Intellectual Property Crimes with Special Reference to

Software Piracy
Mudit Nema*

Student, Master of Science in Cyber Law & Information Security (MSCLIS)

National Law Institute University Bhopal (M.P) (INDIA)

Abstract: In this paper the various aspects and issues related to software piracy and their impact on the society as well as on the world‟s
economy has been discussed in it, and also in this paper I am also trying to discuss the law, punishment, and case related to software piracy
in India and in US. Software piracy is a global issue and it is also a victimless crime people have to be more aware about its issues and its
negative impact on society.

Key terms: Copyright issues, Piracy rate

1. Introduction

Intellectual Property Crimes (IP) crimes increasing day by day in today‟s world we already see that there is serious bleach of copyright act
because there is no restriction for the content they can be easily copied and transmitted over the internet. Software piracy is one of those
crimes which comes under Intellectual Property crimes in this Copyright Act has been infringes, the Copyright Act is made to protect the
right of the creator or the owner of that digital content. Software piracy affects human life in more than one way, firstly the revenue of the
software is lost so the first loss for economy and second it affect the IT sector, because of software piracy less amount of jobs are available.
And the third reason is that the software pricing, because of software piracy the licensed software were get very less amount to be sold and
because of that the licensed software pricing is high. Most of the people don‟t aware all of these issues regarding the software piracy.

By using the pirated software the user who is using it is in real danger because they were not safe regarding to their data
any one can easily attack the pirated software and introduces virus or malware in that system. And now there is Internet were there it an
easiest place to download the pirated software. Most of the companies were allow downloading their software online, though it is an easy
and faster way to download any software over the use of internet but these things also increased the internet piracy. The internet piracy has
different forms such as downloading or uploading a illegal site or attaching a software copy via email through FTP (File Transfer
Protocol). Sometimes people have less understanding and distinction about the freeware, shareware and commercial software.

2. What is Software?

Software is a collection of various type of logical programs through which the computer system and other electronic devices is being
operated. We can also say that the software is the souls of computer system by which we can operate it, by using the simple commands.
Software is known as the variable part of the computer system where as the hardware known as the invariable part. This includes programs
produced by companies of commercial software (e.g., operating systems, utility programs, applications) as well as shareware, proprietary
software created by an organization for internal use, and software produced by individuals. For all such software, copyright protection is
available if desired.

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 2.1 What is Software Piracy?

The dictionary meaning of the word Piracy is that unauthorized use or reproduction of another‟s work, or in other words „illegal copying,
distribution, or use‟ it affect „Piracy is a Crime‟ and it is considered as stealing same as like shoplifting or burglary. By using the pirated
software each pirated software take away company‟s profit. The history of the piracy was starts in 1960. In early 1960 there were
mainframe systems and if any person buys that mainframe system with that system computer programs were freely distributed no other
extra charges to pay. After that in the late 1960 the computer programs were distributed separately from the required hardware, after the
separately distribution of software begins the illegal use of unlicensed software starts and this gives the birth to software piracy.

Most of the time people don‟t realize or don‟t think that when they purchase the software they are actually purchasing the license to use
not the actual software and most of the people don‟t read the license agreement of that software in which it tells you how many time you
can install it if you make more than the license prescribed copies than your are pirating the software. This clearly shows that the lack of
knowledge is being about the use of software. To calculate the piracy rate there is a formula is being used by the BSA (Business Software
Alliance) i.e.

Unlicensed Software Units

= 𝐏𝐢𝐫𝐚𝐜𝐲 𝐑𝐚𝐭𝐞
Total Software Units Installed

Some facts that you should know about piracy:

 Over the world more than half approx 57% personal computer user uses pirated software.
 In US 25% of the commercial software were illegal.
 In 1999 software market lost $3.2 Billion in piracy.
 And in 2011 only in Asia Pacific the total software piracy rate was 60% and its commercial value of pirated software was $
20,988 Million.
 In 2011 BRIC1 countries has 70% piracy rate and its commercial value of pirated software was $17,907 Million
 In 2011 total worldwide software piracy rate was 42% and commercial value of pirated software was $63,456 Million.

3. Software Piracy in India

In 2011 the annual survey of BSA (Business Software Alliance) in which 63% of the Indian user were uses the pirated software and the
commercial value of that pirated software was $2,930 Millions. This clearly means that out of ten peoples six are using the pirated
software. Software piracy affect the Indian economy as well an estimated cost that the Indian Government lost the revenue was $866
million which was in taxes in 2009 to software piracy. Software piracy comes in four common forms.

 End User Piracy: In this when the user of the software install that software on more machines then the license agreement is
prescribed.
 Hard Disk Loading: In this the computer dealer installs pirated copies of the software onto the computer according to their sale.
 Software Counterfeiting: In this the illegal reproduction and the sale of that illegal software which is nearly identical from the
original one.
 Internet Piracy: In this illegal software copy of software is placed by an individual to download it from internet.

