Antipiracy and Anatagonism

By Ericka Chickowski Print this article Print

Is the Business Software Alliance really having an impact on software piracy? Do they often punish businesses that are trying to play by the rules?

Antipiracy and Antagonism
According to Blank, the BSA typically has around 500 piracy cases going at any given moment. The group does not disclose the number of cases it brings to settlement, nor the total amount in damages it has collected overall. However, it frequently publicizes its enforcement actions. Piecing together numerous press releases archived on the BSA web site and on the Wayback Machine, Baseline arrived at its estimate of $89 million.

Though the settlement money never reaches BSA members’ coffers to offset the losses from piracy, the reason the fines are so stiff is deterrence, Blank says. Those press releases are sent off with reports of new settlements to scare businesses straight and encourage them to get their house in order before the BSA comes around.

“We would really love it if the phones stopped ringing, if no one was pirating, so we wouldn't get any leads anymore,” Blank said. But many businesspeople who are coerced into a BSA audit and subsequent settlement negotiations claim that this organization’s tactics are more aggressive than they need to be.

“Obviously there is a punitive component to it,” said one technology start-up owner, who chose to remain anonymous in light of his pending negotiation with the BSA, “but it really feels like a shakedown to me and I can't imagine that it has much of an impact on the piracy issue, especially when they go after companies that want to do the right thing.”

*Check out 12 companies that were fined in 2007 by the BSA.

According to this man’s attorney, Rob Scott of Scott & Scott in Houston, many businesses stung by the BSA are not guilty of what the typical person would traditionally think of as piracy. As an attorney who specializes in BSA defense cases, Scott has seen many businesses that were simply disorganized with their asset management or were operating software honestly but lacked the high standard evidence required by the BSA to prove it. Most times these businesses are reported to the BSA through a program the organization set up to reward whistleblowers for providing information about businesses whose licensing is out of compliance.

“We have many clients who have told us they had no idea that this was going on, and several who have said that the very person they believe is responsible for making the tip was the person they had charged with managing the issue,” Scott said.

In the anonymous tech company’s case, the owner said that his company’s software non-compliance was borne out of the tech bubble bust following 9/11. The company missed out on a round of $7 million in funding when venture capital dried up and it found itself having a difficult time making payroll, let alone paying for software. It took a couple of years to get back on its feet, but when the business did so it began working on going legit with its software.

“We hired a guy to go through and audit and get us legal, but he didn't work out,” the business owner said. “So we fired him and that’s when he went and ratted us out.”

The BSA is demanding upwards of $300,000 in this case, a figure not uncommon in these settlement negotiations. According to Steve Helland, a partner at the Minneapolis-based law firm of Fredrikson and Byron who specializes in software licensing. “On the one hand, I represent creators and sellers of software and I know that unauthorized copying of software is a significant problem. To the extent that the BSA is helping software vendors get paid fairly for their software sales and do enforcement against companies that intentionally steal their software, I applaud their efforts,” he said.

“On the other hand, I think that the BSA takes an overly aggressive approach toward the unintentional infringers and the poorly documented legitimate purchasers. It is easy for a well-meaning business to inadvertently install a few extra copies of software and to threaten those companies with over a $100,000 in damages for a software program that has as shelf price of a couple hundred dollars is, to me, fear mongering,” said Helland.

Indeed, analysts agree that many of the BSA’s membership have licensing schemes that make it really difficult for businesses to understand well enough to comply. Take Microsoft, for instance.

“Microsoft will tell you that they've made it simpler,” said Paul DeGroot of Directions on Microsoft about Microsoft licensing agreements. “All that they've done is that they've made the documentation that you sign to buy your software simpler. They've actually made the licensing rules far more complex, even in the last twelve months.”

This is the beef that Sterling Ball, owner of the renowned music instrument manufacturer Ernie Ball, had with his well-publicized scuffle with the BSA and Microsoft back in 2000. Ball has been a strident critic of the BSA ever since its agents stormed his office in an unannounced raid. He is one of the few businesspeople willing to speak out publicly against the organization after a settlement.

“My problem was that I think that they engineered the stuff in such a way that it was very hard to stay in compliance and I feel like a phone call could have gotten them everything they wanted,” he said. “Instead it was a media event in my expense that in the end was just there to sell more software. I think they've bloodied a lot of businesses and some of these probably deserve it for blatant piracy. But in our case we were only out of compliance by 8 percent.”

In the BSA’s defense, Blank explains that unlicensed use of software is piracy any way that you slice it, causing damage whether the offending organization means harm or not. “I don't understand this idea of 'real true piracy,'” she said. “Unlicensed use of software is piracy and selling unlicensed software is piracy, and they all cause damage. When you talk about financial harm, the use of software that is unlicensed through the company is an enormous damage to the industry.”

*Check out Baseline's in-depth reporting and advice on the Business Software Alliance:

12 Companies Caught Stealing by the BSA

8 Ways to Avoid a BSA Audit

What to Do When You Receive a BSA Audit Letter 

This article was originally published on 2008-01-25
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