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)

For years the group implored unhappy employees to report their companies for software piracy. "Nail Your Boss!" the ads said. But beginning in 2005, the BSA sweetened the deal by offering $50,000 rewards to whistleblowers in the U.S. It raised the limit to $200,000 last year, and now it is $1 million.

That matched the top reward of a smaller trade group, the Software and Information Industry Association, which has many of the same members, but not Microsoft. (SIIA also serves as a copyright watchdog for media companies, including The Associated Press, that want to stop their content from being misused online.)

Blank says the high reward is having its intended effect: It is bringing in more leads. However, she also says about half of all tipsters don't want any money.

It's unlikely the BSA will ever pay $1 million. The rewards have a sliding scale, with informants eligible for $1 million only if the resulting case reaps more than $15 million. The BSA's largest case, against what it called an "international media company," pulled in $3.5 million. Most informants collect closer to $5,000.

Even so, having rewards at all raises questions of whether the BSA creates a perverse incentive for employees who discover their organizations out of compliance: Should they help their bosses get squared away or try for a BSA jackpot?

Although whistleblowers aren't revealed to the target company, businesses often suspect the tipster was a technical employee _ even someone who had been responsible for handling software installations.

The BSA says people who intentionally load software improperly at a company are ineligible for rewards. But it can still bring a case sparked by someone who had let the problem fester.

That dynamic, coupled with the fact that software can be hard to manage, is why BSA critics contend the organization can get cash almost anywhere it pokes.

Blank disputes that notion. She said it's not worth the BSA's time to chase "onesy, twosy random noncompliance," so it focuses on the worst offenders.

Yet in 2005, her group pursued Mediaport Entertainment Inc. of Salt Lake City, where an audit revealed two unlicensed copies of Microsoft software. Retail value: $6,500. The BSA pressed for $16,500; the sides settled for an undisclosed amount.

Blank said she didn't recall the case.

When he directed BSA enforcement from 1993 to 2005, former federal prosecutor Bob Kruger didn't make much of grumbling from BSA targets. Mainly, he says, people were rationalizing software copying they knew was wrong.

"It's never fun to be investigated or audited or charged. I think it's human nature to say, `Well, you know it's not all my fault,'" Kruger said. "I don't think BSA was ever above reproach, but I think we always tried hard to run a program we could take pride in."

In particular, Kruger's group enjoyed big gains against piracy. Even in the U.S. it was over 30 percent in the 1990s, but it fell to 22 percent in 2003, according to the BSA-commissioned research.

"People are better now than they used to be. More often, it was the case in the past that BSA would identify organizations trying to get away with something," Kruger said. "More likely these days the disputes are going to center around negligence or sloppiness. It's not across the board, but I think it's a fair general statement. And that's because BSA has been, to some degree, successful in raising awareness."

Yet the campaign no longer shows momentum. The U.S. piracy rate ticked down to 21 percent in 2004, and there it remains.

So does the BSA need a new strategy?

"I think it's a fair question: What exactly is the problem the program is tackling now, as opposed to the problem it was tackling 10 years ago?" Kruger said. "If the problem is the same, that says something about the effectiveness of the program, doesn't it?"

Holleyman acknowledged that the BSA is finding it tough to have its "voice heard for the remaining part of the marketplace where there is piracy." But he said he sees no reason to try a dramatically new approach.

Top antipiracy executives at Microsoft and Autodesk praised the BSA for keeping piracy from rising; Autodesk said its experience supports the notion that smaller businesses have the biggest compliance problems. Other alliance members declined to comment.

They may be overlooking something: BSA targets commonly say they wish they didn't have to buy anything again from the companies that unleashed the alliance on them.

In one case, a BSA raid on musical-instrument maker Ernie Ball Inc. cost the company $90,000 in a settlement. Soon after, Microsoft sent other businesses in his region a flyer offering discounts on software licenses, along with a reminder not to wind up like Ernie Ball.

Enraged, CEO Sterling Ball vowed never to use Microsoft software again, even if "we have to buy 10,000 abacuses." He shifted to open-source software, which lacks such legal entanglements because its underlying code is freely distributed.

For many businesses, open-source has seemed technically daunting or unable to match the proprietary programs seen as essential in some industries. These days, however, the march of technology might be changing that.

That's one hope of Michael Gaertner, the architect who worried his BSA encounter would crush his business. Now he wants to rid himself of the Autodesk, Microsoft and Adobe software involved in the case.

"It's not like they have really good software. It's just that it's widespread and it's commonly used," Gaertner said. "It's going to be a while, but eventually, we plan to get completely disengaged from those software vendors that participate in the BSA."

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On the Net:

BSA site: http://www.bsa.org

Rob Scott's firm: http://www.bsadefense.com