Software Piracy and Ethics

Posted: September 24, 2010 in Shubham's Posts
Tags: , , , ,

Software Piracy is defined in the Computing Dictionary of as “Making or distributing unauthorized copies of software, either for kudos or for profit.” This definition may sound simple, but its impact and affects are anything but simple. According to Business Software Alliance, in 2009, worldwide software piracy rates rose to 43 percent, with losses estimated at US $51.4 billion.

Forms of Software Piracy

The most common forms of software piracy are as follows. A few of them may overlap also:-

  1. Softlifting occurs when someone purchases one legitimate copy of the software, and then loads it onto many different computers.
  2. Hard Disk Loading occurs when unauthorized copies of software are placed on the hard disk when one buys a new personal computer. This method is used by computer dealers to sell computers at low prices, but give their customers an added value.
  3. Renting the Software occurs when one uses the software temporarily and then gives it back. It is the same thing as renting a video from a video store, but the difference is that this is illegal.
  4. Software Counterfeiting is burning a software disk and selling it to someone.
  5. End-User Piracy occurs when an individual or organization reproduces and/or uses unlicensed copies of software for its operations.
  6. Client-Server Overuse occurs when the number of users connected to or accessing one server exceeds the total number defined in the license agreement.
  7. Subscription Licensing is using subscription-licensed software past the expiration date.
  8. Counterfeiting is the illegal duplication of downloaded software with the intent of directly imitating the copyrighted product.
  9. Online Software Theft occurs when individuals download unauthorized copies of software from the Internet.
  10. License Misuse occurs when software is distributed in channels outside those allowed by the license, or used in ways restricted by the license.

If one has pirated software, there are ways to tell that it is not real. One way is that it will not have adequate documentation with it such as instructions. Another way is that the user will not get the technical support that one would usually get with the real software. Lastly, since the software is copied, one will not get the software updates needed for some programs.

Whether one purchases software from a retail store or downloads installation files from an Internet site, a user license, not the CD or possession of installation files, is what gives the right to install and use the software. The license purchased defines specific terms and conditions regarding legal use of the software, such as how many computers the user may install the software on, or whether the software can be transferred to another computer or not. Any actions taken outside the limits of the license constitute software piracy.

This video explains in brief, the importance of the terms and conditions of the license and how its violation is piracy

Economic Impact

The impact software piracy has on software companies goes beyond the amount of money involved in lost revenues. Software piracy costs in terms of jobs. If worldwide software piracy levels fell by 10 points over a four-year span, 600,000 jobs would become available in the IT industry, according to a January 2008 report issued by the International Data Corporation. The same study reports this 10-point reduction in software piracy levels would raise an additional $24 billion in worldwide government revenues without increasing taxes.


Buying or using pirated software has many inherent risks; the least of which is facing legal charges. There is no guarantee that pirated software will function as it should, and in cases where it does not, the user can expect no support, technical or otherwise. This software is not eligible for upgrades, updates or security patches. In addition, the user runs the risk of damaging his/her reputation, as criminal prosecution becomes a public record.

Software Piracy is a Crime and its Possible Implications

Software piracy is a crime and copyright infringement laws make no distinction between one or 100 illegally copied CDs or the unauthorized sale of software installation files. If one is caught, it can lead to heavy penalty, criminal prosecution, fines and/or a few years in jail. In addition, a business is responsible for the actions of its employees, whether it is aware of what takes place or not.

How to Stop Software Piracy

Software piracy affects everyone and illegal and improperly used software hurts the economy in general, the software industry in particular. It can cause harm to the user’s computer and legally speaking, it is against the law. The software industry is taking steps to curb the problem, and there are many things individuals and businesses can do to help stop software piracy.

Personal Measures

  1. The End User License Agreement (EULA) for each software product purchased should be read carefully. The EULA’s terms and conditions define how one can legally use the software, how many computers the user can install the software on, and whether or not a backup copy can be made. Most software companies first ask the user to accept their agreement and then only allow the installation of their software.
  2. Software should be purchased only from reputable resellers. The manufacturer’s website should be checked to see what kind of authentication markings they include to guarantee that the software is genuine. Microsoft affixes a “Certificate of Authority” label to the outside packaging of their products, and Adobe includes silk-screened artwork along with trademarks, patent information and part numbers on their CDs.
  3. Software should be downloaded directly from the manufacturer’s website. It should never be downloaded from a peer-to-peer file- sharing site such as Limewire, Kazaa or BearShare. One should also not make one’s software available on these sites.
  4. Software should be registered to prevent others from attempting to install this software on their computers.
  5. Software piracy should be immediately reported if it is discovered that software one has purchased is not authentic or if it is suspected that an online reseller or retail establishment is selling counterfeit software. This is the biggest single action anyone can take to stop software piracy.

