Costly Copies

Costly Copies

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So your administrative assistant just got the new Microsoft Office 2000. You are still using Office 1997 and are feeling a bit jealous so you decide you have to install your assistant's copy on your computer too. There is nothing wrong with that—is there? The law firm paid for the software; you are a member of the firm; your assistant is working on your projects; so what could be wrong with making that one little copy?

The real question should be whether your firm can really afford to pay for that copy. What you have just done is actually software piracy, or "softlifting," and you have just exposed your firm to civil and criminal action.

A technical consulting company, Thoughtworks, headquartered in Chicago, just paid $480,000 to settle claims relating to unlicensed copies of software that were installed on company computers. Aftermarket Co., a telemarketing firm headquartered in Phoenix, paid $168,000 for unlicensed copies of software. Another Phoenix company, DuraSwitch Industries Inc., agreed to pay $135,000 for copyright violations. This agreement came only after a federal court issued a restraining order preventing the company from deleting the software and the court ordered a raid on DuraSwitch.

The Law on Softlifting

When you purchase software, you are actually purchasing the license to use the software. This license usually allows you to install and use the software on one computer at a time. The license provides you limited rights to use and reproduce, generally for back-up or archival purposes, the purchased software. Software is also protected by federal copyright laws. Title 17 of the U.S. Code gives the owner of the copyright the exclusive rights to reproduce and distribute copies of the copyrighted work. The person or company that purchases a copy of the software has no rights to make additional copies or install it onto a second computer without the express permission of the copyright owner. The law further provides that "anyone who violates any of the exclusive rights of the copyright an infringer of the copyright." 17 U.S.C. §501.

Getting Caught

According to the Business Software Alliance (BSA), unauthorized copying of software within business organizations is the most pervasive form of software piracy faced by the software publishing industry. BSA is an international organization representing software and e-commerce developers in 65 countries around the world. As the "voice" of the software industry, BSA helps to educate computer users about software copyrights and works to combat software piracy. BSA is a nonprofit organization that is funded by dues from its members, including such companies as Microsoft, Novell, Intel, Adobe, Apple, Compaq and Dell. Additional funding comes from the monies it receives in settlements reached with companies found in violation of the copyright laws. According to Jenny Blank, Director of Enforcement for BSA, those settlements have exceeded $500,000. "The statute permits up to $150,000 per title infringed, which can be shocking to a company that was trying to save $500 by copying the software," she said.

Debbi Bauman, Communications Manager for BSA, indicated that "softlifting" occurs not only in corporations, but in schools, public agencies and government offices. According to a state-by-state analysis of software piracy in the United States, in 1999, software piracy cost the United States $3.2 billion in retail sales of business software applications. Softlifting often occurs when extra copies are made to use in the office or to take home.

It is surprisingly easy for a company to get caught using copied software. BSA receives hundreds of reports on its hotline, 1-888-NOPIRACY, and on its web site, Those reports generally come from current and former employees of the infringing company. As for the former employees, Ms. Blank noted that "people have differing motivations for calling us. What's really important is the information they have to impart." In any event, BSA does do an initial investigation before contacting a company. In most cases, contact is made with the alleged infringing company thereby giving them a chance to cooperate. Sometimes, BSA will file a complaint requesting a motion for a temporary restraining order and a motion for seizure. Once those motions are granted, the BSA, accompanied by federal marshals, go straight to the infringing company and conduct an audit on the spot.

Avoiding the Marshals

The BSA recommends that a company treat its software just as any other valuable company asset. Most companies couldn't survive if the employees were permitted to walk off with the furniture, computers or accounts receivable, and software should be treated with the same respect. In its Guide to Software Management, the BSA asserts that managing software is a four-step process. The first step is to create a clear statement of company policy that should include strict procedures on purchasing software. This policy should be distributed to all current employees, posted on the company bulletin board and computer network, and should be included in new employee packets. The second step is to take inventory of all of your software assets. That includes checking every employee's desktop and laptop computers for product name, version number and serial number. Once you have an inventory, step three is to make sure that the company has a license for each of the software programs inventoried and installed. Carefully review the terms of each original license. There may be some licenses that permit the use of the software on multiple computers. Any illegal software should be immediately deleted. The fourth, and never final, step is to continue monitoring the software and updating the inventory list. The BSA recommends spot-checking individual computers to make sure that any illegal software has not been inadvertently or deliberately installed. A copy of the BSA's Software Management Guide can be printed from their website at The guide describes the four-step process in detail and offers recommendations as to a general policy statement and purchasing requirements.

The BSA periodically offers a "Truce" to certain cities across the United States. This Truce Campaign provides companies not already under investigation the time to review software installations and usage, and, if necessary, acquire the proper licenses needed to obtain legal status for software. If an organization becomes fully licensed during the Truce, the BSA will not seek to impose penalties for past infringement. Last fall, this Truce was offered to the cities of Austin, Texas; Baltimore; Cincinnati and Phoenix. Ms. Blank said another Truce campaign is going to be announced this spring. The cities have not yet been selected for this Truce, but you can visit to find out more about upcoming campaigns.


There are very few businesses today that do not utilize some brand or type of software. It is simple to purchase, install and copy. The purchase and installation are generally inexpensive. It is the copying that carries the heaviest price tag.

Journal Date: 
Sunday, April 1, 2001