The Copyright infringement of software reference article from the English Wikipedia on 24-Jul-2004
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Copyright infringement of software

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The copyright infringement of software is often called software piracy by those seeking to reduce its incidence. There are several practices which when done without the permission of the copyright holder may be called software piracy: Copyright infringement of software is extremely common in China, Russia, Brazil, and several other parts of the world.

Table of contents
1 The term "software piracy"
2 Software piracy as price control
3 Software licenses
4 Existing and proposed laws
5 Preventing copyright infringement
6 References
7 See also

The term "software piracy"

The term "software piracy" is more correctly described as copyright infringement: Some object that copyright holders' use of the term "piracy" is a dysphemism, making the unauthorized reselling of copyrighted works morally equivalent to the violent actions of pirates — robbers on the high seas, who often murder and rape their victims. Another complication of the pirate analogy is that pirates actually deprive their victims of their property, whereas software pirates only deprive proprietary software companies of potential revenue, which may not actually exist because of market elasticity. For example, if one hundred copies of a product are sold, and five hundred copied illegally, it does not necessarily follow that five hundred extra copies would have been sold at the full price if unauthorized copying became impossible. Sometimes the unauthorized copies may in fact encourage the marketing of the software and allowing some piracy may create an interest and encourage corporate and institutional users to purchase site licenses for their students or employees who may recommend purchase of these licenses after their trial of the pirated software.

The use of "piracy" to refer to copyright infringement has historical basis; it is the second meaning of the term given by the Oxford English Dictionary and the first documented use is from the 18th century:

1771 LUCKOMBE Hist. Print. 76 They..would suffer by this act of piracy, since it was likely to prove a very bad edition.
1808 Med. Jrnl. XIX. 520 He is charged with "Literary Piracy", and an "unprincipled suppression of the source from whence he drew his information".
1855 BREWSTER Newton I. iv. 71 With the view of securing his invention of the telescope from foreign piracy.

Software piracy as price control

Software Piracy as Price Control is a school of thought that says that software piracy in moderation is a good thing, as it keeps prices down by providing a rival product (i.e., a pirated copy) to compete with the official version provided by the software company in question.

Given that every piece of software is unique (e.g., you wouldn't want a game that was roughly like Tomb Raider — you would want Tomb Raider itself) one could put the case that each piece of software is a monopoly, as the only method of getting the game is buying it from the publisher — apart from software piracy. Piracy therefore prevents a monopoly and hence stops software publishers from charging too much for their software.

There is evidence to back up this school of thought:

  1. Back in the early 90s, the game Street Fighter 2 was released on the SNES, a fairly unpiratable format, for ã65 (an unimaginable price by today's standards). No cartridge manufacturing prices (and certainly not before 10 years of inflation) could account for this cost.
  2. Early in 2003, the game was released for the PC, Xbox and Playstation 2. On the Xbox and Playstation 2, where games are not yet easily piratable, the cost of the game is ã40. On the PC, where the game can easily be pirated, it is ã30.
  3. In July 2003, was released for the PC and Playstation 2. On Playstation 2, still fairly unpiratable as of July 2003, the game costs ã40. On the PC, just as easily piratable in July 2003, it costs ã30. The extra costs involved in producing the Playstation 2 version (programmers who can program efficiently in the console's more difficult architecture and Sony's licensing fees for producing copies of the game) do not amount to an extra ã10, plus there are some things that appear or are needed on the PC version of the game (for example the installer) which weren't needed or implemented in the Playstation 2 version.
  4. In December 2003, XIII was released for the PC, Playstation 2 and Xbox. The piratability of each platform remains as above, and the PC version costs ã35, whereas the two console versions each cost ã40.
  5. In early 2000s the maturing game market in Russia allowed local companies to get favourable distribution terms from international publishers. Since then jewel editions of games are regularly sold at prices about 50-100% higher than those of pirated copies. The games are always translated into Russian to prevent re-export to Western Europe.

However, when a piece of software is not by its nature unique (such as an office suite application like Microsoft Office) piracy may be keeping prices high, as it inhibits take up of free software (in this case, OpenOffice.org or KOffice) because people will use pirate copies of proprietary software instead of free alternatives, meaning that the seller of the proprietary software can charge more to the customers, safe in the knowledge that their software is so widely used that the paying customers need to buy it.

