Software Piracy

Software Piracy

Software Piracy

A Report On SOFTWARE PIRACY Guided By Mr. Anand Khandare

Submitted by TE CMPN A Dhruv Agarwal (01) Anirudh Maheshwari(39) Nikunj Mange(41) Daksh Tripathi(52)

Software Piracy

DECLARATION
We hereby declare that the project entitled SOFTWARE PIRACY is being presented by us under the guidance and observation of our respected professor Mr. Anand Khandare during the academic year 2010-2011, for the partial fulfilment of term work in SEMINAR .

Dhruv Agarwal (01) Anirudh Maheshwari(39) Nikunj Mange(41) Daksh Tripathi(52)

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ACKNOWLEDGEMENT

Thanks to the professors , writers and experts for their various articles and worthy inputs which helped us prepare this project We are thankful to be given the opportunity to prepare a report and gain the experience and skills required in preparing a survey-based report. The much needed encouragement and moral support was provided on numerous occasions by our owm Prof. Anand Khandare We appreciate the time given to us by our colleagues during our survey , as well as their useful inputs in our reports, which we believe helped us truly understand the social phenomenon we were studying. We also extend our thanks to the websites and blogs which helped us immensely in our research work. And lastly, the team spirit, enthusiasm and dedication of our team members are worth appreciating.

Software Piracy

ABSTRACT Software Piracy is unauthorised use of software. Software piracy has its origin in early 1960s when both computer manufacturers as well as software developers were young. In 1990 the problem of piracy has taken a jump and came under scrutiny. In the last 20 years this problem has worsened rapidly to become a menace. And today it is the most unsettling concern among the software developers. This growth was possible because of the dynamic nature of piracy techniques and static nature of software defences. The main reason of piracy is that it makes available new technology at low cost. Software piracy has many impacts on many people in different fields. Reducing software piracy will generate large number of IT jobs. It will also provide vast amount of income to software development companies and government. Software giants are trying to reduce the software piracy through improvement of technology and effective implementation of piracy protection laws. The serious attempts are also being made to change the static nature of software defence which will help in reducing the software piracy. Open source software is suggested as an answer to the software piracy. Companies like Microsoft, Oracle are making collaborative efforts with IEEE to increase the use of original software and spread information about destructive impacts of software piracy.

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Table of Content:Certificate..iii Declaration..iv Acknowledgement....v Abstractix

SR.N O 1 2

TOPIC PIRACY-INTRODUCTION 1.2- METHODOLOGY ALL ABOUT SOFTWARE PIRACY 2.1- What Is Software Piracy? 2.2- What Piracy Involves? 2.3- History Tells Us 2.4- Types of Software METHODS OF PIRACY 3.1- Traditional P2P Applications 3.2-Usenet 3.3-Torents 3.4- Internet Relay Chat (IRC) 3.5- Burning CDs and DVDs 3.6-Key genaerator CAUSES OF SOFTWARE PIRACY 4.1- Monetary issue 4.2- Excessive use of Internet 4.3-Ease Of Piracy 4.4-Lack Of Awareness 4.5- Static Nature of Technology IMPACT 5.1-Negative Impacts 5.2- Statistics on Impact of Piracy

PAGE NO. I III

VIII

XII

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5.3-Positive Impacts Piracy Prevention XVII 6.1-Technical methods 6.2- Piracy Protection through Laws 6.3 Piracy Protection through other methods Case Studies XXIII India and Software Piracy XXVI 8.1- Software industry in India 8.2- Piracy in India 8.3- Factors driving piracy 8.4- Effects of Piracy in India 8.5- Benefits of reducing software piracy in India 8.6- Microsofts stand on Piracy in India 8.7- Other steps to curb piracy in India Conclusion XXXII

7 8

Bibliography..x

1.

INTRODUCTION

Software is one of the most valuable technologies of the Information Age, running everything from PCs to the Internet. Computer software affects every aspect of our lives, but most significantly the way we communicate. With each passing year, software evolves into a faster, more sophisticated, versatile and easy-to-use technology. It allows companies to save time, effort and money. Home software helps to enhance the productivity and creativity of user. The industry thrives on

Software Piracy

original software packages that are paid for and from these not only the software publishers stand to benefit but users too. Unfortunately, because most software is highly valuable, and computers make it easy to create an exact copy of a program in seconds, software piracy is widespread. From individual computer users to professionals who deal wholesale in stolen software, piracy exists in homes, schools, businesses and government. Software piracy in simple words is copying and unauthorized use or distribution of software. Its existence can be marked with the birth of personal computers. As stated by National Association of Software and Services Companies (NASSCOM) it is illegal copying of software for distribution within the organization, or to friends, clubs and other groups, or for duplication and resale. As a parasite grows with its host so has software piracy grown with the software industries. Software piracy can not be completely removed. The software industry loses billions of dollars each year to piracy, and although it may seem innocent enough to install an application on a couple of additional machines, it may ultimately shatter the profitability of a small software company. [1] The following chapters are a journey into the intriguing world of software piracy starting from the history and the causes of this pervasive practice to the efforts that can be made to turn it to our benefit.

