Software industry names Ohio a 'hot spot' for piracy of professional software

By Shaheen Samavati, The Plain Dealer October 07, 2009, 11:31AM
Updated at 6:47 p.m.

The Business Software Alliance, a trade group for the commercial software industry, on Wednesday named Ohio a "hot spot" for illegal software use by local businesses.

Each year, BSA receives more than 2,500 reports of business software piracy from across the country. Over the past nine months, Ohio was identified as one of the top five states where it received reports, with a large portion coming from the Cleveland area.

But that could just mean that Ohio has a high number of disgruntled employees, said Laura DiDio an analyst for Boston research firm ITIC who specializes in technology licensing and compliance issues.

"Ohio is not the first place that comes to mind when you think of a real hot spot for pirated software," she said. "Being from New York, I know that's a hot spot, as are Los Angeles and San Fransisco."

The BSA said most reports of software misuse come from current or former employees of the offending company. It would not identify the other four "hot spot" states or say what percentage or reports came from Ohio.

DiDio said she thinks BSA's announcement was meant to spur disgruntled ex-employees into whistle-blowing action.

"It's a natural conclusion since Ohio is one of the top states that's been hit in terms of unemployment," she said. Rewards the group offers to those who report "can be like winning the lottery for a laid-off employee."

BSA is known best as the software licensing enforcer for about 30 major software vendors including Microsoft, Apple, Adobe, Cisco and Autodesk. The group collects millions in damages each year from businesses who have either stolen software, or who can't provide licensing information to prove that they legitimately purchased it.

Earlier studies commissioned by BSA estimate that 27 percent of software installed in Ohio is unlicensed, above the national average of 20 percent. BSA says that software piracy in Ohio cost software vendors an estimated $447 million, and an additional $1.2 billion to their distributors and service providers in 2008. BSA also estimates the loss in state and local sales and income tax revenues at $165 million.

While stealing office software might seem to benefit some local businesses "it's very unfair to other businesses in town that are paying for legal software and have to compete with a company that hasn't made the same investment," said Jenny Blank, senior director of legal affairs for BSA.

And, the potential fines companies face make it not worth the risk, she said. A company found using unlicensed software and violating copyright laws could pay damages of up to $150,000 for each software title copied.

Blank said it's small businesses that are most often found without proper licensure.

"Small businesses have been sort of in the cross-hairs of the Business Software Alliance," said Brad Nellis, director of the Northeast Ohio Software Association, the technology arm of the Council of Smaller Enterprises. But he said he doesn't think small businesses are pirating software at a higher rate than their larger counterparts.

Still, he said, it's important that companies pay for the software they use.

DiDio says if it turns out that a company is out of compliance, it's best to "throw yourself at the mercy of the vendor," and they'll likely work out a fair deal.

If you don't, your company could become the BSA's next example. The group continues to ask those who have witnessed illegal software use by a business to report it confidentially by calling 1-888-667-4722 or visiting nopiracy.com. The organization offers rewards up to $1 million, depending on the size of the settlement that results from the report. Since last year, the organization paid $220,650 to 63 individuals for software piracy tips.

First published October 7, 2009