The Hunt for Software Pirates

Posted by: Steve Hamm on May 8, 2006

A couple of days ago, I got a message on my home computer purporting to be from Microsoft telling me it wanted permission to download some software onto my machine to verify if I was using a legal copy of Windows. Like a good Boy Scout (former senior patrol leader!), I clicked “yes.” I have no idea if I was communicating with Microsoft or some rogue intent on causing damage to my computer. But I got the message that the crackdown on pirating of software is revving into high gear, and sometimes it’s a bit intrusive and irritating. Clue No. 2: I interviewed Stephen Schneider, CEO of Med-Legal, a document scanning service in California, who claims he’s being hounded unfairly by the Business Software Alliance—which has accused him of using a ton of illegal software. I’m normally a fan of the BSA, and there’s no way I can afford the time and effort to investigate this situation to find out who is right, but Schneider’s complaints seem to be worth airing. Does anybody else out there think the BSA has become too heavy handed?

Med-Legal focuses on massive scanning jobs for medical malpractice attorneys, so I guess you can call it the ambulance chasers’ ambulance chaser. Or something like that. It also sells law-office management software packages—so there’s some irony in it being accused of stealing software. “I sell software so I can appreciate people wanting to get paid for the intellectual property they create,” says Schneider.

Schneider’s tussle with BSA started in January when he got a letter from an attorney representing the organization that accused him of using illegal copies of programs from companies such as Symantec and Microsoft. In particular, he says, he was accused of using illegal copies of antivirus software from Symantec. He was told to stop buying software and to submit to an audit. Schneider says he uses Trend Micro antivirus software, so he asked one of his employees to write a letter back to the attorney informing him there must have been some mistake. The reply, he says, was “an even more threatening letter.” Schneider hired an attorney, Rob Scott, of Scott & Scott, who specializes in handling such cases.

Schneider denies he has illegally copied software. He says he’s cooperating in the self-auditing process that the BSA demanded of him. And he’s confident he’ll be vindicated. He suspects that a former IT staffer whom he fired last year turned him in to the BSA to get revenge on him.

He has two specific complaints about how the BSA has gone about this. First, the organization offers up to $200,000 (boosted from $50,000 earlier this year) to tipsters who blow the whistle on their employers or former employers. Schneider says this opens the door to the possibility that IT employees within companies who are responsible for illegally copying software may turn in their companies and collect a reward. Second, for proof that a company owns a piece of software, the BSA demands a detailed receipt. It won’t accept other proofs of ownership, including canceled checks, the retail boxes the software came in, or certificates of authenticity. What if you can’t find the receipt? You pay the full retail price, and, if it’s a bundled product like Microsoft Office, you pay the full unbundled price for each application in the suite.

Schneider is more than a little irritated. And, while the BSA is the primary focus of his ire, he’s also pissed at Microsoft—one of the main backers of the BSA. “I have always been a big believer in Microsoft,” he says. “I have their software on my desktops and servers. I go to their conferences. I’m a Microsoft man. I feel like I’m part of the Microsoft family. But Microsoft has turned on me. It’s not treating me like a customer.”

Jenny Blank, the director of enforcement at BSA, defended her organization and its members. She says she doesn’t believe the $200,000 reward causes miscarriages of justice. The BSA vets all of the complaints and only pursues those that it feels are solid. “We don’t want to be anybody’s tool, but we haven’t seen a lot of evidence of this in our cases,” she says. “Also, the proof is in the pudding. Most of the companies we approach reach settlements with us.” She says the BSA wants copies of original dated receipts so companies won’t simply go out and buy copies of software to avoid getting caught and paying a big fine.

The BSA has been pursuing illegal copiers since 1992 and has so far collected over $110 million in fines. Plus, software companies have sold a lot of new software as a result of its investigations..

She urges companies who receive letters questioning their use of software to comply quickly. In most cases these complaints are settled without resorting to lawsuits. “If they cooperate with us, and do the audit, and tell us if there’s a problem, this thing can be done in not time at all,” she says.

Sounds almost pleasant, which, I’m sure, it’s not.

But it’s all the more reason for honest companies—even very small ones--to set up systems for tracking their use of software and saving their receipts.

Reader Comments

Lowell C. Dobyns

September 11, 2008 12:39 PM

I know two teenagers who have been
downloading copying and selling
software. I think they should have the
fear of the law brought to bear on them.
What is your advice.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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