Software Piracy – Research claims that 41% of all Software installed is illegal

Illegal downloading is a popular topic at the moment, especially after calls from the Entertainment industry earlier this week for the Government to force Internet Service Providers to disconnect users who copy and share music and movie files in the face of a massive hit to the sector’s profits.

However, the effects of the trade in illegal copies is being keenly felt by knowledge-based industries across the board, as demonstrated by new research published by IDC which claims that around 41 per cent of all software  installed on computers over the last year was an Illegal copy. According to the research, the global trade in software piracy has cost the industry around $53 Billion. In the UK, software piracy rose by around 1%, accounting for 27% of all software loaded onto British computers.

Marcel Warmerdam of IDC, warned that the global economic crisis was likely to lead to a further rise in the figures this year due to the expansion of high-speed broadband connections, which many use to download all kinds of software ranging from games to office programs.

The British Software Alliance has called for action ahead of the publication of Lord Carter’s Digital Britain report in June.

It’s easy to focus on the music and movie industry as the main victims of piracy, but this research just goes to show that it’s a widespread problem for any business whose value is generated largely as a result of their ability to generate and exploit their intellectual property. 

Software, movies and music are all protected by copyright, which is a right that comes into being as soon as the material in question is recorded in a permanent form, whether that means writing it down, recording it or filming it. Provided that it meets the eligibility requirements, businesses will not need to apply for registration of copyright. This means that, provided they can trace ownership back to themselves, prove that it is original, show when you came up with it and that it doesn’t reproduce a substantial part of any other copyright-protected material, the only investment a business will need to make to protect its copyright is time.

It’s the value of that copyright which is being eroded through illegal downloading. Like the Music Industry, software houses will probably want to focus on Internet Service Providers, who provide their users with their connections to the web and the means to download illegal software, as the source of the problem but this isn’t as straightforward as it may seem.

ISPs can’t ignore the fact that they allow their users to share files and need to take some responsibility for the problem. For a long time, they have sad that they are not in a position to police the activities of their users due to the sheer number of them that download illegal software. ISPs are only obliged to step in and take action where a copyright owner makes them aware of their content being posted on a website which they host, or where they bring individual users to an ISP’s attention.

This is the “mere conduit” defence from the 2002 Electronic Commerce Directive Regulations, which also says that ISPs can be sued for copyright infringement if they do not quickly remove infringing content after being notified that it is on a website which they host or downloaded by their users.

Even then, it isn’t a black and white issue. ISPs monitor traffic on their network for a number of reasons and while it’s easy to identify traffic which moves through file-sharing programs such as LimeWire and Pirate Bay, it’s much more difficult to show exactly what that traffic consists of and what content is being shared. File Sharers are also becoming much better at hiding their IP addresses, which are used to track them down.

Even if you have an IP address, a number of people could use that computer, meaning that you won’t always get the right man. Not only that, but current technology used to digitally fingerprint files is already falling behind the times and may not be admissible as evidence in any court case, especially in a criminal prosecution where the standard of proof is higher. The EU has also expressed concerns that a Court ruling should be obtained before any user is disconnected.

There’s also the other side of the problem – users who make physical copies of software and pass them on. How this will be policed more effectively is anyone’s guess, but there’s certainly an obligation upon Software owners to implement more sophisticated encryption software and other tactics to choke off the supply. The likely target of any initiative would probably be the business community and as such it’s important that businesses ensure that they only use licensed software. It may cost more, but it’s more likely to be easily maintained and not contain malware or viruses.

The message has to be to take this seriously – a woman was forced to pay £16,000 in costs and damages by the Patents County Court in a claim brought by  for file-sharing earlier this year in a case brought by games producer Topware Interactive earlier this year. As we move further towards a knowledge economy, that knowledge will be protected ever more fiercely.

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