Forums: Discussions for entrepreneurs and small business.

Gubment taking software piracy very seriously these days.  Even when a judge has somebody pay hundreds of thousands of dollars, prison time is sought on appeal.  see http://caselaw.lp.findlaw.com/data2/circs/3rd/062484p.pdf

USA vs DMITRI I. KONONCHUK - guy will probably do hard time - probably 18 to 24 months.

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James Lindon, Ph.D. Patent Attorney
Lindon & Lindon, LLC
Cleveland, Ohio
Patents, Trademarks, Copyrights, Pharmacy Law, Litigation
[this is not legal advice - provided for discussion only]
Intellectual Property for the Individual and Small Business: Identify, Protect, Enforce, Defend.
"Fools rush in where angels fear to tread."
http://www.LindonLaw.com

Two scenarios for people wanting to get Microsoft Office for free:

a) Walk into an Office Depot and shoplift it.
b) Copy from a friend.

I fail to see the difference in these two situations. Stealing software is stealing.

I had a friend who is a senior flight attendant for UsAirways ask to `borrow` my Microsoft Office disc. I told her that I had to decline, since this would be like asking her to sneak me on her next flight to London.

I don`t know why people see software stealing as `no big deal`, `a victimless crime for the richest person in the world` (Bill Gates), etc. Just because it doesn`t involve armed robbery doesn`t make putting a disc into your drive and installing it, when you don`t own it, any less of an example of stealing.

I even know web design shops with 10 PC`s who own one copy of every piece of software they run. One disgruntled employee calling Microsoft one time can cost $10,000 or more. Just doesn`t seem worth it, especially if their website preaches ethics and good business practices.

The problem with a lot of software is prices.

I ran into this problem a lot as a student. You need to learn (insert software here) in order to find a job using this software in your field once you are out of college. But being a starving student, there is no way you could afford $500-1,000 for the software. So then what do you do?

Honestly, some piracy actually helps the company. If there weren`t teens and 20-somethings out there learning to use the software by pirating it in college, there would be no one who knew how to use their software in the corporate world. (As if, as a student, you`re going to pay thousands for training or certification??)

Maybe there is a better way to do it, like to wrap discounted versions of the software into loan and grant programs. Otherwise ...
what will they do when everyone stops using it, or everyone shifts to something cheaper?

Sometimes I see the same thing in music piracy as well .. if you didn`t get hooked on that band with (pirated) mp3s in college, would you be buying their CDs now?

Food for thought ...

Food for thought? More like evidence for indictment.

Schools have software running on their lab computers, students can buy student versions of most everything, and regardless of how much it costs, stealing isn`t the answer.

I also don`t buy the argument that young people stealing the software does the company any good later. What, does the person grow a conscience later on and buy the real thing? I doubt it.

With arguments like the ones above, I could easily make a case for stealing a Porsche - they`re so darn expensive! I can`t afford one, but I`m sure the company will thank me later!

Having read the entire case (on appeal) as well as the original case, here`s what you might not know about it from the brief snippet of the title of this post:

• The defendant set up a company to fraudulently traffic in counterfeit software over the internet.
  
• He sold anywhere from $260,000 to $1,000,000 of it around the world.
• He refused to cooperate with the FBI.
• His codefendant was not of legal age when he involved him in the scheme.
• His attorney made the stupid argument that his client shouldn`t do prison time, since being convicted would make him less eligible to get a job, therefore harder for him to pay restitution to Microsoft.

This isn`t a case of some guy borrowing his friend`s copy of MS Office. But in my book, the issue is still the same: stealing.

Should one go to prison for stealing one copy of MS Office? They wouldn`t anyway, since sentencing guidelines are based on dollar amounts. And yes, sentencing guidelines are advisory, but a judge isn`t going to move for an upward departure for one copy of software.

A dude in prison ain`t gonna be able to pony up $265,000 restitution - that`s pretty much reality and far from a stupid argument in my opinion.  The appeal placed some weight on the fact that the guy might not pay the restitution anyway since he might be deported.  There is certainly an argument to the guy going to prison under the sentencing "guidelines" - though I`m not wild about guidelines in general [a whole different topic].  If there was much more certainty about the guy making the $265,000 restitution, the prosecutor probably might not have even filed the appeal.  As it was, he did not really have the money and might have been sent back to Russia before the $265,000 restitution was paid.  No money?  Go to jail.

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James Lindon, Ph.D. Patent Attorney
Lindon & Lindon, LLC
Cleveland, Ohio
Patents, Trademarks, Copyrights, Pharmacy Law, Litigation
[this is not legal advice - provided for discussion only]
Intellectual Property for the Individual and Small Business: Identify, Protect, Enforce, Defend.
"Fools rush in where angels fear to tread."
http://www.LindonLaw.com

James,

This is why you`re not a federal appeals court judge.

