COLUMN ONE : The War on Software Copycats : The industry has tried for almost a decade to stop illegal reproductions. Workers are now being asked to squeal on their own companies.
Forget about undercover agents, secret police and industrial spies. The latest foot soldiers in the long-running battle against software piracy are decidedly untrained, and perhaps even a bit unorthodox. But, unmotivated they are not.
The Software Publishers Assn., home of the generals of the software industry, is turning to disgruntled employees of corporate America to pursue its crusade against those who would make, use or sell illegal copies of personal computer programs.
If a company buys one copy of a word-processing program, but 100 of its secretaries are using it, the association wants to know about it. It also wants to know about shared spreadsheet, database and utility programs--or any other illegal appropriation of copyrighted PC software. And it has even set up a toll-free, 24-hour-a-day telephone number, (800) 388-PIR8, to accommodate its informants.
The tipster program is the latest volley in the association’s nearly decade-old attempt to eliminate--or at least seriously reduce--illegal copying of personal computer software, an offense that ranges from duplicating a favorite computer game to share with a friend, to outright counterfeiting of programs to sell to unsuspecting customers.
In all, software executives estimate that, for every legitimate copy of a PC program sold in the United States, one illegal copy is made. For personal computer game software, the ratio of illegal copies to legitimate ones is even higher, perhaps as much as 5 to 1.
All told, industry executives estimate annual revenue losses to domestic piracy at $1.5 billion, about half the $3.2 billion in U.S. retail PC software sales last year.
Piracy is just one of the ethical and legal issues raised by the continuing introduction of new electronic technologies and media. Those advances--which include photocopiers, personal computers, videocassette recorders and, soon, digital audio tape players--have made it increasingly difficult for authors and artists to protect their so-called intellectual property from the relatively cheap and easy methods of copying and distributing.
“It’s just become so easy to copy things that people don’t even realize that it’s not only illegal, but just plain not nice,” said Donn Parker, a senior consultant at SRI International, a Silicon Valley think tank.
Added Mary Jane Saunders, a lawyer with the Software Publishers Assn., a trade group that represents the vast majority of the nation’s software publishers: “Just because it’s easy to copy doesn’t make it right. I tell people that just because someone doesn’t have a lock on his door doesn’t mean that it’s OK to walk in and steal his belongings. It’s the same with software.”
Over the years, software publishers have spent millions of dollars and countless hours on a variety of anti-piracy efforts. Lawsuits have been slapped on counterfeiters and off-brand computer makers who copy popular software programs into their machines to increase their customer appeal.
Engineers have designed lock-out systems or other devices to thwart illegal software copying, some of which have even worked. But, when they did, customers complained that the copy-protection mechanisms--including secret codes and questions that can be answered only by consulting material obtained at the store--made the programs too difficult for legitimate users to operate.
So now, software publishers rely on a simple license agreement contained in every package of shrink-wrapped software sold. The agreement, which most customers never notice, spells out a consumer’s rights and limits. The bottom line: A program may be transferred from one computer to another, but it may be used only on one computer at a time, and it may not be copied.
Businesses Targeted
The latest stamp-out-piracy effort, now about 9 months old, focuses exclusively on American businesses, which account for the largest percentage of the nation’s estimated 40 million personal computers and an estimated 50% of the PC software abuse, according to software industry leaders. The remaining 50% spans a wide range from deliberate counterfeiting by quick-buck artists to such casual abuse as personal computer game sharing among teen-agers.
The most prevalent type of corporate piracy, experts say, is inadvertent.
A worker will bring a piece of software to the office for his own use, sing its praises and end up making copies for interested colleagues as a favor. The Norton Utilities, a $100 program written by Santa Monica programmer Peter Norton that helps users manage their computer files, has the dubious distinction of being America’s “most pirated” piece of software because of its popularity.
The most popular feature of the program, which has sold about 1 million copies but is believed to be installed on about 5 million PCs across the country, is its ability to retrieve data lost from a computer user’s files.
In other cases, the Software Publishers Assn.’s Saunders noted, corporations fail to budget adequately for personal computer software purchases, leaving workers to fend for themselves. That process often leads to program sharing and duplicating.
In the most egregious instances, she said, companies will make a conscious decision to keep costs low by encouraging employees to copy and share software programs. In the thinking of those offenders, there is no reason why every secretary or professional should need an individual copy of WordPerfect (the second most pirated software program); departments can copy the discs and share a single operating manual.
Although casual program-sharing is the most prevalent type of piracy, the association is most interested in pursuing piracy that is explicitly fostered or condoned by a corporation, because blame and responsibility are more easily pinned on a company and its executives. And in its advertising, including spots on American Airlines’ new in-flight televised “advertorials,” the association is actively courting informants to tell all they know--names, addresses and dates--to the association’s answering machine.
