[rumori] WSJ software piracy stories

From: Steev Hise (steevATdetritus.net)
Date: Thu Mar 21 2002 - 10:50:40 PST

from the Wall Street Journal, a couple good stories on software
piracy crackdowns.

one thing they fail to mention is the basic fact about
intellectual property which makes these draconian rules so
ridiculous: the marginal cost of software is almost zero. so all
the whining from the BSA about their losses due to piracy is a
total lie.

---------- Forwarded message ----------
Date: Thu, 21 Mar 2002 08:28:42 -0800 (PST)
Subject: the ending is a real zinger

Recreational Software Pirates Face
Brig Time, Angering Some Critics


The U.S. software industry says it has a big problem, and it believes it
has a solution: putting Robin Rothberg and some of his friends behind

Not everyone agrees.

Mr. Rothberg, a 34-year-old Boston-area computer consultant, was for a
year or two around 1997 a leader of "Pirates With Attitude" -- an online
software-piracy group. The Pirates -- like hundreds or even thousands of
other groups on the Web -- do for software what Napster did for music,
making programs such as games and expensive financial software available
for free. No money changes hands, and the groups are mostly hobbies for
Do you think people should be jailed for sharing software? Participate in
the Question of the Day1.

In 1997, after industry lobbying efforts, Congress made this sort of
"recreational" piracy a criminal offense; previously, it was only a civil
violation. Swapping more than $2,500 in software, regardless of the
circumstances, became punishable by as much as three years in jail. Mr.
Rothberg and 16 other Pirates With Attitude are the first big group of
people to be faced with jail time under the law.

They were arrested in 2000; most pleaded guilty last year, and will be
sentenced next month by U.S. District Judge Matthew F. Kennelly in
Chicago. Many are expected to be given probation, but the government seems
to be gunning for Mr. Rothberg and a few others, who could be sent to jail
for more than two years.

The software industry describes the crackdowns as a much-needed step to
deal with a rampant and costly problem that grows worse every day. "We
feel the threat of jail time provides a greater deterrent," said Mike
Flynn, who heads up antipiracy efforts at the Software and Information
Industry Association.

But many people see the "criminalization" of recreational, or
noncommercial, piracy as part of a disturbing trend. "The penalty is
completely disproportionate to harm that is caused," said Marci A.
Hamilton, a specialist in copyright law at the Benjamin N. Cardozo School
of Law at Yeshiva University.

Selling pirated programs has always been regarded as a serious criminal
offense. But recreational piracy -- almost as old as the PC -- was long
treated as a civil matter, with those caught potentially receiving fines
but not jail time. In convincing Congress to change the law, the industry
said that even noncommercial piracy was expensive, pointing to 130,000
jobs and $1 billion in taxes it said was lost due to all forms of piracy.

No one in the debate thinks that stealing software should be condoned. The
bone of contention is whether the punishment fits the crime. The music
industry's campaign against Napster has been conducted entirely through
civil, as opposed to criminal, courts; critics say the software industry
has the resources to do the same thing.

With software-industry trade groups cheering on the arrests, the courts
are likely to see more such cases. In December, federal agents seized
hundreds of computers in another big bust, this one involving a group
called "DrinkOrDie."

The fact that people now face jail time for what had for years been a
civil offense is another indication of the growing power of copyright
owners -- not just software companies, but also the music and movie
industries. These powerful lobbies are increasingly getting their way in

In 1998, for example, Congress extended copyrights by 20 years after heavy
lobbying by companies like Walt Disney Co., which was worried about losing
copyrights on Mickey Mouse and other icons. On account of the 1998 Digital
Millennium Copyright Act, a programmer was kept in jail without trial for
three weeks last year simply for writing some decryption software. And the
entertainment industry is now lobbying Congress for it to force PC makers
to fundamentally redesign computers to make some kinds of digital copying
physically impossible.

"Things have tipped too far," said Miriam Nisbet, legislative counsel with
the American Library Association, which often testifies on copyright
issues. "We are very much for protecting authors, but some sort of balance
is very important."

