Software Piracy Problem in the IT Industry - Coursework Example

A REPORT ON SOFTWARE PIRACY PROBLEM IN THE IT INDUSTRY by A REPORT ON SOFTWARE PIRACY PROBLEM IN THE IT INDUSTRY The IT industry has revolutionised world economies with innovations that have increased efficiencies and subsequently reduced labour costs tremendously. These innovations have resulted in growth of countries’ GDP and improvement of people’s lives. The industry, however, faces many problems that threaten its existence and development. Most IT innovations run on software that makes the innovations to operate. These softwares are the owner’s/ inventor’s intellectual property. Nonetheless, they are often pirated by users thus threatening inventions and creativity. As such, software needs to be protected to encourage and support innovation and creation of knowledge. Software facilitates creation and functioning of all IT devices which improve people’s lives (Cronan, Timothy & Al-Rafee 2008). The Business Society Alliance (BSA) defines software piracy as illegal copying, downloading, sharing, and installation of software that is copy righted. The problem of software piracy is a global issue and thus is very difficult to measure. Documented evidence shows that software was the first IT development to be duplicated on large-scale. Initially, this piracy was conducted via copying disks and other physical items. Currently, the crime is carried over the internet by downloading and sharing copyrighted software. For example, peer to peer software connects people in the internet and is used to share digital files at no cost (Bagchi, Kallol & Cerveny 2006). Peer too peer software enables users fast access to digital files, ease search options for pirated software, lower risk of detection and no cost. These factors increase software piracy among internet users. Types of Software Piracy End user copying of copy righted software is a crime in most states. This includes reproducing software for lending. Also, copying licenced software for friends to use is illegal. For example, copying a commercial software into a CD for a friend to test it. On the other hand, counterfeiting refers to reproducing original software and reselling the softwares as original copies with labels and packaging. For example, making copies of an original software, reproducing the labels and packaging to make the copies look like the original software and selling the counterfeits to the public (Marron & Steel 2000). Online piracy is another type of illegal software distribution conducted by downloading illegal copies of software and distributing it to other online users. Peer to peer software programs are often used by online users to down load software and distribute it to others via the internet. The practice is rampant since the detection risk of online piracy is very low. Mischanneling is another type of piracy that involves selling discounted software licences as fully licenced product. For example, buying discounted software and reselling it at the full price of the licenced product. Hard disk loading refers to installing software programs in computers that are not licenced for the programs (Cronan, Timothy & Al-Rafee 2008). Computers with the licenced programs must have manuals and disk, For example, installing a single user software in other computers is illegal and unethical. Impact of Software Piracy in IT Development and the Economy Piracy hinders creativity that leads to innovation. It denies the inventors profits which motivates and rewards them for their effort. Software that is easily copied is never bought. Therefore, the developer doesn’t gain from his intellectual work. As a result, he may be discouraged to pursue further innovations. Consequently, there will be less technological advancement in the IT industry. A slowdown in innovation and software development impacts the economy negatively. Hence, piracy denies developers returns that could be used to improve their current inventions or create newer ones that are more efficient. This may stagnate development in the IT sector, which will be felt in the entire economy since technology is used to achieve economic growth (Marron & Steel 2000). Software piracy has a negative impact on the economy as stated earlier in the text. It denies the country revenue from the sale of software. Additionally, it results in loss of employment to thousands of people. This lowers a country’s GDP and reduces income per capita. Consequently, people have less income per capita and can barely purchase products in the market. In extreme cases for countries where IT industry is well established, the local industries may face the danger of closing due to lack of business. Further, increased cases of piracy results in a lot of time being wasted in court to settle law suits against offenders. This time could be used constructively by the developer to create more software that will further revolutionize the IT industry (Gopal & Sanders 1997). Ethical and Social Issues Surrounding Software Piracy People hold different views on whether software piracy is ethical or unethical. Piracy is justified as ethical by some users as they don’t find fault in the