What is the cost of piracy?

One credible analysis by the Institute for Policy Innovation concludes that global music piracy causes $12.5 billion of economic losses every year, 71,060 U.S. jobs lost, a loss of $2.7 billion in workers' earnings, and a loss of $422 million in tax revenues, $291 million in personal income tax and $131 million in lost corporate income and production taxes.  For copies of the report, please visit www.ipi.org.

The Motion Picture Association of America (MPAA) says piracy costs the U.S. film industry $3.5 billion annually (not including online piracy). The Business Software Alliance says the software industry lost $29 billion to piracy in 2003.


What is the purpose of copyright law?

Copyright law provides an incentive to create software, music, literature and other works by ensuring that the creators of works will be able to reap the financial benefits of the work.


If I am accused of "piracy," what does this mean?

Piracy or copyright infringement is the unlawful copying of software, videogames, movies or MP3s. Copyright law gives a creator of software, music, literature and other works a limited monopoly to reproduce or distribute in the created work. If you are accused of piracy, then someone is claiming that you have violated their copyright by copying part or all of their work without authorization, or have enabled other people to make such copies.


Is all copying piracy?

No. Copyright gives the owner exclusive rights to reproduce, adapt, publicly distribute, perform and display their work. Nonetheless, the law allows "fair use" of copyrighted material. Fair use permits, in certain circumstances, the use or copying of all or a portion of a copyrighted work without the permission of the owner. Copyrighted works may be used for purposes such as criticism, comment, news reporting, teaching, scholarship, or research. To decide whether a use is "fair use" or not, courts consider, in part:

(1) the purpose and character of the use (including whether such use is of a commercial nature or is for nonprofit educational purposes);
(2) the nature of the copyrighted work (giving creative works more protection than factual works);
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole (including size and quality- i.e. Does the portion represent the "heart" of the work); and
(4) the effect of the use upon the potential market for or value of the copyrighted work.

Courts balance these factors, placing an emphasis on the fourth, however rulings have been unpredictable. Parody may be protected by fair use where the user is actually making a comment on or criticism of the copyrighted material, even if a profit is made from the use. Still, distributing copyrighted software will rarely be fair use because people will use those copies instead of buying the software from the legitimate vendor.


Why is piracy such a big issue?

This issue is especially important in the digital realm, since digital technology allows perfect copies and easy distribution of some works via P2P or other file sharing networks. That makes it easier for people to make and get copies of songs or videogames, and more difficult for copyright holders (record companies, etc.) to control the works once they are released to the public. This new technology has changed the way content distributors relate with their customers, and law and business models are just trying to catch up.



Why are copyright holders and rights holders concerned about piracy?

Free speech is protected by the U.S. Constitution but so are property rights. Copyright law provides incentives for creating. One of the incentives for creating software, music, literature and other works is being able to reap the financial benefits as the creator. Illegitimate distribution of copies may prevent the copyright holder from benefiting from the sale of legitimate copies of the product. The theory is that significantly fewer people would buy copies from the copyright holder if other copies were available cheaper or for free.


What are the penalties for copyright infringement?

In a civil suit, an infringer may be liable for a copyright owner's actual damages plus any profits made from the infringement. Alternatively, the copyright owner may avoid proving actual damage by electing a statutory damage recovery of up to $30,000 or, where the court determines that the infringement occurred willfully, up to $150,000. The actual amount will be based upon what the court in its discretion considers just. (17 U.S.C. 504)

Violation of copyright law is also considered a federal crime when done willfully with an intent to profit. Criminal penalties include up to ten years imprisonment depending on the nature of the violation. (No Electronic Theft Act, 18 U.S.C. 2319)


I operate a site but I never actually upload or download copyrighted materials. Could I be liable for what visitors to my site do?