The software industry justifies the tough new laws by citing the economic
harm it says it suffers from piracy. Many of the industry's claims,
though, don't appear to bear close scrutiny. The industry oftensays, for
example, that well more than 100,000 jobs are lost every year due to
piracy. It comes up with that number through extrapolation: that if the
industry would have sold, say, 20% more software had it not been for
piracy, then it would also have had 20% more employees.

Timothy F. Bresnahan, a Stanford University economist, dismissed the
analysis as "goofy." "No industry executive would make that mistake," he
said. The economic analysis about piracy was prepared by the International
Planning and Research Corporation; the group, which works as a consultant
to software groups such as the Business Software Alliance, said it stood
by its analysis.

The arrests tend to take up considerable federal resources: The DrinkOrDie
bust came after a 14-month investigation involving multiple federal
agencies. The busts are usually billed as major advances against computer
crime. But some security experts, such as Lois Jacobson, chief executive
of MIS Training Institute, a Framingham, Mass., security operation, wonder
if law-enforcement resources wouldn't be more effectively used against
potentially more serious problems, such as corporate computer break-ins.

Also, the law requires judges deciding piracy cases to treat every copy of
a pirated program as a lost sale, even though many people in the piracy
world are students who couldn't afford to buy the programs they are

The names of the software-piracy groups conjure images of anarchy-loving
hackers. But the members typically turn out to be college students or
middle-class professionals, often in the computer industry, with no other
criminal records. All say they would have halted all of their trading had
they been served with a civil warning.

While not defending what they did, several Pirates facing sentencing say
there were extenuating circumstances -- another reason they question if
jail time is appropriate. And like many of those arrested, T. David Oliver
of Illinois showed off racks of software he purchased legally at regular
prices while a group member. Among the programs were copies of the Linux
operating system -- which can be had for free, quite legally.

Write to Lee Gomes at lee.gomesATwsj.com5
URL for this article:
Hyperlinks in this Article:
(1) http://online.wsj.com/article/0,,SB1003444565356550240,00.html
(3) http://online.wsj.com/article/0,,SB966206724698767425,00.html
(4) http://online.wsj.com/article/0,,SB957492236169474418,00.html
(5) mailto:lee.gomesATwsj.com

Updated March 21, 2002

And, anyone interested in a grace period?

Microsoft-Backed Piracy Crackdown
Strikes Some as Too Heavy-Handed


The stern letter from the Business Software Alliance, a Washington, D.C.,
trade group, crossed Carl Gammon's desk in May. Mr. Gammon, who oversees
technology decisions at a small medical-device manufacturer, was taken
aback by the tone.

"This is just a quick reminder to let you know that -- if you are running
unlicensed software -- you could become the subject of a BSA
investigation," the missive declared.

Around the same time, Mr. Gammon's company, Minntech Corp. of Plymouth,
Minn., received a similar letter from Microsoft Corp. -- a main backer of
the BSA. Then, ominous-sounding BSA radio ads started running on stations
in Mr. Gammon's area, warning that companies could be "only one phone call
away" from an audit of the software they use. That's a potentially
nerve-wracking process that could result in big fines.

"I thought it was fairly strong-armed tactics," recalls Mr. Gammon.

Call it a software dragnet. Minntech is one of millions of businesses that
have been contacted over the past 14 months by the BSA or Microsoft, which
have been expanding efforts to crack down on companies that might not have
proper licenses for software. Licenses serve as proof that a user paid for
the software or is otherwise entitled to use it.

The new campaigns are angering some Microsoft customers, who feel the
efforts are too aggressive -- and might be aimed at increasing sales for
Microsoft at a time its customers are struggling with pared-down
technology budgets.

Microsoft says it simply wants to combat piracy. But the enforcement
effort comes as the software giant, whose products dominate most computer
desktops, has been delivering new versions of its Windows and Office
products and instituting new policies that could boost revenue from them.

A controversial new Microsoft licensing plan, for instance, ends some
discounts for organizations that buy software in bulk. And in its new
Windows XP product, Microsoft is adding a software "activation" feature
that will make it harder to install one copy of the operating system on
multiple machines.