Manufacturers’ Measures

While it is doubtful that a manufacturer will be able to completely eliminate piracy, it can work towards reducing the number of incidents.

  1. Offering free and paid versions of software. It can be successful to offer different levels of the software program. One level is free and includes basic functionality, and customers must pay to receive an advanced version of the software that includes more features.
  2. Reducing the cost of software to the extent possible. Some people pirate software because they feel that the price is too high. If the price is reduced, more and more people could be encouraged to buy it instead of obtaining illegal copies.
  3. Including an activation step. As users install software, the manufacturer can include a step that involves activating the software through the Internet or by phone before users actually can use the software. This involves a unique code that a user can only get by purchasing the software legally.
  4. Seeking out and stopping illegal downloads. Some people pirate software through peer-to-peer file sharing. The manufacturer can send these sites a cease and desist letter, asking them to remove its software. Some will be more responsive than others, and may remove the software; the manufacturer might have to take legal action against the others. The file sharing sites should be continuously monitored for this type of activity. Some software programs can help do this automatically.
  5. Taking legal action against those who pirate your software. When someone is caught pirating software, the manufacturer should take legal action against him. As people see that the manufacturer does actually take action against pirates, they become less likely to pirate software, as it presents a greater risk of them getting sued.

What Are the Causes of Software Piracy?

High Income Gap

Piracy thrives greater when the income gap between the rich and the poor is relatively large. For example, developing countries like China, India and Mexico have higher piracy rates per-capita.

Lax Enforcement

The remote possibility of being held responsible for copyright infringement is often cited as a cause of piracy.

Reliability of Pirated Copies

The amount of piracy is affected by the reliability of the pirated software available for a given product. Software that pirates can produce reliable copies of is more likely to be stolen than software that pirates cannot reliably copy.


The ease of pirating software using peer-to-peer file sharing software such as BitTorrent and LimeWire contributes to its prevalence.


Many users do not realize the illegality of “softloading”, the installation of one piece of software onto multiple computers


The software industry has to deal with the threat of piracy and its impact on their business. While the activity is generally seen as illegal, the ethical implications of it are explored here in the following most common cases-

  1. The pirate seeks to sell pirated software at a price
  2. The pirate seeks to distribute pirated software free of cost

Today, it isn’t difficult to pirate software, and with Bit Torrent and Lime Wire around, it’s fairly easy to do so. With such an ease, it is very logical that some people might try to earn a profit from pirated software. Suppose there is a person who copies an application developed by a large company and decides that this product is way over-priced and should be available for a much lower price. With this in mind, he begins creating and distributing copies of the application at a new, adjusted price (of course lower than the price of the original software). Very clearly, this activity is illegal, since he is reselling copyrighted material, which he has illegally copied. The pirate in this case may think that he is ethically right for providing the product at a price that he feels it should be sold at. He might even feel a little noble for doing so; after all, he thinks that he is protecting the consumer and making a product available at the “right” price. This scenario is actually a very weak argument to present piracy as ethical. Even though, it may seem that the pirate is doing the “right” thing, he is not. In case he feels that the software is overpriced, he should raise this issue with the company or protest legally in various forums. He can’t begin “stealing” software and selling at a “just” price. Another important question is whether he is keeping the money to himself or donating it to charity. If he is keeping the money to himself, he should stay far away from the term “ethics”; he cannot give the money to the company stating what he is doing as the company will file a criminal case against him, and he has already admitted his wrongdoing. What if he is donating the money to charity? It is a difficult case and it means that in effect, the company is being forced to charge some customers a low price and to pass it entirely to charity. The pirate’s act of getting the software is unethical, but his giving the sale proceeds away to charity is ethical, but what when the two acts are taken together? I would treat it as not totally unethical, but well, I am unable to pass a final value judgment. There is another point to consider in this type of piracy. If a company discovers the existence of a pirate who is selling their product and chooses not to take action, how do the ethics now apply? Suppose the company does not take action because the legal expenses would cost more than what it is losing to the pirate. In this case, it is better for the company financially to allow the pirate to continue, but does this make the piracy ethically right? I feel that the act of the pirate is still “unethical”. However, the company must also share some of the blame for allowing the piracy to continue. It is not economically sound for the company to initiate legal action against the pirate, but not doing so shall have adverse effects. Even if it is not economical, taking an exemplary action against the pirate could reduce piracy in general and would certainly start to give the company a reputation for not tolerating piracy of its products, which could be beneficial in the long run. Ethically also, the company is wrong because they are allowing the unethical act of piracy to occur when they are able to take action to stop it. Thus, in a situation such as this, the act of pirating a product is still “unethical”.