practice. The users believe in freedom of information and accordingly, find it acceptable to copy software since they have a right to the information therein. They also hold the view that distributing copy righted information is fair as it gives other users information and freedom of expression. Some pirates have sighted the first amendment as their defence for pirating. They argue that since posting information in electronic form is legally protected, distribution of illegal software is just an expression of their right which shouldn’t be infringed upon (Bagchi, Kallol & Cerveny 2006). Others think that piracy doesn’t hurt anyone and is victimless. They argue that software prices are high and software manufacturers will understand the practice. Some users think that software prices are overrated and softwares are not worth their prices. They claim that since the software is ‘faulty’ it is justified to get it free. Some claim to be testing the software and pay for it later. They argue that they rarely use the program and it just sits on their hard driver. A different view among users is that piracy is unethical since it really isn’t victimless. Piracy has seen the IT industry lose 12 billion dollars and more than 100,000 jobs. The attraction of piracy is facilitated by low detection risk and ease of illegal copying of software. However, every person who pirates software contributes to this huge economy loss. Additionally, information is not free because software developers should profit from their efforts. Piracy is not protected by the first amendment as it doesn’t cover illegal activities (Gopal & Sanders 1997). The claims that pirating is justifiable as the software isn’t worth as the high price, is faulty or rarely used and is thus misguided. For example, just because an item is overpriced doesn’t give you the legal right to steal it. The same applies to faulty/ low quality software. Finally, pirating costs everyone. Manufacturers raise the prices of pirated software to increase their profit margin as the software is rarely sold. Therefore, legitimate users pay higher costs because of piracy. The victims of piracy include manufacturers, end users, employees of IT companies who lose their jobs and general economy. Reasons behind Software Piracy These reasons are put in different categories. The first category is individual reasons that users use for pirating. Public awareness is one such reason. Users lack knowledge that software piracy is a legal crime. They have no idea what copy right laws are and penalties for breaking them. Software developers are currently using licencing agreements during the process of installation, but users don’t pay attention to them. High software prices is another reason given by users for pirating. Users argue that software programs are very expensive and therefore, many cannot afford to pay for genuine software. There are many opportunities to pirate software without the risk of detection. Online down loading is an easy way to pirate software. Physical copying and distribution of illegal software is rarely regulated. According to Cronan and Al Rafee (2008), 84.3% of people who were interviewed in a study claimed that it is easy to pirate software. Only 0.3 % of people believe that it is difficult to pirate. Moral factors also contribute to piracy (Cronan, Timothy & Al-Rafee 2008). People with strong moral principles believe that there is no free lunch. They refrain from pirating software since the developer should profit from his invention. On the contrary, users with a low moral outlook feel justified to pirate since it is victimless. Social factors such as friends and family can also influence piracy. People are affected by the values of their families or friends. A user’s attitude to piracy is affected by the attitude of the people one interacts with. A study revealed that family disapproval of piracy was a major factor for some users to refrain from the practice (Marron & Steel 2000). If a user’s friends pirate software, the user may be influenced to pirate without a guilty conscience. Previous piracy behaviour also influenced continual practice of the vice. Men are more prone to piracy than women as they are attracted to risky behaviour. Social reasons that support piracy include critiques regarding copyright legislation. Countries that don’t have software industries criticize copyright laws as being punitive and are used to create monopoly by countries that produce the softwares. Accordingly, this results in ineffectiveness of copyright compliance in countries that face high piracy rates. Those countries claim that they don’t want their legal structures to be utilised for financial gain by other countries. Lack of domestic software industry is another social reason for software piracy (Cronan, Timothy & Al-Rafee. 