Although the tipster program has uncovered pirated software in about 40 corporations and recovered nearly $2 million in fees, the efforts have generated a fair amount of controversy, even from the very people it is designed to protect: software publishers themselves.
“We shouldn’t sue our customers; we should educate them,” Philippe Kahn, founder and president of Borland International, a Silicon Valley software publisher, said. “It’s like dealing with drug abuse. Arresting users won’t solve the problem.”
More radical members of a growing “free software” movement, who oppose copyrighting software on the grounds that it restricts society from enjoying its benefits, have attempted to subvert the association’s efforts. Early on, Saunders recalled, the software association took tipsters’ calls on a sophisticated telephone answering machine that could be remotely accessed as a convenience to its executives. It was quickly deactivated after disgruntled hackers uncovered the remote code, erased tipsters’ messages and left a greeting of their own to would-be informants.
Deliberate sabotage aside, questions linger over the wisdom of openly encouraging unhappy employees, suppliers or others with knowledge of a corporation’s inner workings to rat on the company, especially when that company is likely a legitimate customer of some members of the software association.
“They’re like the Internal Revenue Service. They are trying to set an example and scare the hell out of everyone else,” complained Paul Saffo, a member of the Institute for the Future, a Silicon Valley research group.
“It’s not a pretty business, but it’s part of life,” admitted Ken Wasch, an attorney and executive director of the Software Publishers Assn. “We want corporate America to worry about the software police. And we want companies to realize that they have to be responsible about how they manage use of their software.”
But, if the truth be told, the current informant-based campaign was more an accident of history than anything else.
It happened last summer when the association was casually tipped by an unhappy employee that a “Fortune 100-type Midwestern” corporation was riddled with pirated software. Wasch, who refuses to name the company, said that, because of its size and prestige, he decided to contact the company personally before taking legal action.
Days after sending a letter to the chairman, Wasch was invited to survey and assess the company’s PC software inventory.
Wasch performed what has since become the association’s standard “software audit.” After getting lists of the contents of the hard discs of every personal computer and inventorying the floppy disc storage cases, the “auditors” attempted to match their findings against the company’s software purchase records and licensing agreements.
The result? No purchase documents could be found for about 5% of the software on the company’s machines. The association confiscated the offending software and slapped the company with a fine of nearly $50,000. It also signed an agreement with the company, Wasch says, promising that it would never release its name publicly.
The process was so uncomplicated and quick that the association decided to keep at it.
“We stumbled onto a winning formula,” one executive acknowledged. “It is far less expensive and time consuming that hauling every offender into court.”
Once a company has been exposed by a tipster, it can agree to an audit or face a lawsuit if the association is determined to pursue the case. With only two exceptions, corporations have accepted the software audit over the lawsuit.
Wasch argues that there are sufficient safeguards to protect against vendettas from disgruntled employees.
Getting Details
Informants are encouraged to tell as much as they can about the alleged offense. Required information includes names of the software allegedly being copied, departments where the abuse is happening and names of any executives with knowledge of the practice. Informants are also encouraged to leave their names and any other details supporting their claims. The more information offered, the greater the likelihood that the association will follow up on the tip. In the end, Wasch said, he pursues only cases that he thinks would make a strong lawsuit.
And, he noted, companies tend to cooperate to save time, expense and their corporate pride.
“Companies are buying our silence by letting us in their doors,” Wasch said. “We see no reason to drag a company’s name through the mud after they have agreed to settle.”
However, insiders say Hertz Corp. is among the companies that has been audited. The rental car firm had no comment except to say that it has “no problem with its software now.”
Proceeds from the fines are spent to educate consumers, particularly corporate information systems directors, about their responsibilities for PC use and abuse.
But they are also used to underwrite lawsuits against flagrant offenders. That includes the case filed last month against National Business Academy, a Los Angeles software training school charged with passing out illegal copies of three popular programs to its students.
How did the association find out about the academy? Some ex-faculty members called that 800 number.
MOST-PIRATED SOFTWARE PROGRAMS 1. The Norton Utilities, from Peter Norton Computing Inc., Santa Monica. This top-selling trouble-shooting program can retrieve information unintentionally erased or electronically lost. 2. WordPerfect, from WordPerfect Corp., Orem, Utah. The top-selling word-processing program for the PC. 3. Lotus 1-2-3, from Lotus Development Corp., Cambridge, Mass. The top-selling financial spreadsheet program for the PC. 4. XTree, from Executive Systems Inc., San Luis Obispo. This program keeps track of files stored on the PC’s hard disc. 5. DBase III Plus, from Ashton-Tate Corp., Torrance. This program, the best seller in its class, organizes information and allows users to index and cross-reference vast quantities of data.
