Open up, it's the software police!

Business News New Jersey, Dec 21, 1998

There are some calls you fear receiving, say, from the local emergency room when your kid has the car. Another is from the Business Software Alliance (BSA), a Washington, D.C.-based trade group dedicated to wiping out the use of unpaid-for copies of its members' products.

In the last year and a half, three New Jersey companies heard from the BSA: Gemini Industries, a custom electronics packaging wholesaler based in Clifton; General Spice, a South Plainfield spice manufacturer; and the Gillespie Organization, a Lawrenceville advertising agency that was recently purchased by the New York City-based Interpublic Group. Suzanne Brown, Gillespie's CFO, says, "We got a letter saying they're going to come in and audit our computers for unauthorized duplication of software." All the companies settled with the BSA for amounts ranging from General Spice's $35,000 to Gemini's $275,000.

Like many other people, Brown admits to having been surprised that a private organization could demand such an accounting. They do indeed have the right, and the group, which represents major software developers, including Microsoft, Lotus Development and Novell, says it has to. Bob Kruger, BSA's vice president for enforcement, insists that, "A lot of people, when they think of piracy, think of counterfeiting in China, or selling illegal copies in flea markets. But the biggest source of lost revenue to the software industry comes from the practice of copying in the workplace."

His group claims that in 1997 illegally copied versions of programs cost the industry $2.8 billion in the U.S. alone. "One of the ways to promote compliance with software copyrights is with aggressive enforcement," he says. According to him, all three of these New Jersey actions were initiated after tips to BSA's toll-free number.

Because the BSA didn't think the three New Jersey firms were the types who would try to destroy evidence, it didn't show up at their doors with Federal marshals and search warrants. Rather, the companies had the opportunity to round up all their software licenses and conduct their own audits. Gillespie was the only company willing to be interviewed for this story.

The irony for Gillespie is that the firm thought it had its software use under control. "We had policies saying 'No software from home, no sharing software, no downloads from the Internet,'" Brown insists.

But it wasn't good enough. Despite the policy, Gillespie ended up agreeing to pay the BSA a $125,000 penalty for having unlicensed copies of programs published by Adobe, Microsoft and Symantec. "And this settlement," Brown says, "was based on them having judged that our infringement was unintentional."

Has your company gone through its files recently? According to Marjorie Chertok, a partner with Woodbridge law firm Greenbaum, Rowe, Smith, Ravin, Davis & Himmel, "It's very important to draft a tight policy and make sure it has teeth. Then terminate people who violate it." This sounds hardhearted, perhaps, but Chertok emphasizes that theft is theft, saying, "It's as if they walked in and stole a fax machine."

Like Gillespie, Chertok says, most companies don't make a business practice of copying software illegally. It just happens, with a game e-mailed to a friend, or a copy of Excel thrown on the laptop for a business trip. The difficulty, she says, is "keeping an accurate audit trail when you have thousands of PCs. It can be a full-time job." It can be hard with only 130 PCs, too. Ask Suzanne Brown.

Gillespie has now wiped all its drives and, using a master disk, reinstalled all its licensed software from scratch. It has implemented a tougher, BSA-sanctioned software policy and can anticipate annual audits by the software publishers' group. And Brown sounds a bit like the character in Pogo who said, "We have seen the enemy, and he is us" when she confides that "We were all surprised [the programs] were there. Unless you go through with a fine-tooth comb, you don't know."