Nabbing the Pirates of Cyberspace

By Philip Elmer-DeWitt

The sweep, when it came last month, was swift and thorough. Dozens of Italian customs officers fanned out across the country and began pounding on doors in Milan, Bologna, Pisa and Pesaro. Their target: a loose alliance of computer bulletin-board operators suspected of trafficking in stolen software. By last week, according to unofficial reports, the Italian police had shut down more than 60 computer bulletin boards and seized 120 computers, dozens of modems and more than 60,000 floppy disks. In their zeal, say the suspects, some officers of the Guardia di Finanza grabbed anything even remotely high-tech, including audiotapes, telephone-answering machines and multiplug electrical outlets.

It was the most dramatic move yet in a determined -- and some say increasingly desperate -- effort by governments around the world to curb the spread of software piracy. The unauthorized copying of computer programs by American businesses alone deprived software publishers of $1.6 billion last year, a figure that swells to nearly $7.5 billion when overseas markets are included. "Industry's loss on a global basis is staggering," says Ken Wasch, head of the U.S. Software Publishers Association.

But government actions to stem the losses may be causing more problems than they solve. The Italian campaign, which began just as the newly elected right- wing government of media tycoon Silvio Berlusconi took office, hit largely left-leaning bulletin boards. And it is seen by some Italians as an ill- disguised attempt to suppress free speech on a troublesome new medium. In the U.S. a widely publicized federal case against a college student accused of operating a pirate bulletin board may backfire if, as expected, a judge rules that the charges filed against the student do not fit the crime. The underlying difficulty, say copyright experts, comes from trying to guard intangible electronic "property" using laws that were crafted with printing- press technology in mind.

At first glance, software piracy seems no different from that of any other copyrighted material. Chinese factories stamp out copies of American music CDs by the millions. Pirated American movies regularly appear in Asia and Africa long before their official release on video. (The objects that sometimes crawl across the bottom of the screen turn out on close inspection to be the heads of theater patrons inadvertently videotaped by the bootleggers.)

But software is not really like other intellectual property. Books and videotapes can be copied only by processes that are relatively time consuming and expensive, and the product is never quite as good as the original. Software, on the other hand, is easily duplicated, and the result is not a scratchy second-generation copy but a perfect working program.

The rapid growth of electronic networks only compounds the problem, for it allows anyone with a computer and a modem to distribute software silently and instantaneously. More than 90 countries around the world are already connected to the Internet, a global network that reaches an estimated 25 million computer users.

In many developing countries, software piracy has become pandemic. According to spa, 95% of the software in Pakistan is pirated, 89% in Brazil, 88% in Malaysia and 82% in Mexico. Hundreds of tiny gizmo shops in the mazelike streets of Seoul's Yongsan electronics market offer brand-name U.S.-made programs for a fraction of the list price, including Lotus 1-2-3 for $7.50 (suggested retail: $368). New Delhi's largest pirate outlet is a back-room operation that offers customers a catalog of nearly 400 titles and facilities for making copies for as little as $4 a disk ($2.50 for customers who bring their own floppies).

How to combat this rampant piracy? The publishers' first approach was to control it through technical means -- by putting codes in their programs that prevented users from copying them. This strategy worked for a while, or at least until determined pirates found ways to get around it. But the codes also made it difficult for legitimate users to copy programs onto their hard drives. Copy protection became so unpopular that by 1986 most publishers had abandoned it as their first line of defense.

But they didn't give up altogether. Through associations like spa they began picking off pirates one at a time, focusing on the biggest abusers. spa began running spot checks and audits on major corporations, suing for damages when they found firms had bought, say, a single copy of a program and then made numerous unlicensed copies for its employees. spa also opened a hot line on which anybody can report the use of illegal software. The organization now gets 20 to 30 calls a day, mostly from former or disgruntled employees, and collects more than $3.5 million a year in fines and penalties. The Washington- based Business Software Alliance is conducting similar operations overseas, putting pressure on foreign governments to enforce the copyright laws already on the books.

The U.S. government is a relative newcomer to the antipiracy effort, and it shows. It got dragged into the most recent case this spring when officials at the Massachusetts Institute of Technology reported that one of the students -- a 20-year-old junior named David LaMacchia -- appeared to be running a pirate bulletin board on a pair of campus workstations. By the government's estimate, people reaching LaMacchia's board through the Internet may have downloaded more than $1 million worth of copyrighted programs.

It was the largest single case of software piracy ever reported, and given the Clinton Administration's avowed interest in the so-called information superhighway, the Justice Department felt obliged to pursue it. But what crime had been committed? Without evidence that LaMacchia himself had copied or used the software, he could not be charged with criminal copyright violation. The charge actually filed -- conspiracy to commit wire fraud -- may not stick because of the legal definition of fraud (which usually requires that the victim be conned or deceived). The case also raises tricky First Amendment issues because it seems to hold the person who operates a medium responsible for what others do on it -- something the government cannot do when newspaper publishers are involved.

Trying to stamp out piracy under the current copyright system may ultimately prove futile. "The drafters of copyright never anticipated a day when everyone could infringe," says Michael Godwin, staff counsel for the Electronic Frontier Foundation. Godwin thinks society may be entering a postcopyright era, in which the creators of intellectual property have to find new ways to be compensated for their work. In the future, the real value of a piece of software may not be in the program itself but in the ancillary services that come with it: printed manuals, frequent upgrades and a live person at the end of a telephone help line when the thing doesn't seem to work. If such inducements are sufficiently attractive, even the software pirates may line up to buy a copy.

With reporting by Greg Burke/Rome, Meenakshi Ganguly/New Delhi and Robert Guest/Seoul