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December 19, 1997


Software piracy touches 82 per cent

On July 17, a posse of policemen from the Intellectual Property Cell of Delhi Police's elite Crime Branch cracked down on two major computer software pirates operating in the capital and seized hundreds of CDs with illegal software worth millions of rupees.

Amongst the seizures, the police was astounded to discover pirated copies of the very latest programs including expensive packages like Autocad.

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Piracy hits 82 per cent
The raid was a success but no one, even the exuberant cops, could deny that it represented no more than a drop in the ocean, considering the fact that over 82 per cent of all software in use in India is pirated or illegal.

Software piracy is a global phenomenon and the losses it causes are astronomical - according to one estimate a staggering $12-15 billion is lost annually due to this illegal activity.

Software piracy is rampant all over the world and ranges from an incredible 98 per cent in China and Commonwealth of Independent States to 35 per cent in the US. Software piracy is well above 55 per cent in most European countries. In Pakistan, the incidence of software piracy is 96 per cent.

In absolute terms, the largest losses occurred in the US ($2.8 million), Japan ($2.1m), Germany ($1.9m), France ($0.77m), Brazil, UK, Korea, Russia, and China ($0.5m) each.

In dollar terms the losses in India due to piracy are estimated at $0.13 million.

Software piracy is of different types. Soft lifting or the purchase of a single copy which is loaded on more than one computer is prevalent all over the world and is difficult to check unless some reliable informers divulge details.

Hard disk loading or the loading of unauthorised software on to computers that are sold by dealers is now well established marketing strategy even by vendors selling hardware by leading brands like HP, Compaq etc.

In the just released copy of The PC Zone, for example, a Compaq Presario 4760 is offered with pre-loaded Windows 95, MSWorks, CorelDraw! and several other leading software. Almost all the hardware advertised can be pre-loaded with software of the buyers' choice.

By far, the most damaging piracies are software counterfeiting and downloading over the Internet. Counterfeiting software is more prevalent in China. It is common knowledge that over 25 factories, mainly around the Schenzen Province in southern China produce 75 million counterfeit CDs annually of which 5 million are locally sold and the rest exported.

A CD has substantial storage capacity (600 MB) as compared to a floppy (1.44 MB) and by using sophisticated Philips equipment several software programs can be 'hot-pressed' on to a single CD.

The racket operates so efficiently that pirated versions are often available a couple of days after the release of the original software.

These CDs are illegally exported to all Asian countries, particularly to Hong Kong, Thailand and India where there is a ready market.

One CD at Nehru Place, in New Delhi, had 86 programmes on it, all with a self-extracting installation utility. The contraband CD, costing just Rs 900, included masterpieces like Autocad (price Rs 130,000), MS Office (Rs 20,000) CorelDraw! (Rs 20,000), Tally (Rs 27,000) and many other programmes at a fraction of the listed prices.

At the infamous Golden Arcade in Hong Kong, buyers from all over the world converge to buy such counterfeit CDs. One can buy CD-ROMs containing nearly 70 titles, including the latest Microsoft releases for $50, the total market value of the programs being well over $30,000.

The advent of the Internet has made the already serious problem of software piracy much worse as any and all of the 20 million Internet users can illegally download software on to their computers with just as much effort as it takes to press a few keys.

As more and more people go online, there is an increasing opportunity for and demand to pirate software. New, low-cost techniques are making it easier to produce and distribute unauthorised copies. Inexpensive CD-ROM copying devices and increasing use of the Internet will make large-scale counterfeiting of software a common occurrence.

The Nehru Place Business Centre has emerged as the hub of piracy activity in Delhi. It is estimated that a majority of the 3,000 establishments running their trade in this complex indulge in one or the other form of piracy.

Undoubtedly, software piracy has numerous, alarming effects - it kills creativity and originality in software manufacturers, stunts development of the software industry, deprives the programmers and others engaged in the production of original software of their just returns, robs the government of revenue and fuels the parallel economy.

Statistically, the odds are against the ultimate user being prosecuted. Second, each PC user has all the equipment he requires to make perfect copies of the original. There is an erroneous belief that purchase of software includes the right to reproduce it whereas, in fact, the buyer is merely a licensee who is authorised to use the software for his personal use only.

Many people do not realise that they break the law when they loan their floppies to their friend to copy the software. Third, enforcement action has not been taken on such a scale as to act as an effective deterrent.

Only three complaints have been made to the police in the past 12 months in Delhi and five in the last three years: Not one of the eight persons brought to book in these cases has yet been convicted. Most serious, however, appears to be the ineffectiveness of the law to redress the problem.

"None of our laws were written with the Internet in mind," observed a Los Angeles attorney who prosecuted Captain Blood - one of the most notorious software pirates brought to book in the US in recent times.

It is difficult to apply existing laws to emerging technologies even in advanced countries, leave alone India.

There is a quantitative difference in the perception level of investigating and prosecuting officers and magistracy. The conventional laws of evidence and rules of criminal procedure are areas where the present wherewithal is hopelessly inadequate to meet the requirements.

Offence of software piracy is a cognisable crime, punishable under Section 63 of the Indian Copyright Act, 1957, which was amended in 1994 to make it more proactive towards checking piracy, and sections 78 and 79 of the Trade Marks Act.

In the 1994 amendments, the definition clauses were modified to specifically include computer programs within the scope of the Act.

All forms of software piracy now fall within the ambit of the Act. The law now prescribes a minimum punishment of seven days imprisonment, which may be extended up to three years, and a substantial fine up to Rs 50,000 for such offence.

There is a provision for enhanced punishment with higher fines for second and subsequent offences. On being convicted on the second and subsequent occasions the offender faces a minimum sentence of one year, extendable up to three years and at least a Rs 100,000 fine extendable to Rs 200,000.

- Compiled from the Indian media

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