The facts

Software piracy continues to be a major problem for the IT industry, and recent research suggests that the current piracy level remains at a staggering 27% in the UK. It's not just the software publishers who are losing out; the repercussions of this are costing the country billions. A reduction in software piracy levels of just 10 percentage points to 17% could create 40,000 jobs and contribute £6 billion to UK gross domestic product (GDP).

Theft is theft

Illegal copying and/or distributing of software is wrongly viewed as nothing more than a minor transgression by perpetrators, rather like speeding along the M4. “It won't happen to me” is their answer to the threat of being caught. But the threat is becoming a reality and the Copyright, Designs and Patents Act 1988 allows for serious penalties to be dished out if the perpetrators are found guilty: up to 10 years imprisonment and unlimited fines.

For most companies, even an out-of-court settlement could be almost as damaging for directors as a spell at Her Majesty's pleasure. The potential impact on the company reputation, customer relationships and share price is unquantifiable.

There is proof that direct action is not a just a threat but a reality. City banker, Alex Bell, and three other perpetrators were punished by prison sentences of up to two and half years at the beginning of May for conspiracy to defraud through their involvement in an internet piracy gang, DrinkOrDie. The group considered themselves 'Robin Hood'-style heroes, and enabled visitors to their website to download products such as Microsoft Word and Excel for free.

But it's not just individuals engaged in piracy that are getting caught out. Over the last five years, companies have paid out £1.8m in fines to the Business Software Alliance for using unlicensed software and in excess of £5.5m has been recovered as a result of FAST activities.

Yet digital theft continues apace, despite the fact that it is tantamount to going into a high street computer store and walking out with a software CD stuffed up your jumper. Can you imagine the director of a reputable company doing such a thing? Probably not. So why is software piracy still on the increase?

Director complacency

UK plc is worryingly complacent when it comes to software piracy and the vast majority of company directors are conveniently ignorant of the concept of vicarious liability, which puts the responsibility for all of their employees' actions at work firmly at their own feet, particularly if it can be shown that they knew about the incident. This involves any acts by employees, no matter whether or not the act was specifically authorised by the company.

That includes software piracy, so it is up to directors to make sure that they are putting in place the appropriate measures to prevent illegal installation and use on the company network, as well as to punish those responsible for illegal activity.

What is more, company directors would be wise to question the IT department before blithely accepting their assertion that software licences are all present and correct.

The Federation recently discovered over 5,800 illegal digital music files in a software audit of 2,500 PCs at a UK financial services organisation. The vast majority of these files were illegally downloaded by people in the IT department – those normally tasked with combating the problem.

All too often IT policy management and enforcement is left solely to the IT department, in the belief that when IT staff say that correct licences are in place, they are. But directors must not allow themselves to be fobbed off by IT staff as they can also be the culprits.

User knowledge

Software piracy has also increased partly due to advances in technology. Ten years ago it wasn't so easy for fraudulent copies of software to be made and sold, but the internet and advances in DVD technology have made the process far easier for software pirates.

As IT literacy increases amongst all users – not just those employed in the IT department – the risk of illegal downloads is ever-present. More often than not, employees treat their work PCs as they would their own property and may be downloading software, swapping music files or burning files onto disc to pass onto others inside and outside of the organisation.

Company directors need to have a firm grip on their technically able staff across all departments if they are to stamp out the problem of software piracy in their business.

Internet CCTV

Just as the high street computer stores have installed CCTV and other anti-theft mechanisms, there is an obvious need for similar initiatives to police the internet. But this is something that is clearly easier said than done across the vast World Wide Web.

That said, the Federation has recently embarked upon a new programme, codenamed Operation Tracker. With the blessing and encouragement of our software publisher members, we are using computer forensics experts to trace illegal downloads.

The evidence gathered by these experts will be used to apply for court orders to obtain the relevant user information from ISPs. If deemed necessary, actions which may include criminal proceedings may be commenced. The Federation will not waive any rights to proceed with the necessary and appropriate legal action against targets.

Operation Tracker has its eye on home users as well as users of corporate networks. Nobody is immune from the sanctions under the Copyright, Designs and Patents Act, 1988. Section 109 of this Act enables a search warrant to be secured.

Industry allies

It's not just the software publishers that are taking drastic measures to protect their intellectual property. The global music industry is also stepping up its anti-piracy war. The International Federation of the Phonographic Industry (IFPI) recently announced it was launching legal action against 693 filesharers and the British Phonographic Industry (BPI) has started legal proceedings against 33 UK internet users accused of illegally uploading music to the web.

Neither the Federation nor the IFPI and BPI are cracking down for the sheer sake of it – copyright infringement costs livelihoods and these organisations have a duty to try to prevent it.