The Jig Is Up
This story appears in the May 2002 issue of Entrepreneur. Subscribe »
It's just another day at the office. You're busy trying to squeeze some cash flow out of your entrepreneurial dream when your assistant interrupts to announce there's a Federal marshal out front with a search warrant. Mistake? No, and your day just got a whole lot busier.
The marshal is accompanied by some guys in suits who claim to represent the BSA-which sounds vaguely familiar, but Boy Scouts they definitely are not. BSA stands for Business Software Alliance, a trade association for the heaviest of software heavies-Microsoft, Adobe, Symantec, Autodesk.
No doubt, you've installed some of their programs on your hard drives. In fact, BSA probably sent you a letter a while back asking for an insane amount of money because you made too many copies. Didn't you read your software licensing agreements? Softletter editor Jeffrey Tarter translates the wherefores and whereases roughly as: "You don't own the programs you 'bought'; you only get to use them under the conditions set by their different publishers."
Despite economic conditions in 2001, the global PDA industry grew 18% over the previous year. SOURCE: Gartner Inc. |
Yeah, it's all a big misunderstanding. But before your lips can form the words "Gimme a break," the guys in suits have filed in and sat down at your desktops. In no time, they'll have all the proof they need to label you a software pirate.
It's a well-oiled routine that made businesses pay over $13 million in penalties last year and about $70 million over the past decade. BSA recently collected $275,000 from three small Arizona companies, more than $439,000 from four Texas companies, almost $186,000 from three companies in Connecticut and $91,694 from a single Missouri company. Those dollars will be invested in educational and enforcement programs.
Think those few extra copies your employees make are not worth enough to get BSA's dander up? They will, says vice president of enforcement Bob Kruger. BSA blames casual copying for much of the $2.6 billion or so that business software publishers lose in the United States every year. That costs America about 118,000 jobs, $5.7 billion in wages and $1.5 billion in taxes annually, by BSA's reckoning.
Tarter, who has tracked the industry for 20 years, considers those numbers grossly inflated: "I've gone through their research methodology. It's Rube Goldberg stuff and entirely political."
He may be right. But that won't help.
Amazingly Little Grace
The cold, hard truth is that the BSA can and will prosecute; and, like the IRS, it likes to make examples of small fries so you'll tell a friend. Even if you choose not to tell anyone, expect to find your name on the next BSA press release branding you a corporate miscreant; and small-business miscreants are remarkably easy to flush out.
Usually, an office visit isn't necessary, says Kruger. Most companies start bargaining after getting one of BSA's heart-stopping letters. Those go out shortly after BSA's periodic radio and direct-mail blitzes of select American cities. BSA will blanket a town with its 1-888-NO-PIRACY hotline, offering 30 days of grace to any company that turns itself in and gets right. If a company is already under investigation, however, it is not eligible for the grace period.
Maybe you're too busy to get all your drives checked in 30 days. Maybe it'll take you that long just to get over the shock and check out the BSA. Or maybe a jilted current or former employee jotted down the toll-free number and is savoring the prospect of a little payback.
That's what Steve McSwain figures happened to IPI Security. As general manager of the Irving, Texas, security firm, he was upgrading IPI's 30 desktops when he got a BSA letter demanding more than $100,000. McSwain is pretty sure he was ratted out by the ex-employee who had brought the illegal software into IPI in the first place--an irony not uncommon.
Because federal copyright law specifies up to $150,000 in damages for each infringed work, BSA initially billed IPI for the retail price of every Microsoft Office component installed. In the end, they finally settled for about $69,000.
"Overall, they were very fair," says McSwain, who had to delete the offending programs and buy new copies. Now, he spends 30 hours quarterly ensuring all his software is legal.
The fines wiped out IPI's profits for the year. But that's the point BSA wants to make. "An important principal [of enforcement] is to make it more expensive to copy software illegally than to buy it in the first place," says Kruger.
What to do? Spend a lot of time making sure every program in your company is legal. Yes, it's expensive and hard to keep employees in line during the everyday shot and shell of business. But don't rely on excuses or begging if you come into BSA's crosshairs.
The only defense is not having more software than you can prove you own. Oh, and it wouldn't hurt to stay close, close friends with all your employees-current and former.
Want to keep the software police away?
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Contact Sources
- Business Software Alliance
888-NO-PIRACY, www.bsa.org
- IPI Security
(800) 367-9631, http://www.ipisecurity.com
- Softletter
(617) 924-3944, www.softletter.com