The second type of piracy is that in which software is obtained freely and the software is distributed free of charge. The proponents say that they wouldn’t have purchased the product anyways and that the companies, while pricing their products, already take into account piracy, and price it higher than they would have had if there were no piracy. The proponents of “I wouldn’t have purchased it anyways” argument feel that nobody is being hurt because of this and thus they attempt to consider this sort of piracy ethical. It is worthwhile to mention that the pirate is using a product money was invested in to develop and that individuals spent time to work on. The company should receive payment for providing him with the product to use. If the pirate wouldn’t have bought it, yet he is using it, shows that he likes the product. Consequently, he should purchase it so the company can receive compensation for use of the product. By using the product without compensating the company, an “unethical” act is being committed. The second argument that companies price products higher in order to account for piracy and that this justifies obtaining the product for free, is wrong. If nobody uses the product for free, the company would not have to adjust the price at all. Using the effect of an unethical act to justify it is not a judicious argument, therefore, this case is “unethical” in terms of piracy.

There are many softwares and we have seen recently in the Application Stores of both iOS and Android that there are certain applications which are free to use, but with a remark that if the user likes it, he/she should purchase a copy of the same. The cases where a user likes it, but still continues to use it without purchasing are “unethical”.

Another aspect concerns the people who are below the poverty line and are using pirated software. Technically, they are wrong and their action is “unethical”, but in view of their financial status, it is impossible for them to buy software and they can be given the benefit of doubt. Here there is a scope for the software companies, particularly the big ones, to find ways and means to ensure that people, who are below a defined income level, can have access to software free of cost. Although this is ridden with problems of implementation, it would really be “ethical” on the part of these companies. A counter view is that most of the basic softwares have free alternatives also like Linux in place of Windows & Mac for operating systems, OpenOffice in place of MS Office for office suites, etc. and so there is no need for any proprietary software to be provided to the poor people; and if anybody wants to use it, he/she should pay for it. This argument is again, technically right, but debatable. The readers may decide for themselves, but a recent case in Russia is relevant. The following was reported at down-by-extending-software-li/ by Joseph L. Flatley on 14th September, 2010.

Microsoft responds to Russian crackdown by extending software licenses to NGOs

Put yourself in Microsoft’s shoes for a second: how would you feel if the Russian government used your product as a pretext for shutting down opposition groups? As you know, that’s exactly what happened in January when an NGO known as Baikal Environmental Wave had its computers confiscated under the pretext of searching for pirated Microsoft software. The group, it seems, is spearheading opposition to the reopening of a paper factory with a history of polluting Lake Baikal – much to the chagrin of a certain Prime Minister Putin. In an attempt to keep this sort of thing from happening in the future (and to clean up its tarnished image), Microsoft has announced that it will provide a unilateral NGO Software License that automatically covers NGOs and media outlets in Russia and other, as yet unspecified, countries, and which will extend until at least 2012. “We want to be clear,” said VP and general counsel Brad Smith. “We unequivocally abhor any attempt to leverage intellectual property rights to stifle political advocacy or pursue improper personal gain.”

This shows that as far as political advocacy is concerned, software piracy cannot be used as a tool to stifle it; in other words, Microsoft is not treating software piracy in such a case as “unethical”. Well, my wording of the previous and this sentence may not be exactly correct, but the crux is that certain instances are there where software piracy has not been punished, even when a sovereign government was taking legal action against piracy. In fact, the company has come out and legalized the pirated software. It is a clear indication that software piracy is not always being dealt with plainly in legal and technical terms, and there can be cases where “other” considerations come in.

I am specifically of the opinion that software piracy is “unethical” and there can be hardly any reason for it to be justified as “ethical”. As far as people who cannot afford to pay are concerned, most of the basic and essential software have free variations available which can be used readily and freely. The economic losses of software piracy are colossal and as stated at the beginning, the losses in 2009 were estimated at US $ 51.4 billion. Had this amount been realized by the software developers, the prices would definitely have come down and greater research would have been fuelled for the development of better and easier to use software.

A great victory against piracy has been the action against the owners of the file sharing website The PirateBay which is a store house for pirated videos, music & software. In 2009, a Swedish court has convicted four men of helping people to break copyright law by creating and running The Pirate Bay file sharing website. The media corporations who own the content sued them for loss of earnings. Here is a brief report about this –

However; producers are aware that the growth and innovations in technology are going to provide better facilities of file sharing and that they have to adapt to this and develop alternative revenue and business models. An insight can be had from an interesting seven part video series “Piracy is Good”. The first part is –

The other six parts of this series can be viewed by clicking the appropriate part number here: 2 3 4 5 6 7

  1. […] Goyal, Shubham. “Software Piracy and Ethics”. Retrieved April 8, 2017 from […]

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