Worldwide, more than 38% of all software in use is said to be illegally
copied. Approximately 25 percent of the business software in the U.S. is
obtained illegally. Much of the piracy is done by individuals copying software,
but organized Software piracy and distribution is on the increase.
With software piracy allegedly costing the software industry $11 billion
in lost revenues, enforcement of the No Electronic Theft (NET) Act and
copyright laws is stronger than ever.
The government will need to prove a number of important elements in cases involving alleged distribution over the internet. The internet cases involving warez are unusually complex because of the difficulty in determining the motives of the distributor and number of copies distributed.
The Law:
"The Congress shall have Power . . . To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."
United States Constitution, Article I, Section 8.
United States law, based on this Constitutional provision, protects a person's right to control the reproduction and distribution of his or her creative works like books, songs, and movies. The law describing these rights and their limitations is included in Title 17 of the U.S. Code. Potential penalties for infringers are listed in both Title 17 and Title 18 (which provides criminal penalties).
Copyright protection includes computer software. That means that the owner of the copyright is entitled to say how and under what circumstances the software may be reproduced, distributed and installed. The "owner" of the copyright is usually the software publisher. You do not become the copyright owner by buying a copy of a software package. Instead, when you buy software, you are purchasing the right to use it, under certain restrictions imposed by the copyright owner. Generally, the precise rights you are purchasing are described in the license or other documentation that accompanies the software. If you copy, distribute or install the software in ways that the license does not allow, you are violating federal copyright law. For example, if the license says that you may not make more than a certain number of copies, then making more than that number of copies is a violation of the law. Regardless of any other copying restriction, however, the law does permit you to make a back up copy.
Making unauthorized copies of software is a violation of the law, no matter how many copies you are making. For example, whether you are making a few copies for friends or you are a company buying a single copy of a program, but installing it on 100 PCs, you are still violating federal law if you do not have written permission to make those copies. You are exposed to potential civil and criminal penalties. In other words, you can be sued by the copyright owner and be held liable for money damages, or the government could charge you with a criminal offense.
What are the penalties?
If caught with pirated software, you or your company may be liable under both civil and criminal law.
The copyright owner can bring a civil action against you. In that action, the owner can seek to stop you from using the pirated software (injunctive relief) and can request an award of money (damages). With respect to damages, the owner chooses between actual damages, which includes the amount the owner has lost because of your infringement, plus all amounts you have profited, and statutory damages. Statutory damages can be as much as $100,000 for each work copied. Federal judges have shown their intolerance of copyright violators by handing down increasingly large damage awards against infringers. Additionally, in some circumstances, a court may authorize the U.S. Marshals and local law enforcement officials to conduct an unannounced raid of your premises and seize evidence of the infringement.
The government can criminally prosecute you for copyright infringement. If you are convicted, you may be fined up to $250,000 or given a jail term of up to five years, or both. In 1997, the President signed into law the No Electronic Theft (NET) Act, making it easier to prosecute software pirates on the Internet. Now you can be prosecuted even if you do not make money from your infringement.
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