July 19, 2004
Software Group Enters Fray Over Proposed Piracy Law
By STEVE LOHR

he pronouncements and position papers of trade groups are usually regarded as predictably self-serving and dull. But a study released two weeks ago by the Business Software Alliance, which estimated the yearly losses from software piracy at $29 billion, has managed to stir real passion.

The piracy study has become an issue because of a copyright bill, introduced in the Senate last month, that is strongly supported by the business alliance. The bill is the latest legislative proposal to grapple with digital piracy of music, movies and software, especially the use of peer-to-peer file-sharing networks like Grokster, Morpheus and Kazaa.

Opponents of the copyright bill see the trade group's study as an overt political act intended to increase support for the proposed legislation by portraying software piracy as a rapidly growing problem that is far more costly than had been thought. The trade group's previous estimate of software piracy losses was $13 billion a year.

The bill would make anyone liable who "intentionally aids, abets, induces, counsels or procures" a copyright violation. Supporters describe the bill as a narrow measure aimed mainly at a handful of companies whose business amounts to an information-age form of child abuse - inducing children and teenagers to violate copyright laws.

The bill's co-sponsors are a bipartisan cross-section of Senate leaders: the chairman of the Judiciary Committee, Orrin G. Hatch, Republican of Utah; the ranking Democrat on the committee, Patrick J. Leahy of Vermont; the Senate majority leader, Bill Frist, Republican of Tennessee; the minority leader, Tom Daschle, Democrat of South Dakota; Lindsey Graham, Republican of South Carolina; and Barbara Boxer, Democrat of California.

Opponents insist the bill's impact is potentially far-reaching and is a draconian tightening of existing copyright law. They say the legislation would undermine a 1984 Supreme Court decision, Sony v. Universal City Studios, known as the Betamax case, in which the court protected companies making otherwise legal technologies that could also be used to violate copyright laws.

The opponents regard the bill as another effort by proponents of tough intellectual property laws and enforcement - including music companies, Hollywood studios and Microsoft, a leading supporter of the Business Software Alliance - to protect their interests.

"I think the senators were totally misled about what this legislation is about," Lawrence Lessig, a professor at Stanford Law School, said. "This would not be a tiny, targeted change. It would be a massive change that would totally sidestep the Betamax ruling."

More than 40 companies and organizations - ranging from Intel, Google and Verizon to the American Library Association - wrote to Senator Hatch on July 7, expressing their concerns that the bill would touch off a wave of copyright suits and would chill innovation. They requested a hearing on the bill, before Congress proceeds any further.

Margarita Tapia, the press secretary for the Senate Judiciary Committee, said on Friday that a hearing on the bill was planned for Thursday.

A staff counsel for the Judiciary Committee conceded that the bill's language "makes people nervous." But he stressed that the law's standard for liability was based on behavior and the "totality of your conduct," not on what equipment or technology a company or institution provides.

In a letter last week to the Business Software Alliance, the heads of two other trade groups, who oppose the Senate bill, wrote that the results of the software piracy study were deeply troubling.

"People in Congress are hearing these outrageous numbers at a time when this extreme legislation is being proposed," said Edward J. Black, president of the Computer and Communications Industry Association, who signed the letter.

The other person who signed the letter, Gary Shapiro, president of the Consumer Electronics Association, said the study seemed to assume that every unauthorized copy of software was a lost sale.

"It's a fallacious assumption that distorts the issue," Mr. Shapiro said. "And they are using this distorted data to try to get Congress to once again make copyright laws even tougher."

John Gantz, director of research for IDC, which conducted the study for the Business Software Alliance, said that perhaps one of 10 unauthorized copies might be a lost sale. In developing nations, he explained, many users cannot afford software imported from the West. Instead of describing the $29 billion number as sales lost to piracy, he said, "I would have preferred to call it the retail value of pirated software."

But, Mr. Gantz said, when the trade group released the study, it termed the $29 billion as losses.

Robert Kruger, vice president for enforcement at the Business Software Alliance, said the piracy estimate in the new study was so much higher than in the past because the IDC research was more comprehensive than anything compiled before.

And, Mr. Kruger added: "I don't think anyone in our industry has ever argued that every pirated copy is a lost sale. But even if the number is a little lower than $29 billion, it is still a big problem."

Kruger added: "I don't think anyone in our industry has ever argued that every pirated copy is a lost sale. But even if the number is a little lower than $29 billion, it is still a big problem."