2008). Countries that don’t produce software incur high costs of importing software to support innovation and IT development. The software costs are very high since they import all their software. These countries are then lenient to illegal software copying and reproduction. Their laws are not stringent on this crime and legal reinforcement is weak or non-existent. Economic wealth of a country also contributes to piracy. Countries with low GDP have very low income per capita. The citizens have low disposable income and cannot afford original software. Bagchi et al. (2006) revealed that countries that had an increase in GDP had a decrease in piracy practices. High software prices also influenced a person’s willingness to purchase original software. Finally, the benefits of pirated software are tempting. Countries that lack software industries are aware of how the software can revolutionize their economies. Availing pirated software means that people in those countries can use latest versions of software for free or at minimal cost. These benefits influence low or no reinforcement or support of international copyright law by these countries (Bagchi, Kallol & Cerveny 2006). Professional and Legal Influence on Software Piracy Many countries offer legal protection of software programs and other copyrights. There are civil and criminal penalties for piracy. The court system initiates civil law suits against providers of pirated software and the final consumers of such software. For example, Metro Goldwyn Pictures (MGM) filed a legal suit against Grokster and Steamcast for facilitating infringement through providing peer to peer file sharing services. The Supreme Court ruled in MGM’s favour as distribution of copyrighted services without consent of the owner is illegal. Criminal legal action may also be brought against people who pirate software on a large scale (Marron & Steel 2000). The maximum penalty for software piracy includes damages suffered by the owner, in addition to profits lost through illegal copying. Statutory damages may also be imposed for each item of pirated software. A maximum penalty of five years jail term or a heavy fine or both are imposed on criminal activities of pirating. There are various exceptions extended by the Law for piracy prohibition. First, a user may make a copy of the software for back up. Second, ‘the first use’ doctrine allows a purchaser to sell or give away the software as long as they don’t keep a copy. Finally, some features of the software may be copied, in accordance with the ‘fair use’ doctrine that for sampling of works for education/archival purposes. The Digital Millennium Copyright Act (DMCA) added more restrictions to software usage. It also extended criminal and civil number of actions against piracy (Cronan, Timothy & Al-Rafee. 2008). Under the Act, users are unable to circumvent protection measures of copyright via tampering with software. The only exemption is programs created solely to test the strength of software protection measures or advance research studies in cryptography. Solutions to the Piracy Problem Legal action should be taken against software pirates. They should pay heavy fines or face imprisonment for not less than five years for this crime. The public needs to be made aware about the dangers of pirating (Marron & Steel 2000). The government and developers should also educate and create public awareness of the infringement of copyright and its legal consequences. Software developers should consider reducing the price of the software to make it affordable to many people. This will increase people’s willingness to purchase genuine software. Developers can also conduct a legal training to consumers. This will make consumers to be sensitive about pirating and adhere to licencing agreements provided during the process of installation (Bagchi, Kallol & Cerveny 2006). Ethical training should be conducted to educate the public on the unethical practice that is pirating. Users who pirate software because it is victimless will view it as unethical and stop it. Conclusion Software piracy is a major problem that hinders innovation in the IT industry and stagnates the general economy. Types of pirating include; mischanneling, endues copying, online piracy and counterfeiting. Users may view pirating as ethical or unethical based on their attitude, prices of the programs or frequency of use. Reasons given for piracy include: high prices of software, piracy being victimless, benefits of pirated software and low risk of detection among others. Civil and criminal legal actions are available against offenders. Penalties imposed include damages, heavy fines, imprisonment or a combination of these. The proposed solutions to the problem of piracy include ethical training and public awareness of dangers of pirating. Legal action can be taken against offenders. Lowering the process and prices of software will encourage people to obtain licences. References Bagchi, Kallol, Peeter Kirs. ve Robert Cerveny 2006, ‘Global software piracy: can economic factors alone explain the trend’? Communications of the ACM, 49, 6, 70-75. Cronan, Timothy P. ve Suleiman Al-Rafee2008, ‘Factors that Influence the Intention to Pirate Software and Media’, Journal of Business Ethics, 78, 527–545. Marron, D. B., & Steel, D. G 2000, ‘Which countries protect intellectual property? The case of software piracY’, Economic inquiry, 38(2), 159-174. Gopal, R. D., & Sanders 1997, ‘Preventive and deterrent controls for software piracy’, Journal of Management Information Systems, 29-47. Read More