What is Software Piracy?

When a software application is purchased, the customer most often does not purchase unlimited rights with it. Rather, for each license purchased, the customer owns the right to install and use it on a single machine. Any use beyond that is a form of software piracy.

Software piracy is defined as the illegal distribution and/or reproduction of software applications for business or personal use. Whether software piracy is deliberate or not, it is still illegal and punishable by law. It includes:

• Alteration of the software for resale under a different product name
• Distribution of software that was bought for different purposes, such as educational and or demo software
• Making physical or electronic copies of the software for distribution to non-licensed users whether this is done for a profit or not
• Installing the software on more machines than one has licenses for

Legal aspects of software piracy

In Canada, individuals and companies may face prosecution under both civil and criminal law. A civil action may result in damage awards (including all profits) or statutory damages of $20,000 or more per pirated copy. Criminal penalties include fines up to $1,000,000 and/or jail terms up to 5 years.

In the United States penalties range from prison terms up to five years and fines of US$250,000. In addition civil litigation can result in awards of lost profits or damages of up to US$150,000 per illegal copy.

Most countries have similar software piracy laws.

Other Drawbacks of Software Piracy

Lost profits due to software piracy are estimated at around $18billion annually. The Business Software Alliance puts the global piracy rate at 36%. So who suffers?

• Companies and their employees - More profits coming in usually results in more jobs
• Taxpayers - Less profits for companies translates to less tax revenue for every country that software is sold in
• Software users - Often, pirated software is subject to viruses, or quality problems. Users of pirated software are not entitled to support of any kind, including upgrades, service patches or security fixes.

More: How to Avoid Piracy