The Personal and Social Impact of Computers - Principles of Information Systems - page 592

The Software and Information Industry Alliance (SIIA) was the original software an-
tipiracy organization, formed and financed by many of the large software publishers.
Microsoft financed the formation of a second antipiracy organization, the Business Software
Alliance (BSA). The BSA, through intense publicity, has become the more prominent orga-
nization. Other software companies, including Apple, Adobe, Hewlett-Packard, and IBM,
now contribute to the BSA. The BSA estimates that the software industry lost over $48 billion
in 2007 in revenue to worldwide software piracy. “Worldwide, for every two dollars of soft-
ware purchased legitimately, one dollar was obtained illegally.” 49
Penalties for software piracy can be severe. If the copyright owner brings a civil action
against someone, the owner can seek to stop the person from using its software immediately
and can also request monetary damages. The copyright owner can then choose between
compensation for actual damages—which includes the amount it has lost because of the
person's infringement, as well as any profits attributable to the infringement—and statutory
damages, which can be as much as $150,000 for each program copied. In addition, the
government can prosecute software pirates in criminal court for copyright infringement. If
convicted, they could be fined up to $250,000 or sentenced to jail for up to five years, or
both. 50
The Web site www.MDofPC.com was caught selling unlicensed copies of software from
Adobe, McAfee, Microsoft, and Symantec. Visitors to the site could pay online and then be
given access to the software for downloading when their payment cleared. The BSA initiated
an investigation that led eventually to a $36,000 fine against the operators of the site. 51 The
Acorn Engineering Company agreed to pay $250,000 to BSA to settle claims that it had
unlicensed copies of software from Adobe, Autodesk, and Microsoft on its computers. 52
Another major issue in regards to copyright infringement is the downloading of music
that is copyright protected. Estimates vary widely as to how much music piracy is costing the
recording industry. An estimate from the Institute for Policy Innovation (an economic public
policy organization) is that the recording industry loses about $5.3 billion and retailers lose
about $1.0 billion, for a total direct loss of $6.3 billion. In addition, the U.S. government
loses about $422 million in tax revenue. 53
Operation Copycat is an ongoing undercover investigation into Warez groups, which are
online organizations engaged in the illegal uploading, copying, and distribution of copy-
righted works such as music, movies, games, and software, often even before they are released
to the public. The investigation is led by the Computer Hacking and Intellectual Property
(CHIP) Unit of the United States Attorney's Office and the FBI. Operation Copycat has
resulted in 40 convictions over a period of three years from July 2005 to July 2008. Those
convicted have typically been sentenced to over a year in prison, required to pay fines in
excess of $200,000, and had to forfeit all computer and other equipment used in committing
the offenses. 54
The Motion Picture Association of America estimates that it loses over $18 billion per
year from movie theft. It won a $100 million judgment against TorrentSpy for offering
thousands of copyright-protected movies and TV shows. 55
Patent infringement is also a major problem for computer software and hardware man-
ufacturers. It occurs when someone makes unauthorized use of another's patent. If a court
determines that a patent infringement is intentional, it can award up to three times the
amount of damages claimed by the patent holder. It is not unusual to see patent infringement
awards in excess of $10 million.
To obtain a patent or to determine if a patent exists in an area a company seeks to exploit
requires a lengthy (typically longer than 25 months) search by the U.S. Patent Office. Indeed,
the patent process is so controversial that there is a broad consensus among manufacturing
firms, the financial community, consumer and public interest groups and government leaders
demanding patent reform. Here are just a few examples of numerous recent lawsuits involving
patent infringement.
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Personal computer manufacturers Acer, Apple, Dell, and Hewlett-Packard were sued for
allegedly violating four patents related to a wireless communications privacy method and
system held by Saxon Innovations. 56