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Intellectual Prop.
| '-+ Pat. & Copyr. Law
| '-+ Electronic Copyr.
| '-+ Software Piracy
|- Privacy
|- Risks
|- Social-Just. Issues
|- Speech |
Lecture Notes
- Intro: Bingo Software (Johnson, Scenario 4.2).
- Bingo Software, employing 15-20 people, spends 3 yrs. developing an OS for networked µcomputers, invests $2M.
- Bingo successfully markets system for 1 yr.
- After the 1st year, sales decrease.
- Pirate Pete's Software starts to sell a system very similar to Bingo's, but w/addnl. features.
- Seems that they have examined Bingo's & copied it, w/improvmenets.
- Copying of Bingo's system is rampant.
- Small businesses appear to be buying 1 copy and making multiple copies for int'l. use.
- They may be giving away copies to other businesses as well.
- Bingo is unable to recover the full costs of development, and goes into bankruptcy.
- Software piracy: the extent.
- Software industry estimates that $8.1B of software was stolen in 1994.
- In 1990, $2.4B was stolen; sales were only $5.7B.
- Software Publishers Assn. says that piracy appears to be declining.
- Overseas, situation is even worse.
- Business Software Alliance claims--
- In Germany, a recent survey disclosed that there are fewer programs purchased than computers.
- [This data is a couple of yrs. old, I think.]
- In US, 1.5 legitimate software packages sold for every personal computer--BSA.
- 0.82 in Australia.
- 0.65 in France.
- 0.4 in Italy.
- But at least rate of piracy is falling.
- Between 1993 & 1994, Spain's dropped to est. 73% from 88%, due to tough new law.
- In Finland, rate fell to 43% from 67%, after jail sentences were imposed for illegal copying.
- Worst area is E. Europe.
- In former Soviet Republics & in Turkey, est. 97% of software is stolen; 95% in Bulgaria & Romania.
- Sued Justice Dept. for software piracy.
- In 1982, Inslaw landed a $10M contract w/Justice Dept. to instal PROMIS case-tracking software in 20 offices.
- Then they allegedly spent $8M enhanc
ing PROMIS on the assumption that they could renegotiate contract to recoup expenses.
- But after Justice Dept. got the source code, they terminated contract and pirated code.
- By 1985, Inslaw was forced into bankruptcy.
- Owners kept fighting, & case ended up in U.S. Bankruptcy Ct. for DC.
- In Feb. '88, Inslaw was awarded $6.8M damages, plus legal fees.
- The only way Inslaw was able to sue the feds was because they were in the middle of bankruptcy proceedings.
- Then in 1991, Danny Casolaro, an investigative journalist researching for a poss. book on the case was found dead in a WV mote
- In 1992, House Judiciary Cmte. voted to hold an investigation into the case.
- Hadron, Inc., owned by a friend of Atty. Gen. Edwin Meese, was attempting a hostile takeover of
Inslaw.
- Software piracy: the methods.
- How does one get pirated software?
- Counterfeit packaging.
- In 1991, Microsoft unveiled MS-DOS 5.
- The package contained two holograms that Microsoft said were "virtually impossible" to reproduce.
- "... raise the counterfeiting barrier to a level previously unattempted in the sfotware industry."
- Within 2 wks., a Taiwanese counterfeiter commissioned a holographer in China to copy & produce the holograms.
- In October '91, a salesman calling on a software store in Taipei saw a package that "didn't look quite right."
- One of specialists said, "We were in shock. No one could believe it happened."
- An NYT article in 1992 said that the Chinese gov't. hadn't decided whether to turn over the molds that produce nearly exact fak
- First CD-ROM prosecution in 1993.
- NYT, 12/13/93
- Federal govt. indicted Clare Waioi Sham of San Jose on charges of importing 900 counterfeit CD-ROM disks from Hong Kong.
- Along w/18K counterfeit user manuals.
BBSs
- June 1992: FBI raided a BBS known as Davey Jones's Locker: 200 comercial programs that could be downloaded.
- Finally, in Mar.1995, Richard D. Kenadek, operator of the BBS, was sentenced to 6 months' home confinement & 24 mos. probation.
- He charged $99/yr. for access, let users download 200 programs.
- Was first software copyright prosecution under criminal law.
David
LaMacchia, and a Brown student were indicted in April '94.
- LaMacchia case was thrown out last Dec. 29.-->
- Was not wire fraud--who was defrauded?
- Was not copyright violation--he didn't do it for financial gain.
- Was not theft--legitimate users weren't deprived of anything.
- Brown student Daniel Goldwater didn't collect fees either.
- BSA says that the most common way piracy happens is when management encourages it.
- E.g. Cerebrus Sound & Vision (New Scientist, 2/18/95).
- You buy a "player" with a digital key.
- You buy music & it is sent to you over Internet.
- It is compatible w/your player (only).
- Software Publishers Association asks the following policy.
- Appoint a software mgr. repsonsible for keeping records on purchases and software use.
- Develop a software code of ethics, and make sure employees read it.
- Keep a software log, including records of when a program is purchased, who is to use it, and on which machine it is to reside.
- If not dealt with, problem will escalate.
- Macintosh Quicktime software makes it easy for personal computer users to add snippets of digital video to their programs.
- Beverly Sills visited China & Japan & saw hundreds of her CDs in covers she had never seen before.
- Software piracy law.
- The law.
- Passed by Congress in October 1992.
- Illegally copying software for private or commercial gain is now a felony.
- Penalties: 5 years in prison, or fine up to $250K.
- If made more than 10 copies of software,
- carrying a retail value of > $2500.
- To receive max. penalty, the retail value of pirated software would have to exceed $80M.
- How are violators caught? A disgruntled employee will turn you in.
- Report from Datamation, May 1995.
- "Company with above-average honesty quotient and a zealous microcomputer support manager" spent months negotiating with SPA.
- A terminated employee had called their 800 number.
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