You could be liable for copyright infringement. Under certain circumstances, bulletin board operators and webmasters can be subject to both civil and criminal liability for contributory or vicarious copyright infringement when unauthorized copies of software (or the direct means to obtain such software) are found on their sites. If you know that people are using your site to find warez or cracked video games, you may have an obligation to do something about it, particularly if you benefit financially in any way, or are able to control the unlawful copying. You can protect yourself by complying with the DMCA Safe Harbor.


What is vicarious liability?

Vicarious liability, a form of indirect copyright infringement, is found where an operator has

(1) the right and ability to control users and

(2) a direct financial benefit from allowing their acts of piracy. User agreements or Acceptable Use Policies may be evidence of an operator's authority over users.

The financial benefit may include a subscription fee, advertising revenues, or even a bartered exchange for other copyrighted. Under the doctrine of vicarious liability, you may be found liable even if you do not have specific knowledge of infringing acts occurring on your site.


What is contributory infringement?

The other form of indirect infringement, contributory infringement, requires

(1) knowledge of the infringing activity and

(2) a material contribution -- actual assistance or inducement -- to the alleged piracy.

Posting access codes from authorized copies of software, serial numbers, or other tools to assist in accessing such software may subject you to liability. Providing a forum for uploading and downloading any copyrighted file or cracker utility may also be contributory infringement. Even though you may not actually make software directly available on your site, providing assistance (or supporting a forum in which others may provide assistance) in locating unauthorized copies of software, links to download sites, server space, or support for sites that do the above may contributorily infringe.

To succeed on a contributory infringement claim, the copyright owner must show that the webmaster or service provider actually knew or should have known of the infringing activity.


Am I protected by Digital Millennium Copyright Act's Safe Harbor clauses?

You might be if you follow the DMCA's strict requirements, though different courts have disagreed on how to apply the protections. The DMCA, in the Safe Harbor provisions of 17 U.S.C. 512, limits the liability of "online service providers" (OSPs) for copyright infringement by their users. Though some debate remains over who qualifies as an OSP, the rule's history suggests that website and bulletin board operators qualify for its protections. The Safe Harbors apply to:

1. Storage of material on a system at a user's request. (e.g. pirated software, serial numbers or cracker utilities posted on message boards or in chat rooms)

2. Referral to other online resources. (e.g. linking to other sites that make infringing material available)

3. Caching of online materials from other sites. (e.g. temporary storage of other web pages on one's own server)

4. Acting as a conduit between users. (e.g. automatic delivery of e-mail between users)

In order to be protected for storage and linking (1 and 2, above), you must:

i. Lack actual knowledge and immediately remove or block access to the material when becoming aware of the infringement
ii. Not benefit financially from the activity
iii. Comply with the notice and takedown provisions and set up an agent to deal with complaints in accordance with the Act

In order to be protected for acting as a conduit (4, above):

i. A person other than the OSP must initiate the transmission
ii. The process must happen automatically, without any selection or modification of material or recipients by the OSP
iii. No copies of the material should be kept longer than necessary by the OSP


Can I copy or distribute software that is out of print and has been abandoned for years?

The right to "Abandonware" is largely a myth. Even a title that seems to be abandoned or in the public domain is probably still protected by copyright, which (for works created after 1978, which includes most relevant software) lasts 75 years from the date of first publication, as specified in 17 U.S.C. ?302(c). Unlike trademarks which may be abandoned when not in use, copyright owners are not required to actively market works to the public, offer technical support, or even stay in business in order to keep their protection.


Am I allowed to have 24 hours of "sampling" of software in order to make a purchase decision?

No, this has no  basis in U.S. Copyright law. Test periods are allowed only with explicit permission from a copyright owner as in licensed trial versions of software. Because sampling involves making a copy of the work, one of the rights explicitly reserved to copyright owners in 501(a) of the Copyright Act, it is unlawful.


Isn't sending my friend a music file from a CD I already own just like loaning her the physical CD?

Loaning someone your CD or even selling (but not renting) it is protected by U.S. copyright law since no additional copies are being made. However, when you send a music file to someone else, you retain your copy and an additional copy is made. This copying may violate the exclusive rights of copyright holders.