In December 2003 researchers at the University of Texas at Dallas considered the problem from a slightly different angle. They asked how many pirates a software firm should tolerate. Their answer was that it depends on the amount of competition in the market. If there is a lot of competition, the brand awareness provided by piracy was sufficient to increase market share in the long-term. They cited the example of the Lotus 1-2-3 spreadsheet, which had extensive copy-protection mechanisms, floundering in the competitive spreadsheet market in the early 1990s. Conversely, if the market is essentially a monopoly then software firms have little to gain from piracy — it only erodes potential profit margin as described above.

Software licenses

Some people believe that, in some jurisdictions, unauthorized users may not be violating any software license that is created on consent by contract. By using an unauthorized copy, they do not become parties to the sales contract, and hence not bound by the license. Only the original purchaser may be found in infringement. However, most software requiring installation has a licensing dialogue that requires the end user to accept the license before installation is completed (referred to as a "click-through license"), which obviously protects subsquent installations. Most, if not all software now has a first installation license that a user agrees to by opening the shrink-wrap around the product (a "shrink-wrap license"), and even though such installation is gratuitous it may nevertheless be enough to create a contract between the copyright holder and the end user (who benefits from the use of the software). However, as the second installation in the shrink wrap licence may not be done by the person who removed the original shrink wrap (or opened a sealed envelope or some such variation), the click-through licence is preferred because it will bind all subsequent installations.

Although the question has not been addressed in court, some journalists have questioned whether such a license is enforceable if a minor completes the licensing dialogue, since minors are not allowed to enter into contracts in some jurisdictions and any contracts they do sign are legally void unless confirmed, though many jurisdictions do recognize that rental and sales contracts to minors made in the regular course of business as being valid, otherwise children could take candy from candy stores without any legal consequences and their parents could ask for money back after playing video games in arcades.

Existing and proposed laws

To many of these attempts at circumventing these end user licenseing agreements (EULA) software vendors counter that if a user somehow obtains software without agreeing to or becoming bound by the end user license agreement, then they do not have any license to use the software at all.

In most developed countries, the term of a copyright greatly exceeds any useful life a program may have. The oldest legacy computer system used today are still less than 40 years old. The copyright on them will not expire in the United States and Europe until about 2030. Changes in computer hardware, operating systems, network environments and user expectations usually make programs obsolete much faster than in 70 years (current copyright length).

Under the proposed US Uniform Computer Information Transactions Act, (UCITA), a controversial model law that has been adopted in Virginia and Maryland, software manufacturers are granted broad rights to shutdown software pirates without court intervention similar to some of the provisions found in Title II of the US DMCA, the Online Copyright Infringement Liability Limitation Act, which allows copyright holders to demand that an online service provider (OSP) expeditiously block access to infringing materials. If the OSP complies, it is granted a safe harbor, providing it immunity from infringement claims. If it doesn't comply, it doesn't become liable, but may instead rely on the protection of the Communications Decency Act.

Title I of the US DMCA, the WIPO Copyright and Performances and Phonograms Treaties Implementation Act has provisions that prevent persons from "circumvent[ing] a technological measure that effectively controls access to a work". Thus if a software manufacturer has some kind of software, dongle or password protection device installed in the software any attempt to bypass such a copy protection scheme may be actionable — though the US Copyright Office is currently reviewing anticircumvention rulemaking under DMCA — anticircumvention exemptions that have been in place under the DMCA include those in software designed to filter websites that are generally seen to be inefficient (child safety and public library website filtering software) and the circumvention of copy prevention mechanisms that have malfunctioned, have caused the software to become inoperable or which are no longer supported by their manufacturers.

Most commercially exploited software is being made in the United States, Japan and Europe, hence for those located in economically disadvantaged economies it can be prohibitively expensive to pay for all the end user licenses for those products rather than to purchase just one license and then copy the software without paying any additional licensing fees. Some critics in the developing countries of the world see this as an indirect technology transfer tax on their country preventing technological advancement and they use this type of argument when refusing to accept the intellectual property laws that are in force in most technologically advanced countries. This idea applies to patent and trademark laws as well.

Preventing copyright infringement

Some approaches used for prevention of software copyright infringement:

References

  1. International Journal of Research in Marketing, December 2003 (Volume 20, No. 4), "How many pirates should a software firm tolerate?"

See also