Computer Software Licensing and Piracy

Software Licensing And Piracy

Author: Kelly Sommerfeld

Email: k_sommerfeld@yahoo.com

In 1993 worldwide illegal copying of domestic and

international software cost $12.5 billion to the software industry,

with a loss of $2.2 billion in the United States alone. Estimates show

that over 40 percent of U.S. software company revenues are generated

overseas, yet nearly 85 percent of the software industry's piracy

losses occurred outside of the United States borders. The Software

Publishers Association indicated that approximately 35 percent of the

business software in the United States was obtained illegally, which

30 percent of the piracy occurs in corporate settings. In a corporate

setting or business, every computer must have its own set of original

software and the appropriate number of manuals. It is illegal for a

corporation or business to purchase a single set of original software

and then load that software onto more than one computer, or lend, copy

or distribute software for any reason without the prior written

consent of the software manufacturer. Many software managers are

concerned with the legal compliance, along with asset management and

costs at their organizations. Many firms involve their legal

departments and human resources in regards to software distribution

and licensing.

Information can qualify to be property in two ways; patent law

and copyright laws which are creations of federal statutes, pursuant

to Constitutional grant of legislative authority. In order for the

government to prosecute the unauthorized copying of computerized

information as theft, it must first rely on other theories of

information-as-property. Trade secret laws are created by state law,

and most jurisdictions have laws that criminalize the violations of a

trade-secret holder's rights in the secret. The definition of a trade

secret varies somewhat from state to state, but commonly have the same

elements. For example, AThe information must be secret, Anot of public

knowledge or of general knowledge in the trade or business, a court

will allow a trade secret to be used by someone who discovered or

developed the trade secret independently or if the holder does not

take adequate precautions to protect the secret.

In 1964 the United States Copyright Office began to register

software as a form of literary expression. The office based its

decision on White-Smith Music Co. v. Apollo , where the Supreme Court

determined that a piano roll used in a player piano did not infringe

upon copyrighted music because the roll was part of a mechanical

device. Since a computer program is textual, like a book, yet also

mechanical, like the piano roll in White-Smith, the Copyright Office

granted copyright protection under the rule of doubt.

In 1974, Congress created the Natural Commission on New

Technological Uses (CONTU) to investigate whether the evolving

computer technology field outpaced the existing copyright laws and

also to determine the extent of copyright protection for computer

programs. CONTU concluded that while copyright protection should

extend beyond the literal source code of a computer program, evolving

case law should determine the extent of protection. The commission

also felt copyright was the best alternative among existing

intellectual property protective mechanisms, and CONTU rejected trade

secret and patents as viable protective mechanisms. The CONTU report

resulted in the 1980 Computer Software Act, and the report acts as

informal legislative history to aid the courts in interpreting the

Act.

In 1980 The Copyright Act was amended to explicitly include

computer programs. Title 17 to the United States Code states that it

is illegal to make or to distribute copies of copyrighted material

without authorization, except for the user's right to make a single

backup copy for archival purposes. Any written material (including

computer programs) fixed in a tangible form (written somewhere i.e.

printout) is considered copyrighted without any additional action on

the part of the author. Therefore, it is not necessary that a copy of

the software program be deposited with the Copyright Office in

Washington, D.C. for the program to be protected as copyrighted.

With