Piracy and Asset Management

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As just discussed, software piracy is big business, although progress is being made in the fight against it. According to the BSA, worldwide software piracy rates dropped from 46 percent in 1995 to 37 percent in 2000. But, even so, the value of the software involved comes to $11.75 billion. In countries with lax copyright enforcement, such as China and Vietnam, over ninety percent of applications in use are illegal compared with 25 percent in North America, which is why some of the largest vendors, combatants on most other fronts, formed the BSA: Apple, Microsoft, Novell, Adobe, Macromedia, Symantec, and Network Associates, for example. The BSA, then, could be likened to the Internal Revenue Service of the software world in its aggressive pursuit of any violators. The BSA conducts public relations and advertising campaigns to promote the idea that unauthorized use of software constitutes theft and results in the loss of thousands of jobs, and it holds seminars and lobbies politicians to strengthen the enforcement of laws. But, what the BSA is best known for is its pursuit of businesses that do not have licenses for the copies of software they are using.

The BSA has adopted a "big stick" approach to enforcement and is not shy about publicizing its enforcement actions. And, bolstered by the penalty provisions of the Digital Millennium Copyright Act, the BSA has become increasingly active in enforcing software copyrights. The organization currently maintains hotlines in 65 countries, giving disgruntled employees the opportunity to call in to report violations. A report can lead to a self-audit or raid. Depending on the level of cooperation it receives, the BSA arranges for voluntary payment of a fine (regularly running in excess of $100,000) or initiates a lawsuit. Either way, the firm must still pay the vendor for the unlicensed software. But, some protest, sometimes it is no more than bad recordkeeping, not intentional fraud, or what if the IT staff has neglected their duties with regard to licensing or even falsely reported that all licensing was current? It does not matter. There is no getting off the hook. Take the example of Giroux Glass, Inc. In 2000, Ernst & Young named Giroux's chief executive officer as the Entrepreneur of the Year in the Los Angeles area, and in 2001 the company made its way onto Inc. magazine's Inner City 100 list. It also was one of six Los Angeles firms to pay the BSA a total of $450,000 in fines recently. In Giroux's case, it had relied on an outside consultant to manage its software licenses.

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