1
BRIC countries are Brazil, Russia, India, China

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“People are not aware of the costs of piracy. The ramifications on the economy, IT innovation and job creation within the country due to
buying pirated software are much more than the upfront cost of buying the software legally,” 2 he also said that there were code missing,
patches were not available and open vulnerability in pirated software. And because of all of this the no of hacking cases increasing day by
day.

3.1 Law regarding to Software Piracy in India

The copyrighted software protects under the Indian Copyright Act 1957. An original work is being required to the author to have the
copyright protection in their work. The Copyright Act protects the author work till the author life and continues 60 years after the author
death. In this two main bodies of the government Ministry of Information and Technology and Ministry of Human Resource Development
had played a great role to protect the author‟s original work. And the amendment of Copyright Act 1994 in which the right of the creator or
we can say that the right of the copyright holder, position on rental of software, and the right of the user to create how many backup copies
has been described.

3.2 Punishment for Software Piracy in India

India law prescribed strict punishment for software piracy, Under the Indian Copyright Act the software piracy in India tried under in
Civil/Criminal law. Any person or any company who includes in unauthorized copying, sale, downloading of the software according to the
Copyright Amendment Act 1994 section 63 of this act the punishment for the copyright infringement in which 6 month jail is being
prescribed, this section prescribed the fine also which may upto 2,00,000 rupees or with both. And section 63(B) against whom person or
company who is knowingly using the pirated software all were liable in this section. And section 64 of this Act empowers any police
officer or the rank of sub inspector or above to seize without warrant the illegal copies as well as the material is being using for making
those copies. There were many pirates website available on the web for free download, many auction sites were their which offer
counterfeit all those were punishable under section 120(B) of IPC r/w Sec 63 of the Copyright Act. Section 66 of the IT Act 2000 which
says that all the accused who provides assistance to any person to facilitate access or those who are illegally copying/ downloading the
software are also held liable to pay the damages to the affected party under the section 43 of IT Act 2000.

3.3 Case related to Software Piracy in India

This was a case Microsoft vs. Mr. Yogesh Popat & Others (Defendant) and the jurisdiction of this case was given by the Delhi High Court.
In this case Mr. Yogesh Popat & Other have their business of assembly and sales of computers since 1996 and they were selling computer
loaded with pirated version of Microsoft software. Microsoft placed a trap order via Microsoft employee and the defendant sold the
computer to that employee with the Microsoft pirated software like visual studio 6.0, Microsoft Windows 98 and MS Office 2000. Then
Microsoft files a suit against the defendant. After that the defendant did not come to the court and he himself declare the Ex third party in
that case. Microsoft presents the evidence before the court by the way of affidavit from its employee who is purchased the computer and a
technical expert report who examined the hard disk of that computer. Under the Indian law the copyright holder is entitled to get the
compensation. And any police officer or the rank of sub inspector or above to seize without warrant the illegal copies as well as the
material is being using for making those copies.

2
says Keshav Dhakad, Chairman – BSA India Committee.

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In that case Delhi high court delivers a jurisdiction to pay the Microsoft Rs 20, 00,000 in (US$46500) approx as a compensation which was
the highest damage award in such case in India.

4. Software Piracy in US

In 2005 US lost $6.9 Billion in software piracy and in 2011 the annual survey of BSA (Business Software Alliance) in which 19% of the
US user were uses the pirated software and the commercial value of that pirated software was $10,958 Millions. This shows that out of ten
peoples two are using the pirated software and according to BSA survey in which 25% of the US commercial software are pirated. US
government has also a great loss in their revenue because of the software piracy.

4.1 Law regarding to Software Piracy in US

US copyright law is being governed by the Federal Copyright Act 1976. And the first Federal Copyright Act was come into 1790. And
several times it is being renew. The Copyright Act 1976 of US protects the right of the author the Copyright Act protects the author work
till the author life and continues 70 years after the author death. In the United States, copyright law was introduced through the US Digital
Millennium Copyright Act (DMCA) of 1998. At international level, the protection of digital content was introduced in the WIPO
Copyright Treaty (1996). This treaty contains the power to control the copyright protection regime such as exclusive right and stricter
provision for the limitation to the authors, and other related measures. US has the lowest piracy rate.