Then why are they reporting it as 29 billion in losses?

"I don't think anyone in our industry has ever argued that every pirated copy is a lost sale"

Well, maybe you should. That an unrealistic assumption by the RIAA, and is even more unrealistic in the software business. There are plenty of programs that lots of people would never use in their lives if they didn't find them for free somewhere and pirate them "just because." Those software stealing 15 year olds are not going to turn around and spend hundreds on 3D image rendering software, Photoshop, or pretty much anything else that costs over a hundred or a couple hundred bucks.

If you want a place where every pirated copy really is a lost sale, then look no further than the RIAA. Making 12 billion dollars a year, they could afford it all if they had to.

damn me completely to hell for misreading quotes. I need glasses.

Well the way I see it. If they ever do manage to stop the trading of software apps such as Photoshop, Flash..or other popular ones, they will see something happen they are not expecting.

First of all they will not gain any more sales. If I had to spend 500 dollars each time I needed a copy of Photoshop...LOL..then I just wouldn't design using photoshop. I suspect neither would anyone else who's not about to spend that kind of cash on software.

There has been a great amount of art, design and other innovative websites created with Photoshop and Macromedia Flash (just using these as examples). Both of these programs didn't get their wide use and popularity from people or companies buying multiple licences that's for goddam sure.

Had Macromedia or Adobe figured out a way to inhibit making distributable copies of their software....there's a chance each of those programs could have become vapour ware.

I remember when Flash came out. There were a few other technologies that would achieve the same purpose competing with them. It was the guy's who started trading the programs back forth and thier word of mouth which began people using them to create some really fancy stuff. The wider population will use what they can easily obtain and afford. Small businesses will do the same..(which I believe is why alot of individuals and companies are switching to Linux lately).

Most innovation seems to come from ambitious individuals just doing it for the hell of it who aren't under any pressure of "time is money" (usually not workin with a committee trying to build a horse but end up with a camel) or start-up and smaller businesses. What happens however, is bigger companies will come along and see this....then either buy them out..or steal their ideas and then claim they are the ones who invented the ideas.

My point here is....if some of these individuals or companies can't obtain the tools they need to do the stuff they do (even if it's from some warez site)....there will be no new ideas for the big companies to steal!...LOL. Sounds a bit rediculous..but it happens and it has happened.

I am trying to make a specific point here. I'm not sure of how well I am getting it across. I guess the bottom line is that ironically piracy has caused some software to become the standard. When a piece of software becomes the standard..the company who created it sells the most licences to the people who would actually go out and buy the program.

If software copying and swapping is stopped..I see less sources of innovation, I don't see an increase in sold licences and I see it making it more difficult for a piece of software to become the most widely used. I think alot more money will be wasted in R&D only for a program to become vapourware. Who's gonna be able to afford to test it? Do you really think I am going to sit here for hours using a piece of shareware that won't letme save the work I have just done or will expire in 30 days or less?

The way I see it...if I get the program from a warez site..and I use it..and I tell everyone around me that it's cool. Everyone else will start using it too. They will also get a few sales fromit too. But don't consider it a lost sale just because I don't buy the program...consider it money well spent on R&D and advertising that I just did for free. Something gained....not lost.

They are backing themselves into a corner with this foolishness. They aren't looking at the logistics here. Its more apparent that all they see is the percieved profits they "think" they will gain.

They have in their minds that its all about the science of economics. They believe.."Stop piracy...increase sales." To them it's a simple, technical matter. In my opinion..there are aspects that they are seriously over looking. Think of it this way...technically a bug or a security flaw in Internet Explorer should be solved with a simple patch. However...its not that simple. Even if a patch is released not everyone patches their system. Not only that..but the patch itself might contain holes. It just keeps steam rolling out of control until what they end up with is a roof full of caulking that nobody is gonna live under.

I don't give a shit what logic, scientific economics, or analogies (such as driving a car off a lot without paying for it) anyone can respond with. Go right ahead...say what ya want....but just wait and see.

zxilton, I couldn't have said it better myself (especially since I misread one out of every three sentences).

I believe that software piracy and music piracy are two completely different situations. We've been over the P2P thing a million times here. I believe software piracy is flat out wrong, but that doesn't mean that I excuse the people at the BSA for the things they say. The whole notion that a pirated copy is a lost sale is bogus, and you elaborated on that point very well.

