Software Piracy Fight Makes Enemies

ADVANCE FOR NOV. 26 AND THEREAFTER; graphic shows breakdown of revenue and expenses for the Business Software Alliance; 2c x 4 1/2 inches; 96.3 mm x 114.3 mm (Pete Santilli - AP)

She founded the group to educate businesses on how to manage their software because she felt the industry wasn't doing enough of that, even as it was imposing steep penalties for noncompliance.

"If you were driving down the street and you got a speeding ticket, and there was no speed limit sign, it probably would be thrown out of court," she said.

Yet the BSA is getting more aggressive. Its CEO says software licenses aren't as difficult as many users contend. It has dropped an amnesty campaign for businesses. And this year it began dangling rewards of up to $1 million to disgruntled employees who anonymously report their bosses for using counterfeit or unlicensed software.

"The software vendors have every right to collect the license fees they're entitled to," said Tom Adolph, an attorney with Jackson Walker LLP who has defended against BSA claims. "It's the tactics of the BSA that rankle me."

The BSA was founded in 1988 to represent technology companies on many fronts, and its members also include IBM Corp., Hewlett-Packard Co. and Dell Inc. The alliance spends more than $3 million a year on lobbying, prodding Congress on such issues as patent reform and Internet security.

But the most visible element is the BSA's fight against counterfeit software and illegal copying. Not all members are part of that effort; those that are include Microsoft, Adobe, Symantec, Autodesk Inc., Apple Inc. and McAfee Inc.

In countries with the highest piracy rates, the BSA has pushed governments to crack down, arguing that greater respect for intellectual-property laws would stimulate investment in their economies. In July, Chinese police who cooperated with the BSA and the FBI crushed rings that had been selling an estimated $2 billion worth of pirated Microsoft and Symantec software around the world.

These steps seem to work. The percentage of software in China that was not legitimately purchased is 82 percent, but that's down from 92 percent in 2003 and 96 percent a decade ago, according to BSA-commissioned market research.

Overall, the BSA says the worldwide piracy rate is 35 percent, down from 43 percent in 1996. However, the group says that because the industry has grown in that time, software companies' annual piracy losses have quadrupled. The BSA says piracy took a $40 billion bite out of a $246 billion industry in 2006.

In the United States, where the piracy rate is a worldwide-low 21 percent, the BSA's strategy includes working with law enforcement and Web sites like eBay to stop suspiciously cheap software sales online.

Beyond hunting for dicey characters buying and selling counterfeits, the BSA also devotes significant attention to other forms of what it calls piracy by business users. The money harvested in these company-by-company crackdowns is not parceled to its members whose copyrights were infringed; the funds stay with the BSA to fuel its operations. (BSA's worldwide settlements soared 53 percent last year to $56 million.)

Plenty of cases originate when a whistleblower reports that a company is intentionally cheating _ copying one program onto multiple PCs. In extreme cases, the BSA will get court approval to raid companies in search of evidence.