1.2

METHODOLOGY

Many websites like www.out-law.com, www.wisegeek.com etc were visited to access data pertaining to the information on the definition of piracy. Facts about different types of piracy, causes, effects and conclusions were compiled from these websites. Statistics pertaining to piracy rates, losses was collected from the websites itself.

Software Piracy

Official sites of different organizations such as Business Software Alliance (BSA) were accessed to study anti piracy-laws and tips to avoid piracy.

2. ALL ABOUT SOFTWARE PIRACY

2.1 What Is Software Piracy? Software piracy, in simple words, is copying and unauthorized use or distribution of software. Whether software piracy is deliberate or not, it is illegal and punishable by law. Each pirated piece of software takes away

Software Piracy

from company profits, reducing funds for further software development initiatives. When someone copies software without buying the appropriate number of licenses, it is copyright infringement. It is one of several forbidden actions that may be taken by the user of a particular piece of software. Virtually all software programs today carry an End User License Agreement (EULA). Upon installing the software, the user must agree to the EULA, or click-through-license, before installing the software. The EULA lays out conditions under which the software may or may not be used in keeping with copyright protections. Software piracy involves breaking the EULA agreement on one or more conditions. Software users are generally not aware of the fact that purchasing software is in fact purchasing licence to use the software. The user license will contain information about number of times the software can be installed. Violating this license is software piracy. [2] 2.2 What Piracy Involves? Following are some of the ways in which software piracy is carried out. 2.2.1 Making counterfeit copies for sale While software piracy laws differ from nation to nation, this particular infringement is illegal in most countries. 2.2.2 Making counterfeit copies to give away Though the United States recognizes "fair use" protection, which can allow protected work to be shared in a restricted manner as an allowable infringement, software piracy goes beyond "fair use." A less interpretive counterpart to fair use is "fair dealing," recognized by nations like Australia, New Zealand, Singapore, Canada and the United Kingdom. These laws attempt to protect the rights of the end user and the good of society, counterbalanced by the rights of the copyright holder. A protected work that is shared with a neighbour

Software Piracy

might be considered fair use in some jurisdictions, but lines can be somewhat vague and varied as to exactly where protections end and software piracy begins. Generally speaking, anything that extends beyond personal use is commonly forbidden by the EULA and can bring legal questions into play. [2] 2.2.3 Hard-disk loading Another form of software piracy is selling a computer system with illegal software already installed. Generally, the buyer does not receive manuals, license agreements, or even the CDs or diskettes containing the original program. 2.2.4 Internet sharing Software that is neither freeware nor shareware cannot be legally distributed online. However, many software programs are readily available over P2P (peer to peer) networks, via binary newsgroups or in chat rooms. This type of software piracy is referred to as warez and has commonly been cracked to make it usable by anyone without restrictive copyright securities in place. [1] 2.2.5 Renting software While libraries and educational institutions can purchase special licenses to rent some types of software, renting software in general is illegal and a form of software piracy. 2.2.6 Unrestricted client access Installing software on a server without a network license and allowing clients to access that software is considered software piracy.

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2.2.7

OEM/Unbundling Selling Original Equipment Manufacturer (OEM) software separate from the hardware it comes bundled with is another form of software piracy.

2.2.8

Using personal software for commercial purposes Many software programs are free for personal use, but require a license for commercial use.

2.2.9

Using shareware beyond the trial period without paying for it According to most shareware EULAs, a user must either pay for shareware or uninstall it after the trial period to avoid software piracy.

2.2.10 Tampering with the copyright of any software including freeware Even freeware can be the subject of software piracy, when the copyright is illegally changed or the program is illegally modified, then redistributed. The redistributed product does not require an original price tag to qualify as pirated software. 2.2.11 Soft-lifting Soft-lifting occurs when a person purchases a single licensed copy of software and loads it on several machines, in violation of the terms of license agreement. [1] Arguably, the most controversial form of software piracy relates to what many people consider simple 'personal use' - buying a software program, then installing it on more than one personal machine. Some software licenses prohibit this, a restriction that many consumers see as corporate greed, especially where 'non-optional' programs such as operating systems are concerned. In many cases this has aligned otherwise law-abiding citizens with hackers and crackers when they seek ways around the specific copyright security provisions that they see as unfairly restrictive.

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2.3

History Tells Us The roots of software piracy may lie in the early 1960s, when computer programs were freely distributed with mainframe hardware by hardware manufacturers (e.g. AT&T, Chase Manhattan Bank, General Electric and General Motors). In the late 1960s, manufacturers began selling their software separately from the required hardware which was easily pirated. But software piracy did not really become a massive problem until personal computer sales jumped in late 1990s when Microsoft released Windows 95 which required few computer literacy skills from the user. Microsoft recorded massive sales of their new software which proved that in developed countries nearly every house had at least one computer. The result of this was that people came to rely more and more on the machines and from there spawned software piracy and cyber crimes.

