What Is Software Piracy?

By Jackie Lohrey

The definition of software piracy is the "unauthorized copying or distribution of copyrighted software." While this definition may sound simple, its impact and affect are anything but. In 2008, worldwide software piracy rates rose to 41 percent, with losses estimated at $50.2 billion, according to a study by the Business Software Alliance.


Whether you purchase software from a retail store or download installation files from an Internet site, a user license, not the CD or possession of installation files, is what gives you the right to install and use the software. The license you purchase defines specific terms and conditions regarding legal use of the software, such as how many computers you may install the software on, or whether you can transfer the software to another computer. Any actions you take outside the limits of the license constitute software piracy.


Software piracy can take many forms, but one of the most common includes counterfeiting, or a licensed user making duplicate copies of the software to sell or give away, with or without providing codes to unlicensed users as a work-around to anti-piracy features. Other piracy methods include violating a license by installing software on multiple computers, software overuse on a network and students who purchase education versions of software for family members or friends.


The impact software piracy has on software companies goes beyond the dollars and cents included in lost revenues. Software piracy costs in terms of jobs. If worldwide software piracy levels fell by 10 points over a four-year span, 600,000 jobs would become available in the IT industry, according to a January 2008 report issued by the International Data Corporation. The same study reports this 10-point reduction in software piracy levels would raise an additional $24 billion in worldwide government revenues without increasing taxes.


Buying or using pirated software has many inherent risks, not the least of which is facing legal charges. Pirated software carries with it no guarantee the program will function as it should, and in cases where it does not you can expect no support, technical or otherwise. You will not be eligible for upgrades, updates or security patches. In addition, you run the risk of damaging your reputation, as criminal prosecution becomes public record.


Software piracy is a crime. Copyright infringement laws make no distinction between one or 100 illegally copied CDs or the unauthorized sale of software installation files. If caught, you can face fines of $150,000 for each software title copied, and face criminal prosecution, fines of up to $250,000 and/or five years in jail. In addition, a business is responsible for the actions of its employees, whether it is aware of what takes place or not.