If rogue copies of a well-known processing or spreadsheet package are being used by your company, you had better watch out. Spurred on by mounting losses the software industry is taking a hard line against such illicit use of their programs and is lobbying to make it a criminal offence in the UK.
By Jane Bird
Ever since blank audio and video tapes became available, most of us have happily used them to make recordings of our favourite music and films. Despite the protestations of artists' unions and publishers, few live in fear of being prosecuted for breach of copyright. The people who earn their living from creating and publishing the originals have come to accept that a certain amount of copying will go on. Not so the software industry.
If rogue copies of a well-known word-processing or spreadsheet package are in use on your premises, you'd better beware. The software industry is after you. Spurred on by mounting losses - $6 billion in Europe last year - the industry has stepped up its campaign to identify and punish the perpetrators. The UK is relatively well-behaved; only some 43% of software was pirated in 1994, equivalent to $544 million according to the industry watchdog, the Business Software Alliance (BSA). Other countries in Europe are less restrained - Turkey and central Europe have piracy rates of more than 90%. To stem the losses, the BSA has embarked on an aggressive campaign aimed at raising awareness of software piracy and instilling fear of discovery among company bosses.
'One of the problems we have,' says Robin Burton, director of the BSA in Europe, 'is that most people out there have grown up in the age of magnetic media, and as teenagers they probably copied their friends' CDs onto tape.' The BSA wants people to realise that software is much more expensive to produce, a factor reflected in its price. 'A CD containing the latest graphics software might cost £600 whereas it looks the same as a music album priced £15,' says Burton. However, the high price-tag also makes copying much more tempting. And for those who can't manage to make the copies themselves, compilation CDs containing almost every leading package, including Windows 95, are available for £50 or £60 at car-boot sales or from crooked dealers.
From the industry's point of view, one of the biggest problems is that users believe they are unlikely to get found out. A survey last year by Spikes Cavell, the market research company, found that around 19% of Times 1000 organisations admitted to having pirate software, and this is probably an underestimate. However, some two-thirds of the 450 companies surveyed saw a very small or small risk of being caught. One of the BSA's responses to this widespread complacency has been to set up a freephone 'Crimeline' inviting informers to report the use of illegal software in their organisations. Callers can claim a reward of up to £2,500; during the past year the line has received some 400 calls. Informers can be disaffected employees or people in search of revenge, perhaps because they have been passed over for promotion. Other callers are genuinely unhappy about being asked to work with software they know to be illegal. They may be concerned that their own data will be affected by bugs or viruses which are often contained in illicit programs.
Whatever the reason for the call, the BSA will protect the informer's confidentiality. 'Under UK law, they would have to be declared as a witness if a case came to court,' says Burton. But in practice, it practically never does or is settled in the very early stages. Few companies dare challenge the BSA in court - it has won every single one of the 600 cases it has been involved in worldwide. 'Basically, there is no grey area in the middle,' says Burton. 'Either you do have a licence or you don't.' Following Crimeline tip-offs, the BSA's lawyers and officials sometimes decide to raid the premises where piracy is alleged, as they did the Trowbridge premises of baby-food manufacturer Cow & Gate last autumn. Acting on a court search order, the raiders found almost 100 pirate software programs in use on the site. They then sought a high court injunction banning the company from infringing copyright and requiring that all copied software be handed over. Raids are rare, however. More often, the BSA puts the allegations in writing and suggests that it comes in and does an audit. After all, most sites represent customers with which the industry hopes to have a long-term relationship. But when pirate software is found, the BSA generally requires a five-or six-figure compensation payment to the software houses concerned, plus the price of legitimate licences. It also presses for a public statement aimed at creating the sort of negative publicity that might discourage other potential pirates.
Some users genuinely seem to believe they are entitled to make copies. Take training centres, for example. Around 70 education and training centres across Europe have been discovered using illegal software by the BSA. When Frank McMahon, managing director of Yorkshire & Humberside Training Services, was asked to justify copying, he said he thought it was perfectly acceptable because he was giving the software companies - in this case Lotus, Microsoft and Novell - free publicity among his students. 'We admit to making copies as we believed we had unofficial approval being a training centre,' McMahon said.
