Copyright Protection Campiagn Fact Sheet ---------------------------------------------------------------------------- May 1995 ---------------------------------------------------------------------------- United States Statistics The industry's public awareness and enforcement efforts have reduced the rate of piracy from 48% of all units in use in 1989 to 25% in 1994, a 48% reduction. The US is the largest personal computer software market in the world but it also the world's leader in piracy losses, with losses of $1.04 billion in 1994. SPA estimates that 25% of business software in use in 1994 was pirated. International Statistics (1994) China, Russia and Thailand were all cited in SPA's Section 301 filing with the US Trade Representative. China had a loss of $187 million to software piracy which constitutes a piracy rate of 98%. Russia had a loss of $144 million to software piracy which constitutes a piracy rate of 95%. Thailand had a loss of $55 million to software piracy which constitutes a piracy rate of 92%. Asia/Pacific Rim piracy losses totaled $2.03 billion in 1994 with a piracy rate of 62%. Western Europe piracy losses were at $1.65 billion in 1994 with a piracy rate of 45%. General Statistics (1994) Revenue from business application software totaled $8 billion, while revenue lost to software piracy by US publishers was $8.1billion. Estimates show that over 40% of US software company revenues are generated overseas. Yet nearly 85% of the industry's piracy losses occur outside US borders. Most other countries of the world purchase fewer than 4 business applications for every PC, with some countries purchasing fewer than 1. The trend is positive, though: in 1991, only the US and Canada purchased as many as 2 applications per PC. In 1994, 12 countries purchased more than 2, and 10 countries purchased more than 3 applications per PC. If users outside North America reached US levels of 5.5 applications per computer, unit sales would more than double, generating an additional $9.5 billion in revenues. There is not a direct relationship between the high price of software and the amount of piracy. While the average price for business applications fell by more than 75% in Europe from 1991 to 1994, piracy losses declined by less than half that amount. The Copyright Law The federal copyright law states that it is illegal to make a copy of a piece of software for any reason other than as a back-up without the permission of the copyright holder. Civil penalties for companies/individuals who break this law can be as high as $100,000 for each copyright infringement. As of October 1992, commercial piracy of software is a felony offense (Public Law 102-561) under which penalties include prison terms of up to 5 years (10 for repeat offenders) and fines up to $250,000. Software piracy presents a unique problem for the industry in that there is virtually no degeneration in quality from copy to copy. Few other industries lose as much revenue to theft. This ultimately curtails the industry's competitiveness, as developers are unable to quickly recover development costs and thereby fund new development efforts. SPA Actions Most SPA investigations begin with a call to the anti-piracy hotline (1-800-388-7478). In response, the SPA conducts a thorough investigation before proceeding further. SPA has 7 full-time staff members assigned to investigate each report and prepare cases for legal action. SPA's response can take one of the following forms: * Cease and desist letters * Corporate audits (in lieu of litigation) or * Litigation In 1994, the hotline received approximately 25-30 calls per day. Based on these leads, the SPA took action against 447 organizations (including 197 audits and lawsuits and 250 cease & desist letters. As a result of our enforcement actions to date, recoveries from all anti-piracy actions total nearly $14 million. In both 1993 and 1994, the SPA received five settlements of more than $100,000 each in audit actions. When warranted, the SPA will apply to federal judges for permission to conduct ex parte searches (raids) of defendants' computers. Such searches are used to prevent the destruction of evidence pending trial. The SPA works closely with the FBI and has also written an enforcement manual for the FBI to help them investigate pirate bulletin board systems. Settlements Largest public settlement to date was in May 1991, when the SPA won a lawsuit against Parametrix, an environmental engineering firm, totaling $350,000 in penalties plus attorney's fees. Largest settlement against educational institution was with University of Oregon. It was the first infringement suit brought against a public higher education institution and the University paid $130,000 in penalties and agreed to host a national conference on copyright law and software use. Largest settlement to date from a corporate audit letter has been $498,000. March 9, 1995, the US District Court of Massachusetts sentenced Richard Kenadek, Davy Jones Locker sysop, to 24 months probation and 6 months home confinement. For the first three months, Mr. Kenadek will be monitored by an electronic bracelet. He was also fined $2,000. On March 28, 1995, a federal court ruled in favor of the SPA members in a civil copyright infringement suit against Global Software & Accessories, Inc. for unauthorized rental of computer software. The lawsuit was the first case to test the Computer Rental Amendments Act of 1990, which prohibited the unauthorized rental of software. ---------------------------------------------------------------------------- SPA Anti-Piracy [Image] ---------------------------------------------------------------------------- © 1996 Software Publishers Association. All Rights Reserved.