Piracy can sneak up on you

Swapping software could cost a bundle
By John Russell

WHILE YOU'RE BUSY working on that power speech to the National Vise & Tool Association with your door closed, do you have any clue that your workers down the hall are passing around software CDs like baseball cards?

And putting your company in jeopardy of criminal and civil penalties?

Even if you don't know about the software swapping, just about everyone else in your organization does.

Mike in human resources needs the latest spreadsheet software, so he borrowed a disk from Tina in billing and he's installing it on his computer. Gloria in shipping can't figure out why her computer keeps locking up, so she borrowed some debugging software from Jim in production. Then there's that Acrobat software that's making its third trip around the marketing department.

What do you care? That speech needs more work, and after that, you need to check out the latest sales numbers and then worry about the cost of employee health care. Who has time to worry about software copyright laws?

Maybe you should take a break and check out these headlines:

• A hardware-product distributor in Aliso Viejo, Calif, was caught using unlicensed software and agreed to settle for $200,000.

• An insurance agency in Sterling Heights, Mich., was caught using unlicensed software and agreed to settle for $75,000.

• A manufacturing company in Arlington Heights., Ill., was caught using unlicensed software and agreed to settle for $120,000.

• And the latest: Myers Industries Inc. in Akron was found using unlicensed software and agreed to pay for $564,350, the largest U.S. settlement ever.

Surprised? That's what the companies say, too, when they get caught.

`They all say they had no idea it was going on,'' said Jenny Blank, director of enforcement for the Business Software Alliance, a Washington-based group that watches out for the interests of the big software manufacturers, including Microsoft, Adobe, Apple and Symantec.

Many organizations, including Myers, cooperate when lawyers from the BSA call, asking about a tip that they're using unlicensed software. They'll often agree to audit themselves, pay big settlements and tighten their controls.

And for good reason. It's expensive -- and illegal -- to use software that you haven't been licensed to use. Get caught, and you face thousands of dollars in fines and up to five years in prison.

It's not just the big-time software counterfeiters and distributors who are guilty of piracy. So is your organization, if your workers are loaning disks to each other or your PC technicians are under-reporting the number of software installations they have made.

Here's why. When you buy a piece of software, it's different than buying a filing cabinet or a paper cutter. You don't really own it.

Software is intellectual property that is owned by the people who created it. When you ``buy'' software, you're really buying a license to use it.

Most often, you're allowed to install and use a licensed copy of a program on only one computer at a time. (One exception: You're usually allowed to make a backup copy for archival purposes or in case a tornado hits. But you'd be smart to store them elsewhere.)

So your job is to figure a way to manage your software wisely to avoid breaking the law.

The easiest way, of course, is just to buy only what you need and make sure you use it on only one machine.

That's easier for employees to follow when your company has a no-tolerance policy for piracy and other strict software polices.

And it's probably easier at small companies than large ones, where there are only a few computers and you can keep track of everything.

``I'm pretty cautious with our computer systems in our office,'' said Al Neifert, owner of Creative Management Information Services in Canton, which provides information-technology consulting and temporary services to other companies. ``Any time one of my people need something, I have them go buy it. It's usually not that big a cost. And we usually just need it on one PC.''

But of course, it can be tempting to spread the cost around.

Software can represent 25 percent of an organization's information technology budget, according to the BSA. A single piece of software can run from $40 to $20,000.

So it can seem cost-effective and easy, when you're in a pinch, to install software on a second or third machine. Just for a little while, to handle that big project.

``A lot of people who do it don't have malicious intent. It's just a matter of convenience,'' said Ronald Finklestein, managing partner of Akris LLC in Akron, which does software audits to help companies comply with copyright laws. ``Someone says, `I need a piece of software installed on a machine.' And someone else says, `Oh, I have it. Let me go ahead and install it.' Then they forget to follow up and buy the license for it. That kind of thing happens all the time.''

Finklestein, like a lot of people, has mixed feelings about the strict copyright laws. On one hand, he believes that if you haven't paid to use a certain software, then you're stealing, and in the process, taking away the livelihood of computer programmers who write the code.

On the other hand, when Finklestein buys a piece of software for his home, he sometimes wants to install it on two machines. But he knows he's not supposed to.

``From that perspective, I think it's totally unreasonable I can't install it on both machines at home,'' he said.

Software companies have heard those arguments, and they don't buy it -- whether the place in question is a home, a small company or a global corporation.

They're strict about cracking down on pirates. Most of their tips come from employees and former employees who don't like it when a company is using software illegally. They often call the BSA's toll-free hot line (888-No PIRACY).

That's when BSA lawyers and enforcement workers start digging around. First, they'll do a preliminary investigation to see if Microsoft, IBM or another software maker has licensing records on your company. If the investigators hear that you've got Word software installed on 30 machines, and the software company says you've only bought licenses for one or two, that's when you get the phone call.

What happens next is up to you.

``We will inform the company we received information that they have unlicensed copies,'' said Blank, the BSA's enforcement director. ``Then we will invite them to work with us to come to an out-of-court settlement, or go to court. In general, companies will see the benefit to cooperating, because litigation can be expensive.''

Often, BSA will let a company do its own audit, which is less intrusive than having outside enforcers come in and disrupting business for hours or days.

But when companies don't cooperate, that's when the BSA lawyers start the legal paperwork.

That's not to say BSA is all stick and no carrot. The watchdog group says it is sensitive to the need to educate people about software piracy, and helping companies manage it.

It's either that or take your chances and brace yourself for a call from the lawyers.

First published November 24, 2003