But one of the main causes of illegal copying is sheer lack of management control. At the London Borough of Tower Hamlets, for example, the BSA found 204 illegal copies of software across several sites. Bart Walsh, assistant director of finance and administration (IT services), admits: 'It appears that software management procedures have not been adhered to in many parts of the borough and these need to be tightened up and enforced.' New procedures are in place to prevent further cases, says David Swinnerton, the company's financial director. 'We have now introduced an automated software inventory system which, backed by an auditing procedure, will ensure that unauthorised copying of software is not repeated and that we maintain full control of our software.' But not all users are so willing to shoulder all the responsibility. They argue that the industry makes little effort to simplify the complex task of software licensing. Licence agreements come in a host of different forms and are constantly changing, for example when software houses decide to start charging for options that were previously free, or introduce a fee for upgrades that were traditionally given away. Doug McLardy, principal consultant at BP Exploration, says: 'Some software companies are undoubtedly to blame, not over any one particular agreement but because of the confusion created by the number of different approaches in the market.' Microsoft might draw up its agreements in one way, Lotus in another, and Novell in a third, he says. 'You can't assume that something which applied in one agreement will hold in another.' Peter Williams, financial director of Selfridges, agrees that licence agreements tend to keep changing and are hard to understand. 'If there were some more common understanding among all software vendors it would be easier to control,' he says. Selfridges, for example, has some licences priced per PC, some for which the cost depends on the number of people who can access the system, and others which depend on the number who may be using a piece of software at any one moment. Keeping on the right side of each agreement means deciphering a labyrinth of small print and legal jargon. Moreover, the problem is bound to get worse as flexible workstyles become more pervasive. 'Software licences used to be tied to one place,' says McLardy. 'But as people start to move around a lot, they need their software to go with them.' A manager with a PC at work and a PC at home, for example, has to buy two copies of the software even though it is impossible to be in the two places at once.
The Spikes Cavell report endorsed the view that the industry could do more to help users keep their software legal. 'Most software theft appears to occur because the processes within organisations mean that it is perceived to take too much time, or cost too much, to take legal copies,' the authors wrote. 'Software companies ought to be far more accommodating to those organisations who are trying to manage their software usage,' says Rob Briggs, head of management services at East Sussex County Council. The industry could also help by cutting prices. At present, it is hard to get more than 20% off, however many licences you buy. 'Discounts of up to 50% ought to be available for very high volumes,' he adds. 'After all, it would be 50% more than they're getting for software that is currently unlicensed.' The response of Microsoft, the industry giant, has been to introduce a give-away auditing program, Legal Ware. 'At present companies' perception of the risk of litigation is far too low. They don't realise how many companies have been done,' says Microsoft's software theft business manager Mark Roberts. 'Our program helps companies scan their systems to see what software is in use and highlights any illegal copies.' Implementing it across Nottinghamshire County Council's 5,000 PCs will cost some £200,000, according to Neil Duffy, manager of the project. But the saving in support costs could amount to more than £5million, Duffy reckons. At BP Exploration too, software audits are saving money, though for a different reason. 'More commonly we find we are paying for things that we are no longer using,' says McLardy. 'One of the big incentives to have our records correct is to save money.' Meanwhile, the industry is pressing on with its campaign to catch the thieves. Tougher action from the police and judges is helping. During the past 18 months, four UK company directors have received custodial sentences of several months and large fines, while others got fines, suspended sentences and community service.
The BSA is also lobbying for the use of illegal software to become a criminal offence in the UK as it is elsewhere in Europe. In Finland, for example, two people were recently sent to prison for 60 days and fined $150,000 just because their organisation was using seven copies of a design automation product called AutoCAD. However, most users believe it is unrealistic to try to stamp out illegal software totally. The trouble is the people who want to do it are the most technically able and their activities are not easy to control, says Selfridges' Williams. 'You can't stand King-Canute-like in the face of technology that lets you do all these things, and I suspect that in the fullness of time the software industry will have to accept this.' Time will tell, but the industry isn't ready to turn a blind eye yet. So if you don't want to find yourself in the spotlight, the message is clear: get legal or get out.