It isn't stealing from a store, no matter how much the RIAA or BSA wants it to be. If someone can type "free [insert name of software] warez" or whatever into google and have it pop right up for them, then of course a lot of people will download it who would have never dreamed of purchasing the product. I also believe you're right that software piracy can lead to other people buying the product.

"I don't give a shit what logic, scientific economics, or analogies (such as driving a car off a lot without paying for it)"

You just used my all-time favorite Holywood analogy for piracy. I can't remember if it was the RIAA or Jack Valenti, but one of them said that. I thought it was going to be a joke. Paraphrased it was something like: "You can't just go to a car lot, get a car, and return it if you don't like it!" Someone's never heard of a test drive.

Almost every software program is updated periodically. I've found that many people who download a software program they didn't pay for, usually will purchase the newer version when it comes out. Assuming, of course , that they liked that program in the first place. I'm sure that factor wasn't taken into consideration when they talked about "lost sales".

No sherm -- I think it was the Congressman from NJ who said, what if I bought a car and made a copy of it.

The dumb part of , "what if I bought a car and made a copy of it." (dumb sentence anyways) is that we all can afford CD burners and can get ripping software. If we all could afford the parts, had the knowledge and could put a car together in 10 minutes..we all probably would.

Those who are able do just that...already do it. Some of them get so caught up in their project that they will even get innovative and probably make it better. Then some greedy ass corporation will come along and steal the idea.

They are trying to create (or will at least end up creating) a very dull, dark,
un-creative society, with no incentive to invent or innovate from fear of being sued over either patent or copyright infringement.

Our only function will be to hand over our cash (unwillingly soon probably) so that they can live in luxury and play all day while we work our asses off to support them and at the same time have to bow down and worship them as gods.

carla,

Actually I hadn't heard that exact one before. The car thing seems to be popular. How appropriate that the anti-p2p crowd keeps using the dumbest examples. That's not the one I heard, but it's certainly up there with some of the worst. If I had a piece of hardware that could duplicate my car, then I am not aware of any laws that would prevent me from doing so. A car isn't copyrighted. Maybe the Congressman from NJ doesn't know that.

"If we all could afford the parts, had the knowledge and could put a car together in 10 minutes..we all probably would."

Yeah.. kind of like people who make homemade bread. It's not illegal just because it's made the same way as BunnyBread or any other brand. Again.. ridiculous examples. We're dealing with copyright here.

"I think the senators were totally misled about what this legislation is about," Lawrence Lessig, a professor at Stanford Law School, said. "This would not be a tiny, targeted change. It would be a massive change that would totally sidestep the Betamax ruling."



Lessig also had to say about the INDUCE act:

Whatever the lobbyists say about this bill, this is the single most important fact that we should not forget: It is a lawyer employment act. It will force technologists into court before they get to enter the market place. It will shift responsibility for striking the balance in copyright law from Congress to unelected federal judges.

That’s not a bad thing for me, or my kind. I, after all, think the courts have some role here (in setting the limits of copyright), and I, after all, make lawyers for a living. But for an already overregulated Silicon Valley, it is another nail in the coffin by the regulating-obsessed in Washington.

His full blog on this is at http://www.lessig.org/blog/

And regulating-obsessed they are. They think by passing more laws, it will "FIX" everything. The only thing it fixes is the hole in their pocket books.

The Senate Committee on the Judiciary will hold a hearing on Thursday, July 22, 2004, at 2:00 p.m. in Room 226 of the Senate Dirksen Office Building on "An Examination of S. 2560, the Inducing Infringement of Copyrights Act of 2004."

http://judiciary.senate.gov/


Judiciary Committee Members

Republicans:

Orrin Hatch (UT)
Charles E. Grassley (IA)
Arlen Specter (PA)
Jon Kyl (AZ)
Mike DeWine (OH)
Jeff Sessions (AL)
Linsdey Graham (SC)
Larry Craig (ID)
Saxby Chambliss (GA)
John Cornyn (TX)

Democrats

Patrick Leahy (VT)
Edward Kennedy (MA)
Joseph Biden (DE)
Herbert Kohl (WI)
Dianne Feinstein (CA)
Russel Feingold (WI)
Charles E. Schumer (NY)
Dick Durbin (IL)
John Edwards (NC)

The fact that this bill is so damn vague is why the courts will probally stamp it out like a cockroach

The fact that is is so vague is the reason it should never reach the courts. I only hope the Senate learned its lesson when it passed the Patriot Act without ever reading it. The limits of a law should be spelled out clearly before it is ever passed.