2.4

Types of Software On the basis of sale and commercial use of software it can be categorized into following three types: 2.4.1 Commercial software, purchased with a license for one or more computers This type of software sometimes offers a new version at a reduced rate as "update". It is relatively expensive and is often designed to cover specific industrial purposes. The big exception is the various sets of "office" software, which are designed for use in the commercial environment, but can naturally be equally used for various tasks at home. The most common application in this category is, of course, text editing. Most of the other classic "office" applications, such as calculations and data bases are only of limited use in the domestic environment, although they will be used in some cases, particularly now that the more computer-literate generation is growing. [2] 2.4.2 Simplified versions of the commercial software

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These are intended principally for small businesses and enterprises that do not need the complete capabilities of, say, a 2-D modelling system, but must be able to view such documentation and prepare compatible drawings. These will also come with a single or multiple, but limited licence and now mostly be registered with the manufacturer. [2] 2.4.3 Free or "open source" software Open source usually refers to a program in which the source code is available to the general public for use and/or modification from its original design free of charge. Open source code is typically created as a collaborative effort in which programmers improve upon the code and share the changes within the community. The rationale for this movement is that a larger group of programmers not concerned with proprietary ownership or financial gain will produce a more useful and bug-free product for everyone to use. The concept relies on peer review to find and eliminate bugs in the program code, a process that commercially developed and packaged programs do not employ. Practically many types of software, like Linux, JAVA, are found in this category. [2] Clearly, there can be no piracy of products that fall into the third category, except for changing of the code or reuse of the code for other purposes; hence the emphasis on the first two categories

3. METHODS OF PIRACY
Software piracy occurs through copying, downloading, sharing, selling, or installing multiple copies onto personal or work computers. Most widely used methods for piracy are as follows:

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3.1

Traditional P2P Applications Kazaa, Limewire, BearShare, these are all peer-to-peer applications that allow the sharing of files from one user to another. Chances of getting caught non these are minimal. But it causes a lot of virus hang out on P2P networks. Another reason for the popularity of the internet in piracy is that there are almost no rules to govern the internet. [14]

3.2

Usenet Usenet is an old global Internet discussion system that can be used to share files. It is the fastest way to download, requires no uploading. However, Usenet is not entirely free. One can use a Usenet client for his OS to connect to a server which will then download files. It is also not the easiest method and requires a bit of reading and learning before one can use it.

3.3

Torrents Bit Rocket, Azureus , Bit comet etc are most widely used torrents used for sharing on Internet. Here a file is downloaded simultaneously from several people sharing that file on network, so one who downloads, also shares data.

3.4

Internet Relay Chat (IRC) Here a person connects to a server, gets into a chat room, and starts browsing through peoples material. On finding something useful, the user just clicks on a link to download. IRC is not as popular as other methods, but it is generally safe for the user. [1]

3.5

Burning CDs and DVDs This is one of the most widely used techniques to pirate software. It is quite simple to burn a DVD, make multiple copies of it, crack the software license keys and distribute these DVDs in the market.

3.6

Key Generator

Software Piracy

Key generator is a software tool that can generate multiple keys for a single copy of authentic software. These keys then can be used by multiple users. A software checks the validity by a key to which an algebraic expression is applied by the installation software. For example, an algorithm may require that the sum of all the digits of the key should be 75. In this case, any string of numbers which totals to 75 will be treated as a valid input. Key generators explores the assembly code of the software to have access to the outline which checks the validity of the key entered and can generate key which satisfy the requirements of the software. [2]

4.

CAUSES OF SOFTWARE PIRACY

Over the years, software piracy has become the ugly face of the software industry. Be it software counterfeiting, internet downloads or any other form, software piracy has grown at the same rate as the software industry itself, if not faster. Software piracy has carved a niche for itself in the software industry. It is so prevalent that it has virtually eaten up the entire market. It has now become a virus that resides in the hard-disk of almost every household. Phere are many causes of software piracy some obvious and some that need to be brought to the fore.

Software Piracy

4.1

Monetary issue According to a report by International Data Corporation (IDC), when it comes to causes of software piracy, monetaBy aspect is at the top of the lIst. Pirated software is often cheaper if not free in comparison to the genuine `roducts. This is why when the decision is made to resort to using counterfeit software, the cost is the main catalyst which poifts customers in the wrong direction. The customer rarely pays the original price of the software when it is possible to get the same features for free. It is this mentality of the end-user that has made software piracy so common. [5]

4.2

Excessive use of Internet As the use of internet is on the rise in most of the developing markets, the number of illegal internet downloads is also increasing. Almost all the software are readily available on the internet. This is an easier option for the end-user as against buying an authentic copy of the software. Also there are many p2p (peer to peer) websites that offer a huge range of pirated software. Acckrding to a study conducted by BSA (Business Software Alliance) and IDC in 2006, 60% of the internet traffic is driven by p2p doWnloading. As thE number of people surfing the nat has increased, this kind of piracy is not a rare sight any more. [14]

4.3

Ease of Piracy

Piracy is so prevalent that such illegal copies of software are available just at a click of the mouse. As against this, it is far more difficult to procure the original product. Software can easily be downloaded from the internet. Also making multiple copies of a genuine product with the help of a CD writer has become a childs play. Even a twelve year old can make an illegal copy of software for distribution among the friends making him a culprit in the whole issue of piracy. People like students and those who use software for domestic use usually find it far more convenient to download the software or borrow a pirated copy from a friend. According to todays scenario there is a major section of people who do not even know where to look for

