to the watchdog groups.

But the groups can get tough, too, having filed several hundred lawsuits each. Recently, the BSA announced that, aided by federal marshals, it raided Health Care Revenue Management Inc., a small San Francisco firm. The case is now under litigation.

Education. Antipiracy advocates stress education as perhaps their biggest weapon. The Software Publishers Association urges companies to hire a software manager, maintain a software log, and instruct employees about the copyright issue.

Kruger says most people would not take two candy bars off a store shelf and hide one in their pocket. Yet that is what he sees happening with software. ``That's theft.... I'm not sure everybody knows that.''