Am I allowed to make a backup copy of my software?

Yes, but only for specifically authorized archival purposes, as specified in 17 U.S.C. 117(2). This does not authorize sharing or selling of backup copies. The rule allows transfer to another person only with the explicit authorization of the copyright owner and only if he original copy is transferred. Backups for individual use and those considered ?an essential step? in using the software with an individual's computer are also authorized.


What if the alleged infringement happens outside of the U.S.?

 International rules allow the U.S. to enforce its copyright rules under local laws in over 100 participating nations.


I didn't know that what I was doing could be illegal. Am I safe from punishment?

No. Copyright infringement actions do not require that you actually knew that the files were protected by copyright or that your use of the files violated federal law. Claims of ignorance cannot be used as a defense to direct copyright infringement, Lack of knowledge, is, however, a defense to contributory infringement. 


Does a cease and desist letter recipient have a duty to remove materials alleged to infringe copyright?

The cease and desist letter gives its recipient ("you") notice that someone is claiming something you've done or something on your site infringes a copyright. If the materials that are the subject of the notice are in fact infringing, then you do have a duty to remove them, although there may be statutory provisions (DMCA Safe Harbor) that protect you from a lawsuit if the materials were posted by someone else. You may have to give the poster notice of the complaint.

If you do not believe that the materials are infringing, or if you believe that you are making fair use of the materials, you may choose to take the risk of not removing the materials, but a lawsuit might follow in which the complainer tries to prove they they are right and you are wrong. If the accuser obtains a court order, then you must take down the materials.

Can my ISP police copyright infringement?

Notice that this letter comes from an Internet Service Provider (ISP) and not from a copyright owner. The Digital Millenium Copyright Act both protects ISPs from copyright liability (leaving the end user with that liability) and requires ISPs to participiate in a "takedown" process when copyright owners claim infriging use. See the FAQs associated with this notice for more information.


What are "punitive damages"?

Punitive damages are damages intended to punish and deter similar wrongful conduct rather than merely compensate for losses suffered by the plaintiff (called compensatory damages). Punitive damages are authorized when the defendant acted with recklessness, malice, or deceit. As for the amount of punitive damages awardable, the Supreme Court has held that three guidelines help determine whether a punitive-damages award violates constitutional due process:

(1) the reprehensibility of the conduct being punished;

(2) the reasonableness of the relationship between the harm and the award; and

(3) the difference between the award and the civil penalties authorized in comparable cases.

Is it legal to install an OEM (original equipment manufacturer) version of software on a computer other than the one on which the software came?

No. OEM software agreements specifically cover software that is pre-loaded onto hardware for sale; it is a violation of the license with the software publisher to sell this software without the hardware.


Can I install work software at home if instructed to do so by my supervisor?

That depends. Some licenses permit the installation of two copies: one at work, one on a home or traveling (e.g. laptop computer) — normally with the note that each copy is to be used by the same person and that the two are not to be used simultaneously.


Can I purchase a single licensed copy of a piece of software and load it onto several machines?

No. This is known as "softlifting" and is not allowed according to the terms of most license agreements. This means you are not allowed to "share" software with friends or co-workers, nor install software on home/laptop computers unless the license specifically allows for secondary use.


Can I rent a piece of software from a store?

No. U.S. copyright law prohibits the rental, leasing, or lending of software without the express permission of the software publisher.


Can I legally copy my friends' software?

No. Software is protected by federal copyright law, which says that you can't make additional copies of software without the permission of the software publisher.



If I was instructed by my employer to install illegal software onto company computers, who could be held liable?

Under "vicarious liability" stipulations of the U.S. Copyright Act, an employer is liable for acts committed by its employees when those acts are within the scope of their employment duties. (Vicarious liability is when one person is liable for the negligent actions of another person, even though the first person was not directly responsible for the injury. For instance, a parent sometimes can be vicariously liable for the harmful acts of a child, and an employer sometimes can be vicariously liable for the acts of a worker.)