Software Piracy

an original copy of softwareIt is also about complex licensing programs which cause sufficient confusion and end up deterring the customers from buying the genuine software. [1] 4.4 Lack of awareness There is very limited awareness among a large group of people who do not even consider software piracy as a crime. Many people are unaware about the laws relating to piracy. As software is not a tangible property, people do not see using software without proper licensing as a crime. People fail to realize that software is an intellectual property, and piracy is same as stealing the software and denying the software developer its due credit. People also need to be educated about the evils of piracy. Even people who want to refrain from piracy still do not know where or how to report against software piracy and end up contributing to the crime themselves. [9] 4.5 Static Nature of Technology Leading software companies like Microsoft, Adobe are facing a tough time due to the software piracy. Even these multinational companies consisting of a pool of best engineers from around the globe are not able to device a technology to tackle this problem. The entire software industry is still awaiting the introduction of a system which reduces (if not eliminates) piracy. [7]

5. IMPACT
Software piracy has many effects on people working in different fields. The impact can be classified broadly in two categories: 1. Negative Impact 2. Positive Impact 5.1 Negative Impacts

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Software piracy is one of the most serious problems not only for India but also for economies around the world. According to the BSA-IDC Fourth Global Software Piracy study, globally piracy rates were as high as 65 percent. 5.1.1 Monetary Losses Current illegal software in the US accounts for 25 - 50% of the software in use. Other countries often have levels of piracy well beyond that of the US. For example, Carol Bart, the president and chairman of Autodesk, Inc. reports that one of their flagship products, AutoCAD, has 90% of the Computer-Aided Design (CAD) market in China, yet sales are virtually negligible due to the widespread acceptance of software piracy. A BSA study has shown that India lost about $2025 millions due to software piracy in past. 5.1.2 Increase in Software Prices The cost of software goes up or down according to the supply and distribution. It is also affected by the alternatives present in the market and the open source programs. A person who is copying cheats and using the software for free makes software costlier and denies the distributor the sales it needs to improve software and finance new projects. 5.1.3
[6] [10]

Effects on Open Source community Open source usually refers to a program in which the source code is available to the general public for use and/or modification from its original design free of charge. Open source code is typically created as a collaborative effort in which programmers improve upon the code and share the changes within the community. It turns out that pirated software can also hurt the open source community. Because of the software piracy the users of such pirated software do not actively

Software Piracy

participate in open source communities that can help people gain technical skills that benefit workforces of nations. Louis Suarez-Potts, the community manager at Sun Microsystems Inc. for the OpenOffice.org open source project said, Piracy hurts open source because open source asks people to help them to improve the software code, but users say 'why should I help? I have Microsoft Office for free!' ". This attitude is proving detrimental to the efforts made by the open source community. [2]

5.1.4

Effect on Software Developers and Distributors When software is pirated, consumers, software developers, and resellers are harmed. Every pirated software program prevents developers and distributors from earning their share of the money from the software; it negatively affects the economy by decreasing the profits that allow for further development and growth within the software industry. The U.S. is the country most affected, as it provides about 80% of the world's software. [6]

5.1.5

Effect on New Employment Because of the financial losses software developers must suffer due to piracy, it affects their new employment policy. In India BSA study has predicted that yearly 115,000 new jobs can be given to people in IT section if piracy rate is reduced by 8%. This will also help in new employment in other professions such as carpentry, property development. The number of new jobs those can be generated is even more in countries like USA which is most affected by the virus of software piracy. [12]

Mainly because of the heavy economical losses software development companies like Microsoft bear, they have started to take a though stand

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against users who use pirated software. This has also provoked strict action against the people who indulge in software piracy. 5.2 Statistics on Impact of Piracy

Countries North America European Union Mid-East / Africa Latin America Asia / Pacific Rest of Europe

Piracy Rates 22% 25% 58% 66% 52% 61%

US$ Losses (In Millions) 7,594 12,151 1,229 1,546 7,897 2,212

Table 5.1: Piracy rates and Losses in millions (2005) Source: www.bsa.org As the above data shows, the piracy rates were high in Latin America, MidEast Africa and Rest of Europe. Due to such high rates, developers and distributors had lost a lot of income. The losses due to software piracy in European Union were as high as 12,151 US$.

Fig 5.1 Graphical analysis of losses due to software piracy Source: www.bsa.org

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The above graph shows that United States has suffered most due to software piracy. It has lost nearly 6500 million US$. It also shows that the percentage of software piracy is lowest in Australia. 5.3 Positive Impact Generally software piracy is considered as a wrong doing, but in certain areas it has demonstrated its utility. The positive impact of software piracy is discussed below:
5.3.1

Useful in underdeveloped country In todays technological era when many people in underdeveloped countries do not have enough resources to meet their basic needs, software piracy provides an alternate means of earning a living and also is an inexpensive way of providing technical education. Software piracy has resulted in the reach of computer technology to huge masses. It is due to software piracy that a large number of people learn new technology; thus results in innovation of ideas that have turned out to be a breakthrough in the history of mankind. Software Piracy provides opportunity for new talent, resulting in technological development of underdeveloped nations.

