Copyright infringement is a serious problem for the computer software industry. Programs can be copied easily on a personal computer, making detecting and prosecuting infringements of software copyrights extremely difficult. By estimates of the Software Publisher's Association, nearly 25 percent of all software in use in the United States is pirated (acquired through unlawful copying), and domestic and international losses ran to $8.1 billion in 1994 alone. The growth of computer networks, especially the Internet, presents further problems by providing the means for the almost effortless— and virtually untraceable — transmission of data. In the 1990s, Congress strengthened protections for software, and aggressive litigation by the computer industry targeted corporations, individuals, and counterfeiters in an effort to clamp down on this massive theft.
The Copyright Act (17 U.S.C.A. § 1 et seq.) gives exclusive rights to the authors of computer software. Their work is intellectual property, which the law treats differently from physical property. Software companies own their copyrighted programs even after selling them to consumers. For consumers, buying software is different from buying a car: purchasers of cars are called owners, whereas purchasers of software are called licensees. Although software buyers own the disk or CD-ROM on which the software is stored, they are entitled to use it in only a specific, limited way. The law says that manufacturers, as owners of the copyright, retain the exclusive right to reproduce and distribute copies of the software. Consumers, as licensees, do not have the same right. They may only copy the software onto a single computer and make another copy for archival purposes.
Consumers break the law when they make unauthorized copies of software. Whether for profit, free distribution, or personal use, such duplication is copyright infringement. Copyright owners can sue infringers for damages that may include sales lost by them and profits made by the infringers, or statutory damages of up to $100,000 for each work infringed. The penalties are more severe when software copying is done "willfully and for purposes of commercial advantage or private financial gain" (506 U.S.C.A. § 506). This is a federal crime, carrying fines of up to $250,000 and jail terms of up to five years.
The remote possibility of arrest and prosecution hardly hinders most software thieves. The chances of being caught are slight and the incentives can be difficult to resist. Software packages are often expensive — from around $50 to several hundred dollars — and copying is literally as simple as clicking a button.
The rise of computer networking — in which computers are linked within an office or across cities by means of telephone modems — has made illegal copying even easier. Network communication is hard to monitor, especially when it takes place over large geographic distances between users who can hide their identities. Thousands of computer bulletin boards and the global network known as the Internet proved fertile ground for young computer enthusiasts who saw copyright law as a minor hurdle in their acquisition of new warez (computer hacker slang for "illegally acquired software"). During 1995, the Usenet news group alt.binaries.warez. ibm-pc. amounted to a bonanza where thousands of dollars of copyrighted software was uploaded (installed) weekly by anonymous hackers, free for anyone's taking.
Despite gaining ground against infringers, the computer industry's battle is still uphill. The Software Publisher's Association (SPA), an industry trade group that sues infringers on behalf of its members, claims to have greatly reduced illegal copying in the workplace. However, home copying by individuals and counterfeiters has remained a persistent problem.
In 1994 federal district Judge Richard Stearns dismissed a case against David LaMacchia, a Massachusetts Institute of Technology student who had set up an Internet bulletin board over which users traded more than a million dollars worth of software. The judge ruled that federal copyright law did not cover not-for-profit copying of computer software.
Because of the ease with which software piracy may be carried out and the substantial revenue losses it produces, software manufacturers continue to call for more stringent legislation and to search for improved methods for detecting and preventing software theft.
See: computer crime.
