With the imminent demise of Pirate Bay, one of the world’s largest pirate sites, and the likely imprisonment of its leaders, media attention is focused on the issue of software piracy in a big way.  But for me the most important headlines of last week didn’t come from InformationWeek, CNET, or the Reg’s coverage of events in Stockholm. It came from Fokliftaction News, the unheralded voice of the remarkably obscure forklift industry.

When my brethren in the media write about piracy, the story is about the theft of OS’s, popular games, movies, and music. The result is a misperception that software piracy is a problem mostly of improperly supervised juvenile delinquents seeking gratuitous entertainment online. This is not the case.

The BSA reported $47 billion of software was stolen in 2007 worldwide. This includes a myriad of business applications, and it includes our friends from Forkliftaction.com

As their news story reports, “there is always a risk with pirated software that the information is tainted or the diagnostics will be incorrect. ‘This potentially puts people’s lives at risk. It could be fatal if people think a truck is repaired and it is not – that is the worst case scenario.” It also puts jobs at risk as the rightful sellers of the software lose the stolen revenue and cannot support current employees. This means more failed businesses and more lost jobs.

The number of professional software pirates targeting business applications is growing every day. They are looking for every type of application across every price point and industry. Most victims of crimes felt secure with an “it-will-never-happen-to-me” belief… right up to the point where they went from being naïve to being a victim.

Many organized crime networks engaged in software piracy will try to “fly below the radar” by pirating applications in lesser known vertical markets. A criminal knows it is easiest to steal where there is less protection and fewer are watching. So ask not for whom the pirates troll, they troll for thee, even if all you develop is simply forklift software.

[See Pirate Software – Go Directly to Jail, Part 1 here]

A profoundly insightful analysis of our criminal justice system was once extolled by the great agri-proponent and western philosopher Nelson (in harmony with colleague Keith) in their hit song Beer for My Horses:

Grandpappy told my pappy back in my day son,
A man had to answer for the wicked that he done,
Take all the rope in Texas find a tall oak tree, Round up all of them bad boys,
hang them high in the street, for all the people to see

Truly, an efficient justice system that serves the interest of its citizenry must rely heavily on prosecution and punishment as a deterrent to criminal activity.  Maybe hanging is too extreme, but it is still always wonderful to see software pirates go to prison.  

Thanks to the diligent efforts of the Department of Justice, Timothy Dunaway of Wichita Falls, Texas was captured and sentenced to 41 months in prison. The 24-year old plead guilty to selling counterfeit software with a retail value in excess of $1 million. Dunaway was also ordered to pay more than $810,000 in restitution and forfeit his ill-gotten gains including a Ferrari and a Rolex. 

In addition to celebrating the outcome of this case, software developers and publishers can gain some interesting insights into how pirates operate. From the DOJ press release:

From July 2004 through May 2008, Dunaway operated approximately 40 Web sites that sold a large volume of downloadable counterfeit software without authorization from the copyright owners. Dunaway admitted he operated computer servers in Vienna, Austria and Malaysia. Agents of U.S. Immigration and Customs Enforcement (ICE), working in cooperation with foreign law enforcement, seized Dunaway's international computer servers. According to court documents, Dunaway promoted his illicit scheme by purchasing advertising for his Web sites from major Internet search engines. Throughout the entire course of the scheme, the defendant processed more than $800,000 dollars through credit card merchant accounts under his control  

Dunaway proves again that software piracy is not a victimless crime. The million dollars that Dunaway bought his Ferrari and Rolex with rightfully belonged to the software developers and publishers he stole from.

More simply put, the money that was spent by people that wanted to pay for the software would have easily covered the salaries for several programmers. Multiply this by the countless incidents of software piracy every year and you begin to understand the need for better and more widespread use of software DRM and more aggressive pursuit of the worst software pirates. It means jobs for programmers instead of Ferraris for pirates.

This week FAST IiS came out strongly against the UK Government’s Digital Britain plan. One of my favorite pubs presented the following coverage: 

[From The Register] Software body slams uk.gov's 'special treatment' of music biz

The Government's Digital Britain plan is a failure that gives favourable treatment to the music business and props up failed business models, a software trade body has said.

The Federation Against Software Theft and Investors in Software (FAST IiS), which promotes the legitimate use of software, has launched a stinging attack on the Digital Britain report and on the way the music industry has approached the threat of digital piracy.

“The entertainment sector appear to have lobbied the Government to consider establishing a ‘pirates tax’ on all of us as well as yet another quango to oversee it, meaning more cost, and more hassle," said FAST IiS chief executive John Lovelock.

Without commenting on FAST IiS’ motivations or intentions, which others have done extensively, let’s have a fast look at just a coulple of software piracy related elements of the Digital Britain proposal and speculate on how they might play here in the states.