Another theory of liability is the doctrine of contributory copyright infringement, whereby a party who does not do an infringing act but who aids or encourages it is liable for the infringement. If you were instructed by your employer to install software on your company's computer(s) in violation of — or in excess of — the software licenses, you may want to inform your employer of their obligations under the copyright law. If your employer is not responsive or you choose not to inform your employer of the violation, you should report the violation to Software and Information Industry Association (SIIA), at www.siia.net/piracy/report.asp, or the Business Software Alliance (BSA), at www.bsa.org/usa/report/.



What are the maximum criminal penalties for copyright infringement?

In the U.S., an infringer could be fined up to $250,000 and face a jail term of up to five years.


Do people actually go to jail for copyright infringement?




What is counterfeit software? How can I tell if it is counterfeit?

Counterfeit software is hard-copy software that has been reproduced by someone other than an authorized distributor. It may look just like the real thing, but it is often pretty easy to identify as not the real McCoy. If you are offered extremely cheap software, look for some of these warning signs that you might be buying or receiving pirated products:

  • The software lacks proper documentation.
  • The manual is photocopied or missing.
  • The software does not look authentic. For example, the software, product packaging, or accompanying materials are of inferior quality or include handwritten labels.
  • The serial number/CD key is printed on the CD, sleeve, or jewel case.
  • One CD contains multiple applications (especially if they are from different companies).
  • The price of the software is far below retail price.



Who benefits from copyright law?

Everyone benefits. By protecting the investment of computer software companies in software development, copyright law encourages software companies to invest in coming up with new, creative, and innovative products. These companies dedicate large portions of their earnings to the creation of new software products, and need to gain a fair return on their investment if they are to continue the cycle. The creative teams who develop the software — programmers, writers, graphic artists, and others — can only receive fair compensation for their efforts if the software is commercially viable. Without the protection given by our copyright laws, they would be unable to produce the valuable programs that have become so important to our daily lives: educational software that teaches us much-needed skills; business software that allows us to save time, effort, and money; and entertainment and personal productivity software that enhances leisure time.


What do I get out of purchasing my own software?

When you purchase authorized copies of software programs, you may receive user guides and tutorials, quick reference cards, the opportunity to purchase upgrades, and technical support from the software publishers. With authentic Adobe software, your programs are safe, stable, and backed by a partner you can trust. For most software programs, you can read about user benefits in the registration brochure or upgrade flyer in the product box.


What are the risks of buying or using pirated software?

Buying and using pirated software is risky for corporate and individual users. Aside from the legal and ethical consequences of using software for which the developer does not receive compensation, your organization forfeits some practical benefits. Those who use pirated software:

  • Increase the chances of buying software that does not function correctly or may fail completely
  • Forfeit access to customer support, upgrades, technical documentation, training, and bug fixes
  • Have no warranty to protect their investment
  • Increase their risk of exposure to viruses, spyware, or adware that can destroy (or, worse, publish to criminals) valuable data
  • May be subject to significant fines for copyright infringement
  • Risk damage to their reputation and good name and, in the case of organizations, negative publicity that could cause irreparable harm to the business


What exactly does the law say about copying software?

The law says that anyone who purchases a copy of software must adhere to the conditions of the user agreement that the software publisher associates with it. Companies and individuals who use unauthorized software may face not only a civil suit for damages and other relief, but also criminal liability, including fines and jail terms.


What are the penalties for having more software programs loaded onto company computers than the company has licenses?

Although the circumstances are different, having too few licenses is treated by the law in much the same way as having no licenses. Under federal copyright law, the infringing user may be liable for up to US$150,000 for each software program infringed. The law also permits the software publisher to recover court costs and attorneys' fees it spends to sue the infringer and to destroy all the illegal software found at the company. In cases of willful piracy, criminal penalties may also be assessed against the company.