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Software makers run afoul of piracy on high (tech) seas

By Craig SavoyeStaff writer of The Christian Science Monitor / February 2, 1983



Boston

A new breed of ''push-button pirates'' are busy plying their plunderous trade. But their modus operandi is not the high seas, it's high-tech. The new villains aren't sword-swinging marauders, either, but the owners of personal computers - both consumers and business users - that are innocently or intentionally copying original software and selling it to friends or using it for personal profit.

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Software is the fuel that drives the engine of a computer, the instructions that link man and machine. As the sales of personal computers have boomed, so has the demand for computer programs that equip the machine to do everything from playing electronic games to doing word processing and financial analysis.

The personal computer market has blossomed from nonexistence six years ago into a $6.1 billion-a-year industry. The darker side of the business - the piracy - has mirrored that growth, and is proving harder to shake off than a shadow.

Piracy has taken a bite - some would say a chunk - out of the revenues of the mostly young companies that make up the growing field of software manufacture. Analysts estimate that anywhere from 20 to 30 percent or more of their revenues is lost to bootleggers.

One leading manufacturer of software for video games estimates that his programs have a life expectancy of about six months. After that, pirated copies become so prevalent that no one will pay retail prices to obtain an original.

For those owning personal computers or contemplating their purchase, the piracy could lead at the very least to higher prices for software. More likely, the image of the fledgling industry could be tarnished by a flood of pirated programs of dubious quality and further confuse a market already jammed with dozens of competing companies.

The record industry has been singing a baleful tune about piracy for years, but computer software makers believe their own problem will be even harder to flush out. That's because most of the piracy is done by individuals in their homes or by companies, rather than by dealers who make a business out of selling pirated programs.

Typically, businesses and large institutions buy one computer program and then make copies with a push-button process that can be accomplished in seconds on a blank diskette. Says Clive Smith, a senior analyst for the Yankee Group, a Boston high-technology consulting firm:

''No one wants to talk about it, but it's done, usually on an escalating basis. A university, for example, will buy a third or a fourth terminal and make additional copies of programs on hand, rather than spending the money to buy another original.''

Software manufacturers which have taken their complaints to court have been swept into a legal labyrinth. ''The law clearly protects written programs,'' says Gervaise Davis, a California lawyer specializing in computer software matters. ''The problem is, once the program is inserted into the computer and is reduced to a series of numbers only the computer can understand, is it still protected?''

So far, half a dozen judges in separate cases have said yes, and granted injunctions against bootleggers. And in a landmark decision in Europe, a West German court found that two companies in that country were illegally copying California-based Visicorp's VisiCalc program, a leading business-oriented program for personal computers. It was the first acknowledgment by a West German court that computer programs should be granted copyright protection.

But a case in Philadelphia is causing concern throughout the industry. Apple Computer has charged that a rival is selling copies of its software programs. The competing company readily admits to the action but claims it is legally entitled to do so. In this case the judge has so far refused to grant an injunction.

In addition to legal remedies, manufacturers are exploring technological methods for foiling the bandits. A number of companies have fitted their programs with encrypting codes that make it difficult to make electronic copies off them. But manufacturers have found this to be an inconvenience to customers, an added expense to themselves, and ineffective.

''You have to understand the nature of computer buffs, who up until the last year or two were the primary market for personal computers,'' one dealer says. ''Putting a code on a program is like slapping them in the face and challenging them to break it. And break them they do.''

''At this point, both technological and legal means of redress are nothing more than holding actions until a better solution presents itself,'' says Mr. Davis.