5.3.2

Spread of an idea There is a growing contention among software professionals from open source community that knowledge cannot be monopolised and held captive by some cliques. Software piracy does this unintentionally by spreading the application to large number of people; this in turn reduces the demand of licensed version of the software and hence reducing the cost of the software. It also forces the providers to develop an application so as to be in competition e.g.

Software Piracy

Windows 2.1, 95. When Microsoft released the Windows 95 version it freely distributed Internet Explorer so as to compete with Netscape Internet browser. [2] 5.3.2 Exploration of Various Technologies Software piracy allows user to explore many related kind of applications from different providers. Software piracy is basically a distribution hence many applications can be explored once the platform is provided. 5.3.4 Reduction in Monopoly Today software piracy is on its way to destroy the monopoly of software giants and to create a new culture wherein talent will be the only deciding factor. [6]

6. Piracy Prevention
As discussed earlier we have seen the far-reaching effects of software piracy on the financial policies of the software development companies. Thus it has become their highest priority to diminish the software piracy. 6.1 Technical methods A large number of ways to prevent software piracy at the technical level have been researched and implemented. This section deals with various techniques used for prevention of software piracy. 6.1.1 Code Obfuscation

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Code obfuscation is the deliberate altering of program code, at some level. The idea is to hide the very purpose of the code and hence making it more difficult to understand, alter and pirate the code. This is a protection against reverse engineering, which may lead to easy piracy by analysing the code. Obfuscation may be carried out statically, or it may be introduced as part of the executing code. Due to singularity of each code, customer who wants the software must hold the required permission of code which enforces the reduction in piracy. [9] 6.1.2 Encryption Encryption techniques include systems where the code to be executed is encrypted in some way and requires the correct key and subsequent decryption to run. Users of software must possess their own unique public key certificate. The software provided by the distributor is encrypted with the users own public key. Only the user who possesses the private key is therefore the only person who can execute the software. This system though has one major drawback. It is vulnerable to key loss and assumes that all users of a given piece of software have a public key certificate issued by a trusted certification authority (i.e. product developer). Sometimes encryption is used for program input and output streams, whenever they are streamed to other devices. In this process the program that read and write from files as part of their normal operation (such as word processors) encrypt the files using a key that is unique to each version of the program. As the program ages and requires updating due to defect fixes and new feature implementations, a new key is provided with the update which ensures that files created by the new version cannot be read by older versions. Due to this, the illegitimate software loses the ability to read files produced by legitimate software.

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This system forces pirates to be responsible for providing updates to their customers. This would demand an ongoing relationship between pirates and their customers, making piracy a more risk-filled and less economically viable activity. [9]

6.1.3

Diversity This is a technique which is combination of previous two techniques. The logic used behind this system is that though we cannot prevent the copying of digital data; we can certainly prevent a copy from having specific value. In this method a diversifier is used which controls the diversification process. Due to this process the company creates copies of software with different activation keys. Thus the installed copy (i.e. instance) of such software becomes machine dependant and is unique. The uniqueness of such software is extended to the program level which produces the strong protection.

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Figure 6.1 Showing Diversification Process Due to the machine dependence of software there cannot exists a generalized method for piracy. Hence the piracy percentage is reduced. This method also helps in prevention of piracy of updates given for the software. The update works for a unique instance. Thus the illegitimate copy does not remain up to date. [7] 6.1.4 Low-Cost Software These software are also known as student software and they include slightly simplified version of original software. Such software is not for commercial use. The student software contains all the desirable features. Due to the low price of such software; customer prefers the original software and the piracy is reduced. [6] 6.1.5 Use of Special Software There are many network utilities available which remove unauthorized files and programs on a preset basis. These utilities can effectively monitor and remove illegally possessed shareware and commercial software. This type of software is available at comparatively less price. Installing this software especially in education institutes and at places where the network application is present helps in reducing the percentage of software piracy. 6.1.6 Change in Company Policy Most of the software packages originate in the United States. The price in Asia tends to be higher. As there is a lot of demand for such software in Asia, many companies are changing their policies. Splitting software packages into easily upgraded elements, making special low cost software are some of the changes the companies are going through. This helps the customer as he can purchase the

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required part of software. This method is gaining popularity in many software development companies. [6] 6.2 Piracy Protection through Laws We have seen so far the different methods of piracy prevention at the technical level. Despite the lot of efforts made by the companies still vast amount of pirated software is available in the market. To prevent the piracy at customer level different laws have been created. These laws make piracy unethical. In India the government has put-up many stringent laws to protect the software piracy. 6.2.1 Indian Copyright Act 1957 (Amendments 1994, 1999): India has one of the most modern copyright protection laws in the world. As per the provision made by this act, any person who knowingly uses an infringing copy of computer program shall be punished. This law also clearly defines the rights of software developer and users. According to Section 16 of this Act, it is illegal to make or distribute copies of copyrighted software without proper or specific authorisation. The 1994 amendment to the Copyright Act also prohibits the sale or hiring, or any offer for sale or hire of any copy of the computer program without specific authorisation of the Copyright holder. According to Section 62 B, copyright infringement attracts a minimum jail term of seven days. The Act further provides for fines, which shall not be less than INR 50,000, but may extend up to INR 200,000, and a jail term up to three years or both.[15] 6.2.2 Indian Information Technology Act, 2000 This law deals with most of the issues, IT industry in India is facing. It includes the detailed discussion about the definition of term Software, rights of user and software provider, rights of regulatory authorities and various questions related to the data protection. Chapter IX of this law states that any person who accesses,

