Piracy on the PCs
- By Carl Peckinpaugh
- Mar 19, 2000
The use of unlicensed software is a major problem in the computer trade.
According to the Business Software Alliance, software piracy cost the industry
$11 billion in 1998.
The culprits are not just kids trading computer games but also companies
and agencies. According to the Defense Department inspector general, up
to half of the PCs in DOD may have copyrighted software loaded on them without
documentation to prove that the software was legally acquired.
By 1998, the problem had grown so significant that President Clinton
issued an executive order requiring agencies to ensure that all their software
had been purchased and used only in accordance with applicable copyright
Using copyright laws as a primary mechanism for protecting software
license rights is entirely appropriate. In the private sector, copyright
laws provide software companies with many useful tools to enforce their
property interests, including the possibility of injunctive relief to prevent
In the public sector, copyright laws are just as important, although
their application is somewhat different. The primary difference is the unavailability
of injunctive relief against the federal government. According to federal
statutes, a copyright owner claiming infringement by the U.S. government
is limited to reasonable compensation for the government's use of the copyrighted
The unavailability of injunctive relief in government copyright infringement
cases is a disadvantage. On the other hand, the laws provide copyright owners
other significant advantages when dealing with government agencies.
In most cases, a supplier of goods or services must have "privity of
contract" with an agency in order to sue it. In general, only prime contractors
have privity. This is why a subcontractor typically can pursue a claim against
the government only with the cooperation of the prime contractor. However,
the privity issue is irrelevant when an action against the government is
based on copyright laws; a copyright owner may sue anyone, including the
government, who infringes on a copyright.
An illustrative case is Microsoft Corp. v. Harmony Computers &
Electronics. A computer distributor sold software in violation of a distribution
agreement that allowed it to sell software only when bundled with certain
hardware. In the software manufacturer's copyright infringement suit against
the purchaser, the purchaser argued it had acquired the software in good
faith and without notice that the distributor was violating its distribution
agreement. However, the court ruled in favor of the manufacturer, finding
that good faith was no defense in a copyright infringement case.
Many companies sell software to government agencies. Anyone who does
so should be familiar with copyright laws and should be sure that they are
positioned to take full advantage of the protections afforded by those laws.
— Peckinpaugh is corporate counsel for DynCorp, Reston, Va., and formerly
a member of the government contracts section for Winston & Strawn, Washington,