The American software industry, tired of getting ripped off, is serving notice to users of illegal copies of personal computer programs: The next knock on your door could be the software cops.
In the past year, the Software Publishers Association, a Washington group whose members include the biggest names in software, has dramatically stepped up raids of businesses suspected of using pirated software. The group now files an average of two lawsuits a week seeking federal permission to stage the raids, where SPA auditors accompanied by marshals search a company's disk drives for bootleg copies of 1-2-3, Norton Utilities and even MS-DOS.
The SPA began its aggressive anti-piracy campaign gradually in the mid-1980s. Before that, software makers generally relied on special software schemes that thwarted attempts to copy programs. But the schemes proved highly unpopular with users, who said they made it difficult to use the programs on hard disk drives or create backup copies in case of disk crashes. So copy protection was abandoned, replaced by anti-piracy advertising and education campaigns, along with the occasional raid.
"A year ago, if you had an organization of 50 PCs in Wichita, Kan., loaded with pirate software, it would be a reasonable gamble," says Ken Wasch, SPA executive director. "Now, it's not."
Software industry officials say they have to respond aggressively to the problem because of the enormous losses they incur from pirates. A recent report prepared by SPA and the San Jose, Calif., market research firm Dataquest Inc. put piracy losses in the United States at $2.4 billion in 1990, down slightly from $2.5 billion in 1989 and off considerably from the $2.9 billion claimed for 1988.
The association claims its figures are "extremely conservative," although industry executives admit it's highly unlikely that every user of an illegal copy would have purchased a legitimate one if copying were impossible.
If you're an individual user whose computer is populated with software "borrowed" from a friend, it's unlikely that the software police will be knocking on your door, even though you are technically breaking the law. The cost of catching you is too high.
And Fortune 500 companies are infrequent targets of the more aggressive tactics of anti-piracy squads. Only one major raid of note, carried out against Snap-On Tools of Kenosha, Wis., came up empty. Software industry officials say that most large companies, fearful of the bad press that comes with being tagged a pirate, are making "good faith" efforts to root out piracy.
"Our goal is to get legal," says Tom Peltier, an information security specialist for General Motors Corp. in Detroit, which owns nearly 150,000 computers. "You can spend $300 to get another copy of a product or face a $100,000 liability and bad PR."
The most common targets of the crackdown are small and medium businesses that have enough pirated copies to make action worthwhile for the SPA -- and enough money to pay the penalty. To settle after a successful raid, the SPA charges companies a "fine" equivalent to the list price of all pirated software discovered on a company's premises -- and destroys the software. The company then must buy new copies of the programs.
The downfall for many businesses are the calls of disgruntled former employees to anti-piracy hot lines set up by the SPA and some companies like Microsoft and Autodesk. Autodesk has a profitable anti-piracy department, says director Sandra Boulton.
While callers can remain anonymous, companies are more likely to investigate a tip when callers leave a name and are even more eager if callers are willing to sign a legal affidavit saying they witnessed pirated software in use.
Once SPA decides to act on a tip, it often turns over the case to an independent law firm in a city near the offending company.
The law firm, sometimes using private investigators, then tries to determine the extent, if any, of software piracy at the company. When there is enough evidence that federal copyright laws are being broken, the lawyers will present it to a federal judge, asking the court to sanction a marshal's raid. Most companies where illicit software is seized agree to settle the case, rather than face a civil lawsuit.
Typical pirated programs include widely used applications like 1-2-3. But the program most frequently copied illegally is Syman
tec Corp.'s Norton Utilities, according to SPA estimates. MS-DOS is frequently pirated, but it's just as often counterfeited, says Microsoft, which early this month shut down a large Los Angeles counterfeiting operation.
Despite the high-profile enforcement, many cases of corporate software piracy are not deliberate official efforts by companies to defraud software makers. In many cases, says the SPA, executives may not realize employees have been copying software. The employees, in turn, may not realize that making more than a backup copy violates copyright law.