Software Piracy

downloads, copies, extracts data without authorized means or permission is punishable. The section also defines the fine for such wrongdoing. The person held responsible for such offence is liable to pay damages up to INR 10 million to the affected persons. Chapter XI deals with offences such as tampering with computer source documents and the punishment for the same. [15] 6.2.3 Other Indian Laws Information Technology (Certifying Authority) Regulations, 2001 gives the detail functioning of the certifying authorities in issuing digital signatures. Intellectual Property Right Laws for Computer Software ensures that the computer programs have copyright protection. The Indian Contract Act and Section 406 and 420 of the Indian Penal Code also provides certain amount of protection for software against the piracy. [15] 6.3 Prevention through Other Methods In India Business Software Alliance (BSA) and National Association of Software and Service Companies (NASSCOM) are making collaborative efforts to reduce the piracy. They have started the toll free hotline where people can report about the piracy. With the help of their websites, e.g. www.bsa.org, www.nasscom.org, they regularly publish information about software piracy. There are also magazines which give the latest information about software piracy. [9] Despite all the efforts being put in to control the software piracy there is no software present which gives 100% guaranty that it cannot be pirated. This is because of the static nature of software against the dynamic nature of piracy methods. Following are some of the strategies that are discussed to implement in the future.

Educating and making people aware of the benefits of legal software and the perils of piracy.

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Training and educating users including in the use of specialized tools like software asset management (SAM). Enforcement through legal action, though used as a last resort, is an important part of the approach, especially against organized piracy.

7. CASE STUDIES
Without the fear of law, pirates go to such an extent that they sell pirated copies of software under the name of multinational companies. Such copies are seen at every corner of streets of third world countries as well as in leading nations like USA. The following excerpt from a report that was registered in 2001 is an example that gives an idea as to what extent software piracy has its roots in USA. Four arrested in software piracy case OUT-LAW News, 12/08/2001

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Four suspected software pirates were arrested by the FBI in Los Angeles on 12th September 2001 in connection with the seizure of counterfeit (imitation) Microsoft software valued at $10.5 million. The arrests cap a 14 month FBI investigation into a group which was obtaining pirated software overseas and shipping it into the US to be sold at discounted prices. [16] Genuine versions of Microsoft software carry an edge to edge hologram as a security feature, which the pirates attempted to imitate. The counterfeit CDs had stickers with holograms imitating the legitimate holograms placed on them. Microsofts senior manager of worldwide piracy enforcement, Richard LaManga said: If you can peel it off with your finger, you know it is not a genuine article. The group is alleged to have been selling software such as Microsofts Office 2000 for $75. The retail price of the genuine software is $599. From the news report below it is seen that auction has developed into a market place where sellers feel they are anonymous and out of the reach of law. But this case proves them to be wrong. British software pirate faces up to 10 years in jail OUT-LAW News, 15/01/2008 A British man who was selling 12,000 software for 12 on eBay faces up to 10 years in prison. He pleaded guilty to copyright infringement (break/violate) and was sentenced in February. Michael Walton broke an encryption code in the software which allowed him to make copies of it. He sold the copies on eBay, where he reportedly had 80 identities. The software was AceCad, a 2D modelling program for use in the construction of steel structures. The company has said that an AceCad licence costs between 12,000 and 20,000. Wayne Rawson, general manager of the company was quoted by the Derby Telegraph saying, "International pop stars might be able to afford people copying their work but we cannot. We're lucky in that we managed to stop this

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before too many copies had been sold but, if it had carried on, we could have potentially lost a fortune." Trading standards officials raided Walton's home and found computer equipment and more than 200 discs, according to the newspaper. This case underlines the fact that software piracy not only affects multinational and well-known brands but also smaller specialist companies. [17] The BSA has urged Trading Standards to take a tough stance against online sellers who mislead end users and fuel the demand for copied software. The British Government gave trading standards officers new powers last year to deal with copyright infringement. A change to the Criminal Justice and Public Order Act gave them powers to enter premises and seize goods and documents they believe to be involved in copyright infringement. [17] From earlier facts it is seen that piracy has become a source of income in India. But it is also clear that many cases has been registered against these Indian Pirates. The February 2006 M/s Icon Multimedia vs BSA members case published below proved to set an example for dealer community indulging in piracy to maximize their profit. Icon Multimedia Systems, Delhi, raided for software piracy Defendant was allegedly distributing pirated software of Avid and Microsoft New Delhi, February 12, 2006 M/s Icon Multimedia was allegedly engaged in the illegal distribution of pirated products of BSA members, Microsoft and Avid Technology. The alleged modus operandi for M/s Icon Multimedia was to install the unlicensed software on to the computers which it sold to its customers. On 29th January 2006, the Honorable Delhi High Court granted an ex-parte interim injunction restraining the M/s Icon Multimedia from copying/reproducing, selling or loading on hard disks of computers any pirated/unlicensed version of the Microsoft and Avid Technology software.