Moral of story: don`t steal software, thus avoiding (a) jail and (b) restitution.

Lost of people are in federal prison with restitution as part of their sentences. This can be remedied by property forfeiture, property liens or forced sales, lots of stuff. In this case, the defendant`s father-in-law was a former Fortune 500 executive (twice). Paying the restitution was not a big problem for the guy; not wanting to go to prison was.

The appeal wasn`t about restitution - it was about applying sentencing guidelines improperly due to assuming his codefendants crime was just like his.  It wasn`t due to him being a minor.

Anyway, it`s still wrong to steal. All I`m saying.

Yes, Jeff - they do grow up and buy real copies. And yes, they work for companies that also buy real copies. But if there`s no opportunity to learn, it`s not there.

Heck, maybe you even extend the trial opportunities to expire in 6 months instead of 1. Or make it free to use as long as it`s on the edu network. But the answer is not asking a cash-strapped student to pony up $500 to buy your software. The answer is that a) you lose to something more open-source, or something cheaper, or b) they steal it. Why set up students for failure?

You could make the same argument for people in poverty, btw. If they can`t afford the software, how do they learn it to get themselves out of poverty?

The Gates Foundation bought an entire building at my alma mater recently. Why not just reduce the price of the software and let someone else by the building? Because then good ol` Bill wouldn`t be making Billions and only giving away a small percentage. Do you really think he is hurting from piracy?

I think there is a huge difference between someone who is selling pirated software and someone just using it, btw. I`m not saying stealing isn`t wrong. I`m just saying, in certain situations, maybe we should look at how we set up the market with these things to figure out better ways of doing it. (I don`t *need* a porche, but I wasn`t going to get a job without learning about 15 different software packages. And no, they were not available in a lab. And yes, I pay for them all now.)

Everyone would steal in the right circumstances.

` Everyone would steal in the right circumstances. `

Food, perhaps, if one were starving to death. I actually take that comment back: we have a federal food stamp program in this country. When was the last time you heard of an American dying of starvation? Everything else, no, not honest people. Aspiring web developers can always work at Starbucks until they can buy the software.

Anyway, back to the topic: Running a business with un-registered copies of software running on your systems is a really bad idea.

I had an friend who ran a recruiting firm with 20 employees who always stole her software. One employee was fired, knew about this, and let Microsoft know about it.

She ended up paying $25,000 to stop the lawsuit. That`s a lot less than the original cost of the software. Not a good business move in my opinion.

PC`s wouldn`t even exist without firms like Microsoft, who spent over $6 billion in 2006 alone in R & D. Sure, they`re huge and have tons of money, but they started with two employees like the rest of us.

It`s named `The Digital Divide` for a reason. It`s not a person`s `right` to get free access to software, any more than it`s a person`s `right` to a mortgage. Microsoft isn`t a non-profit organization.

Bill and Melinda Gates have given tens of millions of dollars to lots of causes, and they had no obligation to do so.  Good for them. Did Larry Ellison?

Would you be ok if someone stole your proprietary code, since they couldn`t afford it?

One more interesting topic that was covered at a recent Business of IP event I attended at Duke University:

China is ranked number 4 in computer purchases worldwide.
They are ranked 26th in software purchases worldwide.

I guess all of those PC`s are just running Microsoft Works and Minesweeper, huh?

First of all, I am not running my business with un-registered copies of anything. I`ve been out of school for a while.

And secondly, my "source code" is free - knock yourself out. I`ve posted PHP and CFM solutions around the web, you can download all my HTML and CSS. So really, that`s a bad argument right there. I sell service, graphics and knowledge, not the code.

As I said, maybe if they could wrap discounted versions of the software into the loan package, maybe students couldn`t afford it. As it was, I was choosing between food and programming books a few semesters, because books can`t be bought with loan money. (The books won ... I lost 30 lbs ... and still came out of school nearly $40K in debt.) I bought a computer on a student loan for which repayment started after graduation, why not have those same programs for discounted versions of the software?

And just for a second, think about the Starbucks comment. As an example, my little sister makes about $18K a year at Starbucks while in school. Rent in this area is $800-$1K a month just for a small apartment. How much do people like that have leftover for software? But if they don`t learn it - they`ll be sitting at Starbucks forever. The student argument and the poverty argument is one in the same.

Once again, I`m not presenting a pro-stealing argument. I`m trying to open the dialogue and figure out what people who write software can do to address these situations. I have mentored some up-and-coming developers, and freely zip up all my files and send them over to learn from - for free. What is the software world equivalent of that?

A lot of software is now open source anyway, and they charge for support. When I see these models, I don`t understand why anyone would buy certain Microsoft products that are inferior anyway. And personally - I use a Mac, whose OS is half the price of Windows - and works a whole lot better!