Software piracy on the upswing

Associated Press

WASHINGTON — Software piracy grew in 2000 for the first time in more than half a decade and 37 percent of the programs used by businesses worldwide are illegal copies, a trade group of software makers reported Monday.

The worldwide dollar losses to software makers due to piracy dropped slightly to $11.75 billion, however, due to a growing market for software and lower prices, the group said.

The Business Software Alliance, an organization of productivity software companies such as Adobe and Microsoft, has conducted the study since 1994.

This year’s findings reverse what had been a steady drop in rate of pirated software.

"It appears that there is more change in attitudes towards piracy in periods of economic growth, when business are adapting new technology to keep up with demand and competitive pressures, than in times of slower growth," the report said.

Technologically advanced regions like North America and Western Europe have a "fundamental piracy problem," it said. The Asia-Pacific nations — where more than half of all programs in use last year were stolen — are increasingly accounting for worldwide piracy.

The progress that has been made in some regions, such as North America, isn’t much comfort to the alliance’s director of enforcement, Bob Kruger.

"That’s kind of like saying that I’m having fewer heart attacks than I used to," Kruger said. "But the damage that’s being caused by piracy is still devastating. It can be counted in the thousands of jobs and billions of dollars lost."

The study comes as the trade group announces 159 software piracy settlements worldwide, totaling more than $6.2 million. Thirty-six of those settlements — in which companies paid software companies to settle claims that they were using unlicensed software — are in the United States.

Software companies lost more than $4 billion in 2000 due to piracy in the Asia-Pacific region, the highest dollar rate. Eastern Europe has had the highest piracy rate each year, with 63 percent of its software illegally copied in 2000.

Devices that can write CD-ROMs are cheap and make pirating a simple task. Many companies use authentication codes printed on CD cases of programs like Adobe Photoshop and Microsoft Office — which must be typed in during the installation process — but software pirates find them on illegal Web sites.

In response to this threat, Microsoft’s upcoming Office XP and Windows XP products will require an online "product activation" sequence that uses a combination of a software serial code and a number created by scanning the hardware of a person’s computer. If the customer doesn’t activate the program, it will stop working within several days.

But like copy-proof "key disks" of the past, these methods can frustrate legitimate buyers and are frequently overcome by industrious software pirates. Even though Windows XP hasn’t been released, there already are downloadable programs that work to disable its copy protection.

In Vietnam, only 3 percent of business software is a legitimate copy, making it the worst offender. China and Russia also are also in the top five. In the United States, 24 percent of programs are pirated copies, the report said.

Software companies have tried for some time to persuade China and other nations to strengthen and enforce intellectual property laws.

"There isn’t a sufficient local interest protecting intellectual property," Kruger said of those countries. "But that’s kind of a circular argument. Until you protect IP (intellectual property) you won’t be able to create the growth of an IP industry."