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Following the orders of the High Court and with the assistance of the local police, the appointed court commissioner, carried out a raid on M/s Icon Multimedia in New Delhi. The raid led to the recovery of a computer, which, on inspection, was found, allegedly, loaded with pirated software ready to be delivered to a customer. Additionally, the search also led to the discovery of 12 writable CDs, which allegedly contained pirated software of the Microsoft and Avid Technology. The CDs allegedly contained pirated versions of the following software programs:

Pinnacle Liquid Edition 6 Windows XP Professional Windows XP, SP-1 and SP-2 Windows 98/2000 MS Office XP

8. India and Software Piracy

Having seen the various aspects of software piracy, this chapter focuses on the problem of software piracy in India. The development of India's software industry is so rapid that it has made India one of the world's most powerful software manufacturer and exporter. India being the big boy of software industry, is also more prone to various kinds of piracy.
8.1

Software industry in India

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8.1.1 General status India is among the five leading software producers in the world, second only to the United States in software and service export. Indian software products have been exported to more than 91 countries around the world. India has earned respect and the trust of the world in the field of Softwares. [12] Status of India's software and services export in the national economy The software industry has become the fastest increasing and the most profitable sector in India. The software and services export is the main driver of the industry and contributed more than half the revenues i.e Rs.26855crores of the total projected revenue of Rs.64200crores. The Indian IT sector, growing from USD 12.5 billion in 2001-02 to USD 47.8 billion in 2006-07, has depended heavily on software and services exports for its year to year healthy growth. In terms of shares in the GDP, the IT industry figures have risen from 1.2% in 1999-2000 to 5.2% in 2006-07. Status of India's software and services export in the world market India's rising software industry occupies a pivotal position in the world's software market. Though there is only a decade of development in India's IT industry, its growth is very astonishing. Consequently, this has made India the world's fastest growing country in the software industry. Since the 1990s, the average annual growth rate of Indian software industry is more than 50%, which greatly surpassed the world's software industry growth rate of 20%. The software and services exports from India amounted to US$ 21.4 billion during 2006-07, up 22% from the previous year. [12]
8.1

Piracy in India India has seen a small but consistent decline in the piracy rates in the past 2 to 4 years. Concerted efforts by the government, judiciary, software vendors

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and the channel have resulted in a steady growth in customers purchasing original software in India. It is rewarding to see a three percent reduction in piracy in the last few years and this will have a significant impact on Indias economy. Even though the piracy rate has decreased, it is still far from acceptable. India being a super power in terms of software industry cannot afford such high piracy rate, especially because of the fact that Indian economy relies a lot on the software exports.

Source: www.bsa.org
8.2

Factors driving piracy One of the most important factors that encourage piracy in India is the high cost of commercial software. The street price of software is very high, and forms one-sixth of the price of acquiring the computer. Some of the other reasons are lack of stringent enforcement laws, lack of awareness of IPR laws by users, easy availability of pirated software in the grey market, growing availability of illegal software on the Internet, and improper software asset management by organisations. As India increasingly gets wired to the Internet, we see increasing instances of pirated software for sale on auction sites.
[14]

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8.3

Effects of Piracy in India Software piracy in India has many negative consequences as in any other nation. It cripples the local software industry owing to the competition with the pirated software from abroad. Also tax-revenues and jobs are lost due to the ghost of software piracy. According to a study conducted by BSA (Business Software Alliance), India has already lost $2025 million due to software piracy. 8.3.2 Loss of employment Software piracy leads to loss of employment due to the lack of legitimate domestic market. According to an economic impact study by the IDC, if piracy rate was to reduce to 64 percent by 2009, India will see some 115,000 new IT jobs. [12] 8.3.3 Loss of revenues Software piracy also leads to the loss of revenue for the government. This is because out of the total cost of the software a part of it goes to the government in the form of various taxes. Piracy deprives the government of these revenues. Industry loss due to software piracy in 2008 increased from $1.28 billion in 2007 to $2billion. Reduction of piracy rate to 64% will lead to, an increased tax revenues of $286 million. [5] 8.3.4 Loss of Channel Revenue Reducing software piracy has a 'multiplier effect'. For every $1 spent on legitimate packaged software, an additional $1.25 is spent on related services from local vendors such as installing the software, training personnel and providing maintenance services. The software and the additional services then drive another 1$ of revenue which is called the channel revenue.