Microsoft's antipiracy focus has long matched that of the BSA, which has
power of attorney to conduct investigations on behalf of its nine "global"
members, including Microsoft (it has other members that help make policy
decisions). The BSA estimates the software industry loses nearly $12
billion to piracy every year. And since August 2000, the trade group has
been on a city-by-city campaign to target illegal software use at
companies with under 500 employees.

Through six separate "software truce" initiatives, the BSA has sent
millions of letters and aired a stream of radio ads offering amnesty to
companies that step forward to report illegal software use. Some
aren'tquite sure what to make of the radio spots. "It almost sounds like a
government ad," marvels J. David Jameson, the president of the Greensboro,
N.C., Chamber of Commerce, after listening to one. "I heard that and
thought, 'Boy, who pulled their chain?' "

At a June customer meeting held by Microsoft in Minneapolis to discuss the
new pricing scheme, some attendees felt uneasy when Microsoft
representatives brought up the local BSA crackdown, says Ray Bailey, one
corporate computer chief who attended. He says Microsoft also distributed
BSA pamphlets about software piracy and showed a video on the subject.
That left Mr. Bailey wondering if people who didn't sign up for the new
licensing plans might have a greater chance of getting audited.

In the elevator afterward, Mr. Bailey recalls a fellow attendee saying: "I
feel like we've been to a proctologist."

Microsoft says it hasn't embarked on any sort of new antipiracy strategy
to raise revenue, though it has focused more attention lately on small and
medium-sized businesses, says Nancy Anderson, Microsoft's deputy general
counsel. She says illegal copying often comes from companies that grow
toofast to keep their licenses current.

Customers shouldn't link the recent BSA campaigns or requests for
"voluntary" audits from Microsoft to Microsoft's new pricing or licensing
moves, Ms. Anderson says, since Microsoft has long encouraged voluntary
audits. "There's no question that our intent is not in any way to threaten
or intimidate our customers," Ms. Anderson says. "We are sensitive to the
fact that we want them to be our customers for a long time."

But some customers don't think the company is being sensitive enough. In
the Netherlands, Microsoft recently fired off inquiry letters to more than
20,000 companies which weren't even customers. After some research,
Microsoft figured that many of the small companies, which owned more than
10 computers each, were probably using software that had been illegally
copied, instead of buying it through retail channels, says Onno Hektor,
Microsoft's small and medium business unit manager in Amsterdam.

The letters asked the companies to tell Microsoft what kind of software
they used. Later, Microsoft followed up by sending some companies a letter
from a law firm. Mr. Hektor acknowledges the companies were under no legal
obligation to respond, and called the effort "educational."

Vincent Everts, who works at a 20-person Dutch venture-capital firm and
has been publicly critical of some Microsoft efforts recently, called the
letter campaign heavy-handed. Microsoft's Mr. Hektor acknowledges that
some letter recipients were "very upset, of course," but maintains that
the vast majority of people were sympathetic. "What would you do if you
were a software vendor, and 25% to 30% of your software is pirated?" he

Though Microsoft plays down revenue-raising potential from its recent
moves, some analysts believe that is just what's on the company's mind.
Alvin Park, an analyst with Gartner Group, notes that requests from
Microsoft for companies to perform "voluntary" audits of software use have
risen. Such tactics, along with the recent pricing changes and Windows XP
activation, represent "a multipronged strategy with the goal of increasing
revenue from Office," which is Microsoft's single-biggest revenue line,
argues Neil MacDonald, another analyst at the firm.

Bob Kruger, a BSA vice president, says BSA members "say they've seen
increases in sales activity in some of the regions where we've run the
campaigns, all of which suggests that, at some level, we have been

Mr. Kruger says companies that receive letters from his group shouldn't
feel threatened, even though the BSA can get court orders to conduct
surprise inspections, sometimes with the help of federal marshals. Some
tough language was necessary, he said, since the goal "is to get people's
attention." Still, the BSA recently toned down the letter in light of the
Sept. 11 terrorist attacks, a spokeswoman noted, to delete words like
"target". And instead of offering a "software truce," the BSA now bills
its program as a nicer-sounding "grace period."

Write to Rebecca Buckman at rebecca.buckmanATwsj.com1
URL for this article:
Hyperlinks in this Article:
(1) mailto:rebecca.buckmanATwsj.com

Updated October 19, 2001

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