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Software alliance flexes muscle to fight pirates

One of the most lucrative squealing operations in America is run out of a comfortable suite of offices near Gucci Gulch, the K Street lobbying district in Washington. Disgruntled ex-employees with a bone to pick, laid-off workers seeking revenge, fallen-out former partners who know where the bodies are buried all are welcome here.

Everyone else, watch yourself.

The Business Software Alliance is a typical Washington trade group, one whose members include big software companies such as Microsoft. The BSA does all the things that most Washington lobby groups do, but also something every other group only dreams of: It can use policing powers to get its way.

The BSA has "power of attorney" to enforce the copyright claims of its members against companies using pirated software. If the BSA finds out your company is using more software than you have paid for, they can not only demand that you buy the programs, but also pay a penalty _ technically, a settlement fee that is negotiated _ as a reminder of the error of your ways.

The alternative is to face a civil suit for copyright infringement, something few would want to risk.

This is a well-oiled machine, with a "Report Piracy" button on its Web page and a toll-free number: 1-888-NOPIRACY. The BSA has engaged in hundreds of enforcement actions over the years, bringing in a total of $70-million, including $12-million last year alone.

The Recording Industry Association of America, which made headlines for its lawsuits against music downloaders, has nothing on these guys.

The companies caught in its net tend to be otherwise upstanding members of their local Chambers of Commerce, who for some reason or another aren't paying for all the programs they are using. "I'm going to receive an award for being civil engineer of the year tomorrow night," an Illinois engineer said recently in describing his company's run-in with the BSA over unlicensed copies of the AutoCad engineering program. "This is all very embarrassing."

The engineer, who isn't being named here on the theory that he has suffered enough, including his $115,000 penalty, said a former computer manager at the company hadn't signed up for the required number of AutoCad licenses. Other BSA targets have similar tales. The stool pigeon is often a former employee.

The BSA itself doesn't view its targets as crooks out to save money by stealing software. "Many are reputable companies that obey the law, but which for some reason don't view software management as important," said Bob Kruger, who heads up the group's enforcement efforts.

The BSA gets thousands of tips a year and has three attorneys performing triage. If you are serious about ratting on someone, the BSA advises, please leave complete, detailed information. "You can't just say, "Check out so and so' and then hang up," Kruger said. "We aren't going to do anything with that."

The companies that get busted tend to be medium-size regional businesses with a few hundred employees. Occasionally, though, big names get caught in the net, such as Russell Stover Candies of Kansas City, Mo., back in 1996. It paid a penalty of about $48,000. "We were not keeping the kind of inventory records we should have been," said Richard Masinton, chief financial officer. "We appreciated their bringing it to our attention. Now it's a priority."

In addition to penalties that can run into six figures, companies sometimes also endure the added indignity of being quoted in a BSA press release that announces the action, lamenting how sorry they are and saying how much they respect intellectual property. It's a bit like victims of Communist re-education camps being paraded out to renounce their counterrevolutionary crimes.

Some industry analysts say the real economic problem with software isn't that companies are buying too little of it, but rather too much; that big corporations, especially, tend to buy more licenses than they need. That's no excuse for using software without paying for it, of course, but it helps put the issue into perspective.

Kruger says the money he collects goes to the BSA's antipiracy program, and while the figures may seem Gatesian in their size, they are in fact "a drop in the bucket" compared with the billions of dollars he says are lost to piracy.

Well, maybe. I have a running argument with the industry over whether it really suffers from piracy as much as it complains it does. I've also taken a run at them for using inflated estimates of piracy losses to persuade Congress to makes noncommercial software piracy a crime punishable by jail time.

There are folks in prison now for doing with software essentially the same thing that millions of people did with music on Napster. Both industries are using criminal courts to enforce what should be left as a civil matter.

But that criticism doesn't apply here, since it's an entirely civil remedy that the BSA is seeking.

More to the point, in this particular instance, the BSA doesn't really care what you think about it. The more you hate and fear it, the happier it'll be.