8.5

Benefits of reducing software piracy in India

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Ten point reduction in PC software piracy would deliver an additional 44,000 new jobs, $200 million in tax revenues, and $2.1 billion in economic growth in India. In 2007, India, a country of more than 1.1 billion people, spent $16.1 billion on information technology (IT) computers, peripherals, network equipment, packaged software and IT services. That spending accounted for 1.6% of gross domestic product (GDP), supported more than 24,000 IT companies with more than 766,000 IT industry employees, and helped generate $1.1 billion in IT-related taxes. [12]

Source: www.bsa.org 8.6 Microsofts stand on Piracy in India Selling software on the Web has been a great success for companies like Microsoft. It has given these software majors the geographical spread to make original software available to end consumers. Microsoft has come up with a strategy to address this key problem. The new strategy includes 8.6.1 Launching the Windows Genuine Advantage program online:

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WGA or Windows Genuine Advantage program uses a software tool to detect computers that run illegal and pirated copies of Windows software and alert the user by showing nag screens on the affected computers. On clicking, the customer is directed to a website that offers legitimate Microsoft software for free or discounted rates. He can also get rid of the screen temporarily by clicking on a 'Resolve Me Later' button. 8.6.2 Educate the Indian Public: Microsoft also believes the reason for the thriving piracy market in India is the ignorant and gullible Indian customer. Most Indian customers do not even realize that they are committing a crime while using illegally installed Windows operations systems or Microsoft Word software. The computer vendor who sold them the PC is expected to load the software. He in turn to keep costs low and attract customers, copes the same single license software repeatedly onto several systems and keeps the customer blissfully unaware of the crime that he has unwittingly become a part of. 8.6.2 FlexGo software to reduce the entry level cost of computing: Microsoft also plans to introduce in India rental computers based on its FlexGo software that can be used in the same fashion as pre-paid mobile phones.

8.7 Other steps to curb piracy in India Some of the steps that can help battle piracy are as follows: Tie up with law enforcement authorities at grass root levels. Educate students at schools on how piracy hampers growth of software.

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Conduct local awareness camps across semi-urban localities in India which not only educate and demonstrate the advantage of using genuine software but encourage participation by means of distributing massive discount coupons and other freebies.

Use hardware dongles that need to be used to print anything that has been developed using particular software. These dongles decrypt information flowing to the printer. The dongles can also be issued on a subscription basis. A user having MS Word illegally installed will only be able to print a Word document if he has the dongle, else he can only view it on the screen.

Offer regular and highly tempting freebies online that would be provided only on verification of the installed Windows OS copy and advertising these freebies heavily via the TV, radio and newspaper media. It should make the pirated users aware that they are missing on something they need to flaunt on their system.

9. CONCLUSION
Computer software affects every aspect of our lives. With the touch of a button or the click of a mouse, information is transmitted across the globe. With each passing year, software evolves into a faster, more sophisticated, versatile and easy-to-use technology. Computer software allows companies to save time, effort and money.

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Home software now includes a wide array of programs that enhance the user's productivity and creativity. But unfortunately, because most software is highly valuable, and it is very easy to make exact copy of it, software piracy is widespread. From individual computer users to professionals, piracy exists everywhere. The new methods for pirating software are being developed and spread out through internet. The shortage of money in underdeveloped countries has only promoted the software piracy as majority of users prefer the pirated and inexpensive version of software. This has resulted in heavy losses for software developers, increase in software prices and loss of new IT industry jobs. On the other side it has helped in spreading the software to several users in many underdeveloped countries. The amount of monetary loss has encouraged governments to set up laws like Copyright Act to reduce the piracy. This has helped in development of new technology to reduce piracy. It has also brought about a change in the policy of software developers to sell their software in different markets. Finally the fate of software piracy lies in the hands of users. If users will use only the original software then piracy will reduce which will give huge benefits to the human community.

WEBLIOGRAPHY|BIBLOGRAPHY
1. S. Fowler, "Software Piracy", http://EzineArticles.com/ 2. R. Kayne, "What is Software Piracy?"; http://www.wisegeek.com/what-is-software-piracy.htm

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2. V. Beal, "All About Open Source", September 2008; http://www.webopedia.com/DidYouKnow/Computer_Science/2005/open_source.a sp 4. H. Krishnan http, "Software piracy: Understanding the larger picture", August 2002;

5. Fifth Annual BSA and IDC Global Software Piracy Study,

6. F. J. Karamat, Software piracy and its impact on IT sector, http://www.student.city.ac.uk/~ra829/softwarepiracy1.html, November 2002. 7. B Anckaert, Software Piracy Prevention through Diversity; http://escher.elis.ugent.be/publ/Edocs/DOC/P104_104.pdf. 8. S. Kaiyan, The Development of India's Software Industry and its Lessons for China,

9. A. Advani and W. Hui, Curbing software piracy; http://www.expresscomputeronline.com/20060821/market01.shtml 10. C. Jena, Reducing Software Piracy Has A 'Multiplier Effect', multiplier-effect/27621/0, June 2008 11. A. Sinha, Software Piracy goes up by 20%, India registers a decline.., registers-a-decline-1555/, May 2008 12. IDC Piracy Impact Study, Economic Benefits from Lowering PC Software Piracy. In India , 12. IDC, The Economic Benefits of Reducing PC Software Piracy,

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14. D. Stone, Software Piracy, http://www.uni.uiuc.edu/~dstone/piracy.html, September 1999

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Menon,

IPR

Laws,

http://www.networkmagazineindia.com/200510/newsanalysis07.shtml, June 2007 16. Out-Law News, Four arrested in software piracy case, http://www.outlaw.com/page-1887, August 2001 REFERRED LINKS:http://www.expresscomputeronline.com/20020721/indtrend1.shtml http://global.bsa.org/idcglobalstudy2007/,

http://www.asianscholarship.org/ejourn/articles/shen_kaiyan.doc.
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