Did you know that more than one in four of every software package in use in the United States is illegal? While illegal use is not always willful and may be the result of ineffective software management policies, it costs the industry over 400 million dollars annually.

When buying a software package, many of us do not realize that we're actually purchasing a license to use the software, and not the software itself. A developer owns the rights associated with ownership of its software, just as authors own the rights to their books, artists own the rights to their art, and musicians own the rights to their music.

What Is Software Piracy?

Software piracy is copyright theft. Piracy occurs when an individual or entity offers bootlegs, CD-ROMs, application downloads, or serial numbers free, for money, or for barter; provides educational product without authorization or to non-qualifying individuals or entities; or installs or uses software without a properly authorized license or on more systems than it is licensed for.

Software piracy takes various forms:

• End-User Piracy: The end user or organization copies software onto more machines than allowed under the license agreement.
• Hard-Disk Loading Piracy: Unscrupulous computer suppliers preload unlicensed software onto computers and fail to supply customers with the necessary licenses.
• CD-ROM and Counterfeit Piracy: Illegal sellers (often organized crime rings) pass off fake software as real, trying to emulate product packaging by using company names and proprietary trademarks.
• Internet Piracy: Any form of piracy involving the unauthorized electronic distribution or downloading of copyrighted software programs on the Internet.

What Are The Legal Risks For Software Piracy?

The legal risks include court-ordered damages for illegal use, the destruction of all illegal software, unlimited fines, and up to two years in prison for company directors found guilty of software piracy. For companies or individuals engaging in software piracy for profit, courts will award substantial fines and up to 10 year's imprisonment.

What Are The Practical Risks For Software Piracy?

• For Consumers: When a consumer decides to make an unauthorized copy of a software program, the consumer forfeits their right to the support, documentation, warranties, and periodic updates. Pirated software also often contains viruses that could potentially erase or damage the contents of the hard drive. Finally, the individual is exposing himself (and the companies they work for) to legal risk by pirating a product protected by copyright laws.
• For Software Developers: The revenue lost from software piracy could have been invested into the product themselves, resulting in lower prices for the software consumer. High piracy rates also impact the success of local software developers as they work to generate their own market presence.
• For Resellers: Pirated software results in lost sales, and lost sales result in a decrease of sales revenue for legitimate resellers. These resellers suffer serious business losses when unscrupulous competitors deal in pirate software and undercut their businesses.