In 2011 there were two bills were promoted in the US and they were SOPA (Stop Online Piracy Act) and PIPA (Protect IP Act) which
provides a great strength to fight against the online piracy and include the access to infringing websites. Both the bills were deals with the
online site that is deal with the illegal copies content. “Here's what the government can do to foreign websites under even the most narrow
reading of SOPA section 102 and PIPA section 3:

 Order internet service providers to alter their DNS servers from resolving the domain names of websites in foreign countries that
host illegal copies of videos, songs, and photos.
 Order search engines like Google to modify search results to exclude foreign websites that host illegally copied material.
 Order payment providers like PayPal to shut down the payment accounts of foreign websites that host illegally copied material.
 Order ad services like Google's AdSense to refuse any ads or payment from foreign sites that host illegally copied content.” 3

4.2 Punishment for Software Piracy in US

“In US the maximum civil penalties for the copyright infringement, the infringer is liable for damages suffered by the copyright owner
plus any profits of the infringer that are attributable to the copying or statutory damages of up to $150,000 approx (90 Lakh INR approx)
for each work infringed. And the maximum criminal liabilities were, the infringer could be fined up to $250,000 (1.5 Crore INR approx)
and jail terms of up to five years.”4

4.3 Case related to Software Piracy in US

In 2004 US Army buy the software from the Apptricity Company. This software used to track the US army soldier at real time across
multiple time zone and the US army pays Apptricity $4.5 Million for that software. “According to the company the software was used in

3
http://www.theverge.com/2011/12/22/2648219/stop-online-piracy-act-sopa-what-is-it (January/25/2014)
4
http://education.illinois.edu/wp/copyright-2002/softwarepiracyfaqs.html (January/25/2014)

Electronic copy available at: https://ssrn.com/abstract=2398008

transportation logistic across the Middle East as well as the emergency relief initiatives such as army effort following the January 2010
earthquake in Haiti”5. Then in February 2012 Apptricity Company claim that the US army used more copies of the software than they paid
for it. The company claims that the US army installs 100 additional server and 9,000 devices for which they did not pay anything and they
did not have the valid license. The company was based in Texas and provide the army logistic program since 2004.The company
Apptricity claimed in the court that the estimated cover cost of that software used by the US army was $224 Million. And after that the US
government had agreed to pay $50 million to that software company Apptricity as a settlement.

5. Conclusion

Software piracy is a victimless crime. There is a strong requirement for the awareness program worldwide about the piracy and its
disadvantages like fewer Jobs, Government gaining less revenue, and price of the licensed software are high. Piracy is taken away the right
of the creator. Most of the people don‟t know but somehow they contribute and became a part of piracy. Piracy is not only a single country
issue it is a worldwide issue, every country has come together and take an action against the piracy. But one step should be taken by the
company that they should keep their product or software rates low so everyone can able to buy that licensed software. The best way to
minimize the piracy is to teach the students that they should not promote all these pirated software and don‟t pass the pirated software to
their colleagues. By all these small steps we can reduce the rate of piracy very much.

References

1. http://searchsoa.techtarget.com/definition/software (January/24/2014)
2. http://investigativeconsultants.com/ipcrimes/html/music-movies.html (January/24/2014)
3. http://www.csi-india.org/c/document_library/get_file?uuid=769686a0-9a60-4371-958e-3604303f8659&groupId=10157
(January/24/2014)
4. http://ww2.bsa.org/country.aspx?sc_lang=hi-IN (January/24/2014)
5. http://www.microsoft.com/en-us/piracy/default.aspx (January/24/2014)
6. http://education.illinois.edu/wp/crime/piracy.htm (January/24/2014)
7. http://literacy.kent.edu/Oasis/Pubs/techtalk6-1.pdf (January/24/2014)
8. http://www.cio.in/news/63-indian-users-use-pirating-software-263522012 (January/25/2014)
9. http://mmsoftwarepiracy.blogspot.in/2011/07/software-piracy-laws-in-india.html (January/25/2014)
10. http://www.majmudarindia.com/pdf/Software%20Piracy.pdf (January/25/2014)
11. http://www.smartaboutsoftware.org/downlaods/pdf/FINAL_Software%20Piracy%20in%20the%20US.pdf (January/25/2014)
12. E-Book “An introduction to Internet Governance” By Kurbalija Jovan (January/25/2014)
13. http://en.wikipedia.org/wiki/United_States_copyright_law (January/25/2014)
14. http://www.theverge.com/2011/12/22/2648219/stop-online-piracy-act-sopa-what-is-it (January/25/2014)
15. http://education.illinois.edu/wp/copyright-2002/softwarepiracyfaqs.html (January/25/2014)
16. http://www.bbc.co.uk/news/technology-25137089 (January/26/2014)
17. http://www.foxnews.com/tech/2013/12/02/us-army-settles-in-180-million-software-piracy-case/ (26/January/2014)

Author

First Author- Mudit Nema, MSCLIS, National Law Institute University Bhopal (M.P) (INDIA)
E-Mail- mudit_nema@rediffmail.com

5
http://www.foxnews.com/tech/2013/12/02/us-army-settles-in-180-million-software-piracy-case/ (January/26/2014)

Electronic copy available at: https://ssrn.com/abstract=2398008