A car is not copyrighted, but if you had a machine to instantly duplicate a car you can bet your ass it would immediately become copyrighted. (Or, if enough people decided to build a car from scratch using their own materials and hard work...)

"Those who are able do just that...already do it. Some of them get so caught up in their project that they will even get innovative and probably make it better. Then some greedy ass corporation will come along and steal the idea."

In reference to cars, a perfect example would be the Nissan Silvia (240SX in the US). Since those front ends are cheaper than the front ends for Nissan 180s, people began to change them and made a new car called the "Sileighty" Nissan saw this and made specific Sileighties that had a little more horsepower and tuned better for drifting. That's a good thing for a corporation. Take something that people are doing (not competition) and use it for sales.

"They think by passing more laws, it will "FIX" everything. The only thing it fixes is the hole in their pocket books."

There's honestly one law that needs to be passed. The KEEP IT SIMPLE law. Whereby any reference to older acts, any and all latin are kept to a bare minimum, and even a slow person can read the law and see that just maybe the pros don't outweigh the cons. Free market decides who stays and who goes and stealing an idea makes you that much more creative to survive or it's your own fault. But what do I know about law making?

"There's honestly one law that needs to be passed. The KEEP IT SIMPLE law. Whereby any reference to older acts, any and all latin are kept to a bare minimum, and even a slow person can read the law and see that just maybe the pros don't outweigh the cons. Free market decides who stays and who goes and stealing an idea makes you that much more creative to survive or it's your own fault. But what do I know about law making?"

So brilliant, it needed said again!

I notice John Edwards is on the list. lets see where he stands

You think John Edwards will bother to show up for this one? I hope he does, we need to know where he stands. KISS--that is a stroke of genius. Unfortunately, the government seems to think the more words the better.

"The fact that this bill is so damn vague is why the courts will probally stamp it out like a cockroach"

Which is why they want bills like HR3920
( the one that allows congress to overturn the supreme court ) are so vital to the entertainment industry ( also why it has been referred to the Subcommittee on Courts, the Internet, and Intellectual Property. )

They are trying to create (or will at least end up creating) a very dull, dark,
un-creative society, with no incentive to invent or innovate from fear of being sued over either patent or copyright infringement.

Our only function will be to hand over our cash (unwillingly soon probably) so that they can live in luxury and play all day while we work our asses off to support them


buuut.. their formula has a flaw.. as does the calculation of the idiot coyote from the popular cartoons.

to put it into an axiom. You can kill the roaches by fumigating, but the poison in your home can also kill you.

In other words.. the luxuries they so want come from both innovation and a market.

With their precious impediments in place, and without a market for these luxuries.. they will either have to be custom made (muuuuch more expensive) or will not exist at all.

Either way they get less eventually.

Witness list is posted:

Witness List

Hearing Before the
Senate Judiciary Committee
on

“Protecting Innovation and Art while Preventing Piracy”

Thursday, July 22, 2004, at 2:00 p.m.
Dirksen Senate Office Building Room 226

Panel I:

The Honorable Marybeth Peters
Register of Copyrights
United States Copyright Office

Panel II:

Mr. Gary Shapiro
President and Chief Executive Officer
Consumer Electronics Association

Mr. Robert Holleyman
President and Chief Executive Officer
Business Software Alliance

Mr. Andrew Greenberg
Vice-Chairman, Intellectual Property Committee
IEEE-USA

Mr. Kevin McGuiness
Executive Director and General Counsel
NetCoalition

Mr. Mitch Bainwol
Chairman and Chief Executive Officer
Recording Industry Association of America

They never seem to mention how many sales were made BECAUSE of piracy. People got Windows 3/9/ .x . Photoshop etc., learned how to use it and then either they or their employers bought the software because THAT'S WHAT THEY KNEW. Same with music. How many people have sampled music from P2P networks and said "Hey, that was great but the 128kbps version sucks" and went out and bought the CD because they were exposed to it on P2P?

They never mention these all too common scenerios. Free marketing en masse and all they can think about is hypothetical "lost sales" which only exist in the minds of greedy, clueless executives. Idiots.