MANILA, April 6, 2005 (STAR) By Eden Estopace  -  Software pirates have much in common with their sea thieve-cousins in the ancient world – they wreak havoc on global trade, disturb governments, outsmart legislation and operate outside the borders of any country. What is true of pirates in the olden times is still true of modern pirates but the battle has shifted from the high seas to cyberspace.

Results of a study done in 2003 by the Business Software Alliance (BSA), an international organization dedicated to fighting software theft, and research firm International Data Corp. (IDC) bared that 36 percent of the world’s software is pirated. In the Philippines, the rate is almost double at 72 percent, which BSA estimates lead to losses amounting to P3 billion.

The large-scale looting of merchant ships plying the global maritime trade routes thus has practically the same impact on economies as software piracy. With billions of dollars lost in illegal copying and distribution of software, corporate bottomlines sag with losses in revenue that could have been otherwise spent on R&D, expansion or job generation.

The legendary lure of piracy has survived mainly because of the parallel "treasure" that is at stake but more so because of the ease with which techies and even very ordinary people can steal and distribute copies of copyrighted software.

But your present-day pirate Captain Black Beard is not a fearsome sword- and pistol-bearing outlaw. He is probably sitting in an air-conditioned office in a business suit, is highly educated and commands a tech team. This is because, according to BSA, software piracy is most prevalent among business organizations.

In an interview, Ronald Chua, chairman of BSA Philippines Committee, said corporate end-user piracy occurs when businesses, schools and organizations make additional copies of an unlicensed software program.

"The other forms of software piracy prevalent in the Philippines," he added, "include Internet piracy, which is the distribution of pirated software online and the unauthorized downloading of software from the Web; hard disk loading, which occurs when a business sells a new computer with illegal copies of a software loaded onto its hard disk; and software counterfeiting, the illegal duplication and sale of copyrighted material with the intent of directly imitating the product."

Since BSA was founded in 1998, it has sounded the call for respect to intellectual copyright in 60 countries worldwide, the Philippines included, hoping to bring down the level of piracy.

As the leading global voice of the high tech industry, BSA’s goal, says its president and CEO Robert Holleyman in its website, "is to build a safe and legal digital world that fosters IT investment, innovation and confidence in our networks."

Copyright protection, free trade, competitive procurement processes, strong cyber security and education will continue to play key roles in the future of software innovation, he said.

Can advocacy do the trick?

While it is easy to say that software theft could be minimized if more information is made available to end-users on alternative and cost-effective means with which to obtain licensed software, hard realities in the high-tech world that govern the prevalence of piracy are much harder to negotiate.

In a highly cost-sensitive market with low purchasing power like the Philippines, the price factor is the foremost reason for the proliferation of illegal copies of licensed software. Companies or individuals scrimping on cost will think twice about shelling out P5,000 to P8,000 per PC for an operating system if it can be had for free and without the arms of the law breathing down their necks.

Under Philippine laws, the BSA said software piracy is copyright infringement and is penalized under the Intellectual Property Code of the Philippines. Penalties include one to three years’ imprisonment plus a fine of P50,000 to P150,000 for the first offense, three to six years’ imprisonment plus a fine of P150,000 to P500,000 for the second offense, and six to nine years’ imprisonment plus a fine of P500,000 to P1.5 million for the third and subsequent offenses.

Surely, there is a law in place and the penalties are stiff, but only if you are caught. Chua noted that in 2002, someone was found guilty of selling pirated software. But one successful conviction is grossly disproportionate to a piracy prevalence rate that is considered the eighth highest in Asia with a resulting estimated impact of P3 billion in trade losses per year.

That piracy thrives only in less developed economies is a myth. According to a recent PRNewswire report, software piracy cost the United States $6.5 billion in retail sales of PC software applications last year. In Europe, the UK-based The Register reports that piracy is estimated to cost the software industry there some 9.7 billion euros.

The BSA maintains that one of the main obstacles to compliance is the lack of understanding and appreciation of the intellectual effort that goes into the development of a software program.

"Making multiple copies of a software program and distributing it is easy to do. No thought is given to the intrinsic value of the software. No thought is spared for the investment made by the developer of the software program, or the marketing effort in publicizing the product," Chua said.

Once this is understood, there are many ways to get around the price hurdle.

Going legal

The BSA strongly recommends that organizations adopt a software asset management (SAM) program at their workplace in order to avoid the risk of any software license misuse.

Chua said SAM is a set of policies and procedures which will allow an organization to take full advantage of all its software requirements.

"These actions include conducting software needs analysis and software inventory, comparing installed software with licenses and creating a budget, appointing a software manager and scheduling regular audits, and issuing a company policy statement and reminders," he said.

With proper planning, Chua stressed that companies would know when the software would become obsolete and the right software to upgrade it. As an organization adopts proper management, it gets to control its software and greatly reduce the risk of installing unauthorized software.

This, Chua said, will also prevent or reduce the risk of the organization’s computer systems being attacked by viruses or from being hacked, thus resulting in increased security.

A BSA-commissioned survey among companies in the Asia-Pacific on the importance of software management showed that the top two priorities in using IT were to increase productivity at work and ensure security against hacking and virus infection.

But not everyone, Chua said, sees the direct relationship between having good software management and security and productivity.

According to the BSA website (, the disadvantages of using pirated software, especially in the enterprise setting, are greater exposure to software viruses, corrupt disks, or otherwise defective software; inadequate or no documentation and warranties; lack of technical product support available to properly licensed users; and ineligibility for software upgrades offered to properly licensed users.

In January, Microsoft announced plans to curb the means with which people using pirated copies of its Windows operating system receive updates and security fixes.

The landmark stride, however, was met with opposition by some security experts who said the move could aggravate security problems as computers running on illegal software could be rendered more vulnerable to security breaches if they are no longer entitled to download patches from the software giant.

This is one proof that the proliferation of unlicensed software has negative technical consequences to the networked world in general. Whether or not Microsoft’s anti-piracy program, dubbed Windows Genuine Advantage, due for launch middle of the year, will have a significant impact in curtailing the spread of tech theft is the thing to watch out for since this could snowball into parallel efforts by other software firms.

Detox your PC

In the meantime, BSA recently launched its "Detox Your PC to Keep Your Business Healthy" campaign in coordination with the Commission on Information and Communications Technology (CICT) and the business community.

According to Chua, the campaign primarily targets private companies and the BSA hopes to tap decision-makers such as CEOs, presidents and IT managers for this campaign. Educational mailers urging companies to keep a healthy business by making sure they are using licensed software have been sent out. On April 20, BSA will be holding a free seminar on software asset management to help companies take full advantage of their software.

"We want companies to realize the benefits of using licensed software which directly contributes to an increase in the productivity and competitiveness of their business," Chua said.

Reported by: Sol Jose Vanzi

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