Group Targets Small Businesses Using Software Illegally

BSA group puts teeth into anti-piracy rules by tracking users

The BSA was founded in 1988 to represent technology companies on many fronts, and its members also include IBM Corp., Hewlett-Packard Co. and Dell Inc. The alliance spends more than $3 million a year on lobbying, prodding Congress on such issues as patent reform and Internet security.

But the most visible element is the BSA's fight against counterfeit software and illegal copying. Not all members are part of that effort; those that are include Microsoft, Adobe, Symantec, Autodesk Inc., Apple Inc. and McAfee Inc.

In countries with the highest piracy rates, the BSA has pushed governments to crack down, arguing that greater respect for intellectual-property laws would stimulate investment in their economies. In July, Chinese police who cooperated with the BSA and the FBI crushed rings that had been selling an estimated $2 billion worth of pirated Microsoft and Symantec software around the world.

These steps seem to work. The percentage of software in China that was not legitimately purchased is 82 percent, but that's down from 92 percent in 2003 and 96 percent a decade ago, according to BSA-commissioned market research.

Overall, the BSA says the worldwide piracy rate is 35 percent, down from 43 percent in 1996. However, the group says that because the industry has grown in that time, software companies' annual piracy losses have quadrupled. The BSA says piracy took a $40 billion bite out of a $246 billion industry in 2006.

In the United States, where the piracy rate is a worldwide-low 21 percent, the BSA's strategy includes working with law enforcement and Web sites like eBay to stop suspiciously cheap software sales online.

Beyond hunting for dicey characters buying and selling counterfeits, the BSA also devotes significant attention to other forms of what it calls piracy by business users. The money harvested in these company-by-company crackdowns is not parceled to its members whose copyrights were infringed; the funds stay with the BSA to fuel its operations. (BSA's worldwide settlements soared 53 percent last year to $56 million.)

Plenty of cases originate when a whistleblower reports that a company is intentionally cheating - copying one program onto multiple PCs. In extreme cases, the BSA will get court approval to raid companies in search of evidence.

However, there are ways to get in trouble that do not begin with counterfeits or downloads. Companies sometimes legitimately buy software and fail to follow the letter of the licensing agreements that accompany the programs.

For example, computers often get handed down. Newer, faster machines go to employees who perform intensive technical work, and their old PCs go to colleagues with lesser needs.

Commonly an employee can transfer a copy of, say, expensive drafting software to a new machine. But many companies forget or don't realize that the software should be deleted from the old machine if the company has only one license for it - even if the receptionist who gets the hand-me-down PC never uses drafting software.

The situation is further complicated because software licenses vary greatly. Some programs can be shared on multiple computers in an organization, or used by the same person on a home and office computer.

Multiply such oversights by dozens of software programs, and suddenly a BSA audit can lead to a charge of big-time piracy.

"They call it something awful, but sometimes you grow so fast, you can't keep control of everything," said Mike Lozicki, president of MediaLab Ventures LLC of Tampa, Fla., which paid the BSA $125,000. Lozicki said 12 percent of MediaLab's software was deemed out of compliance, much of it sitting unused. "It was some really obscure stuff," he said.

The BSA enforcement director, Jenny Blank, wouldn't comment on his case.