Imposing a tax on content providers – one on the kookiest ideas ever. It would bring endless political wrangling over who had to pay how much and on what, and it also makes no sense. Should we start charging little old ladies for protection against street hoods or levy a special tax on local merchants for protection from thugs. In the states, this is called a shakedown. Piracy already imposes enough of a penalty on software developers, why hit this unfortunate class of victims twice.

Require ISPs to provide notice to recipients of pirated materials and provide data under a court order – Makes perfect sense. The notice letter is mostly silly and the data collection is perfectly legal. It helps if we think of the average ISP as an operator of a giant electronic toll road. On the roadways, some people violate the law; they speed, they drink, they litter. It is not the job of the toll operator to restrict access to the highway or to police the roadway in anyway. They must however share user information (toll tag data and toll booth pictures) if ordered by a court. The legal precedent is already established so why not treat ISPs in the same manner.

I wish we could eliminate all crime, but we never will. We can reduce it though and it begins with property owners, namely software publishers, taking necessary measures to protect their sources of revenue while still making their product easy to consume. Proper use of DRM technology is a great starting place.  Let's keep a safe distance from the politicians, they're doing a fine job of mucking things up elsewhere. 

Yesterday brought wonderful news of another victory in the ongoing battle against software piracy. In Oklahoma, Daniel Johnson was sentenced to nearly four years in prison in exchange for his guilty plea to charges of copyright infringement and piracy. Johnson sold pirated copies of Microsoft programs. In addition to his prison term, Johnson was ordered by the court to pay $550,000 in restitution and to forfeit diamond earrings and $150K+ in cash.

To my pro-piracy colleagues, this is a classic story of software piracy and runs counter to all of the overused and meaningless justifications for software piracy

• Johnson wasn’t doing this because his customers couldn’t get the features they needed
• He wasn’t helping Microsoft get feedback about their product
• He wasn’t helping identify needed features in Microsoft’s programs
• He wasn’t expanding Microsoft’s market for new customers
• He wasn’t making a noble political stand against poorly implemented DRM

He was simply stealing to buy some bling.

In their story, Alleged software counterfeiters indicted, NetworkWorld reports on another case being pursued by the SIIA and the Department of Justice where  a pair of software pirates are facing up to 20 years in prison if convicted for setting up several merchant accounts on eBay to sell their pirated wares. As the SIIA describes it, “...they acquired software duplicating equipment to mass produce and label counterfeit copies cloned from legitimate brand name products.” One of the accused is still on the run from federal authorities. We will keep you updated as this desperate-duo are brought to justice.

Lessons from the frontline – there are bad people in the world – protect your software.

When I was a little boy, the worst thing you could call someone without using a swear word was fink. Some adjectives usually preceded the f-word if it was to be delivered properly, and it was always said with a sneer or a scowl. I am told that this particular insult still carries significant implications on the school yard as well as the prison yard, although I no longer spend much time on either.

Recently, several respected news sources worked to perpetuate this juvenile mentality. In a post by Chris Gaither in the LA Times, “Strapped for cash? Report your company’s software piracy” and in a piece by Kelly Fiveash in Channel Register, “Turn in workmates, make fat dollar a few quid”, both launched attacks on the practice of employees blowing the whistle on corporate misconduct.  In this instance, the criminal act was theft, also known to us in the industry as software piracy.

So, in praise of rats, finks, squealers and snitches everywhere, I offer a short list of my favorite whistleblowers who have acted courageously to expose corporate wrongdoing.

-          Jeffery Wigan, who, to use the language of Ms. Fiveash, was willing to snitch on his bosses and colleagues  in big tobacco and expose the hidden practice of adding carcinogens to cigarettes (How many lives do you suppose this giant rat has saved?).

-          Cynthia Cooper, who worked in secret to discover and expose the $3.8 billion fraud at Worldcom (Time Magazine named her one of their “People of the Year” for 2002).

-          Christoph Meili, the only Swiss national ever to be granted asylum in the US, who revealed that his employer, a major bank, was destroying records of deposits from Holocaust victims, assets the bank was required to give to heirs of the victims.

Perhaps some people report crimes solely for the cash reward. The more noble part of me believes that most take action because they have a proper sense of right and wrong, because they have an irrepressible feeling of social responsibility, or because they won’t allow themselves to become the type of person who sits on their hands while a crime is committed.

Or maybe in the case of reporting software piracy, it is because they were offended by an employer that required them to use pirated software and forced them to be an unwillingly participant in the criminal act. Yes, perhaps this is also why such a large percentage of the finks refuse any monetary reward for their actions.

The Frank Serpico’s of the world don’t really care what names they're called. I prefer the simple term hero.