June 10, 2002 12:10 PM PDT

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Global software piracy rose for the second straight year in 2001 although monetary losses shrank, according to a report issued Monday by the Business Software Alliance, a trade group.

The BSA's seventh annual "Global Software Piracy Study" estimated that 40 percent of all business software installed around the world last year was illegally copied. That compares with a piracy rate of 37 percent a year earlier and 36 percent in 1999, after several years of steady declines.

Bob Kruger, vice president of enforcement for the BSA, an industry-supported group that tracks and enforces software copyrights, said the global slowdown in tech spending was a likely contributor to the upswing, with shrunken IT budgets prodding workers to make illegal copies of co-workers' software.

"In many situations, IT managers are put in a position of having to choose between what they know is right and what their limited budget allows," Kruger said. "If the budget doesn't cover all the software the company needs to operate, the IT manager may feel they need to look the other way as people copy programs."

While the piracy rate increased, monetary losses attributed to piracy shrank, to $10.97 billion in 2001 from $11.7 billion a year ago. Kruger attributed that to the strength of the U.S. dollar overseas and shrinking prices for legitimately purchased software.

Regionally, piracy losses shrank significantly in North America, from $3 billion in 2000 to $2 billion in 2001. Kruger said most piracy losses in North America stem from businesses installing more copies of a program than their license allows rather than commercial bootlegging.

"It sounds like a pedestrian problem, but those kind of situations are responsible for the bulk of the piracy here," he said. "Our goal is to draw the attention of business to the importance of adding software management to their checklists."

Monetary losses resulting from piracy were up significantly in the Asia-Pacific region, to $4.7 billion from $4 billion a year ago. Countries with the worst piracy problems included Vietnam and China, where piracy rates were more than 90 percent, and Russia, with a piracy rate of 87 percent.

Kruger said poorly written and weakly enforced copyright laws allow software pirates to thrive in such areas, and governments show little interest in addressing such issues as they grapple with bigger economic and political challenges.

"We're trying to work with these countries to make intellectual property protection a priority," he said. "Our argument is that intellectual property protection contributes to some of the bigger issues they're dealing with. It generates jobs; it makes overseas technology companies more willing to invest in the area."

Along with the release of the report, the BSA this week is publicizing a worldwide series of anti-piracy "sweeps," in which businesses found by the BSA to be using illegally copied software have settled with the group. Recent settlements with 44 U.S. businesses have totaled about $3.1 million.

 

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