SAN JOSE, CALIF. -- Fed up with simply pressuring foreign governments to crack down on software piracy, a group of U.S. companies has formed an investigative team to hunt down overseas pirates.
The group, the Business Software Association, will meet today in San Francisco to narrow its investigative targets and to establish formal procedures.
The group's first big success came when detectives it had hired gathered information -- much of it through undercover surveillance -- that led to the Nov. 27 arrest of 10 people in Hong Kong and the seizure of illegally copied computer programs worth $2 million.
The pirates' prices present stiff competition to legitimate retailers. Illegal copies of top-selling spreadsheet and word-processing programs with list prices of $500 and more are available in the Far East for $10 or less.
"This is the first time there's an association whose sole purpose is to go after software pirates," said Ric Giardina, a lawyer for MicroPro International Corp. of San Rafael, Calif.
The group's six members -- including Apple Computer Inc. of Cupertino, Calif., Ashton-Tate of Torrance, Calif., and Microsoft Corp. of Redmond, Wash. -- already have agreed to ante up $90,000 apiece to pursue software pirates throughout the world.
The group's overall 1988 budget is $750,000, according to Tom Chan, Ashton-Tate's deputy general counsel and leader of the antipiracy effort.
The other group members are Autodesk Inc. of Sausalito, Calif., Lotus Development Corp. of Cambridge, Mass., and WordPerfect Corp. of Orem, Utah.
For years, software companies have complained loudly that piracy rings in Hong Kong, Singapore and elsewhere are stealing millions of dollars by copying popular computer programs and reselling them.
Individual companies have caught scofflaws in the United States.
But they've been far less successful in foreign countries, where laws against copying software are lax or nonexistent.
"There have been individual efforts, but there's a sense that we'll be more effective working together," said Tom Lemberg, general counsel at Lotus. "Usually, if a pirate's copying Lotus software they're pirating others' as well."
The problem has worsened in recent years, lawyers at the software companies said, even though some foreign governments have moved to tighten their laws against software piracy.
"People have talked about this problem for a long time but have never really gotten anywhere," Chan said. "Meanwhile, places like Hong Kong have only gotten worse."
In Hong Kong, Lotus 1-2-3, the best-selling spreadsheet program, can be purchased for $13, and WordPerfect, the leading word-processing program, sells for $10, Chan said. Both packages list for $495.
Oracle Corp. of Belmont, Calif., said that illegal copies of a database program listed at $1,295 sell for as little as $2 in Hong Kong.
Chan said the new group originated in an industry coalition formed about a year ago. In early November, the coalition changed its name to Business Software Association and decided to begin compiling evidence against pirates.
The group plans to limit its membership to a few of the software industry's larger companies.
"To be effective, it's important that the group not grow too large," Lemberg said.
Apple joined the group out of "a show of support for software developers and not because we're suffering directly from piracy," an Apple spokeswoman said.
International Business Machines also is cooperating with the group, though it won't become a member, Chan said.
In the Hong Kong case, detectives hired by the group spent 600 hours -- some of it on undercover surveillance -- building a case against a half-dozen syndicates. The evidence was turned over to the Hong Kong Customs and Excise Department.
Customs officials confiscated more than 20,000 phony manuals and computer disks of programs by Ashton-Tate, WordPerfect and Lotus.
Future investigations are expected to focus on Singapore and Mexico, Chan said.
In Mexico, state-run companies routinely copy personal computer software, Chan said. In Singapore, the problem centers on pirate rings that peddle the software.
Not everyone thinks software piracy is as damaging to the industry as the Business Software Association does.
Some observers argue that it actually might help legal customers by holding down official software prices and might benefit the manufacturer by boosting a package's popularity.