What does this have to do with software compliance? Interestingly, many software companies still rely solely on licensing to defend their intellectual property, without using an offensive compliance strategy as an integral part of their defensive plan.

Consider the following statement:

We may not be able to protect our intellectual property rights (including our source code) from third-party infringers, or unauthorized copying, use, disclosure or malicious attack.

Every listed ISV has some variation of this warning on the business risk of illegal use in their Annual Report, but few actually embrace a compliance strategy in order to fulfill that obligation. The truth for many software companies (listed or private) is that they  can’t protect their intellectual property rights using just licensing from infringers, nor is it realistic to expect them to legally defend their rights given the lack of uniform intellectual property law and enforcement globally.

Instead, we find leading software companies balance their defensive efforts with an offensive compliance program to recover lost revenue from infringers create a winning IP protection strategy.

There are two real victims when your intellectual property is misused: Paying customers and your Shareholders. A good software compliance strategy is implemented to do three things:

1. Stop Piracy. With no rights enforcement, history has shown that users will not pay for software licenses. By tracking who uses your software illegally, you give your compliance team the data they need to enforce your rights when and where you choose. By making examples of companies that misuse your software, other companies will learn from that example and stop using your software without a license.
2. Protect your paying customers. When customers buy a software license from you, there is an implicit contract that you will enforce a level playing field by ensuring that all users pay. By allowing misuse, you are actually rewarding companies that misuse your software by giving them a competitive advantage (zero cost of software) over your loyal paying customers. Additionally, some ISVs increase the cost of their software licenses to try and recoup the lost revenue due to misuse with the ironic result of making their paying customers fund their competitors’ software licenses.
3. Increase Shareholder Value. It is estimated that for medium to large ISVs (revenues exceeding $25 million), up to 31 percent of software license revenue is lost to “license leakage” from overuse.Users stealing software licenses don’t actually “eventually pay” for them unless you make them. The only proven way to recover revenue and increase shareholder value is to actively enforce software compliance.

By implementing a Software Intelligence strategy for compliance, you can fulfill your obligations to both your loyal paying customers by keeping the playing field level, and your shareholders by maximizing top line revenue with compliance. The best defense is a good offense: there is no better way to protect your intellectual property than by enforcing your rights with companies that are misusing your software.

- Jim Nauen

The Federation Against Software Theft is to take part in the V.i. Labs’ ‘License Compliance and Software Piracy Panel Discussion’ webinar taking place on 2nd February 2012. The webinar itself is focussing on license revenue recovery best practices and trends as well as a series of real-world latest case studies on the implications of intellectual property theft.

V.i. Labs has bought together a panel of experts, which includes Keith Kupferschmid, General Counsel and SVP at SIIA, and Victor DeMarines, VP of Products at V.i. Labs. The purpose of the webinar itself will be to provide useful information on software piracy for Corporate Counsel, licensing and compliance officers and VPs or Directors of Product Management, Sales and Marketing.

The event will explore industry topics such as:

• Latest Trends: profiles of the average business that is using unlicensed software, policies and laws and geographic data
• New Approaches on Compliance: How to encourage customers to buy licensed software and determining the value of whistleblower campaigns
• Investigating the Piracy Channels: Different techniques to identify infringers

Julian Heathcote Hobbins commented: “V.i. Labs has put together an expert field of speakers to debate the implications of poor corporate compliance, unlicensed software and the impact of piracy on both users and IT rights’ holders. Software piracy continues to be a dominant factor affecting our businesses and our economy and we will be examining where the industry currently stands in terms of software piracy. We want to stress the importance of protecting SMEs by encouraging customers to buy genuine software product. A level playing field”

“This is the second year that we’ve hosted a panel discussion on piracy and license compliance, and we’re delighted to have Julian and Keith on the panel again this year, “commented Victor DeMarines at V.i. Labs. “The main aim for this event is to get our industry talking and thinking about new strategies and best practices for enforcing license compliance and reducing the impact of software piracy. Based on the success of last year’s panel discussion, we know that with Julian and Keith’s knowledge and experience in the industry, these issues will be communicated effectively to our audience.”

Keith Kupferschmid, General Counsel and SVP at SIIA, concluded: “Unlicensed software trends are constantly changing, and it's important for the software industry to stay on top of new strategies and best practices for enforcing license compliance. Panels like this one are crucial for organisations focused on license revenue recovery.”

The webinar will be held on Thursday 2nd February 2012 between 11:00 am and 12:00 pm EST. To register for the event, please visit: http://info.vilabs.com/2012-panel

-ENDS-

About V.i. Labs
V.i. Labs offers software providers solutions to identify, track, and create actionable intelligence on the use and misuse of their software to increase revenue. Its CodeArmor® platform is used by leading software providers to recover revenue lost to unlicensed software use, gain compliant customers, and globally reduce the pirated use of their software applications. Customers have identified more than $2 billion in revenue recovery opportunities and are adding up to ten percent additional revenue to their bottom lines. http://www.vilabs.com/

About The Federation Against Software Theft
The Federation Against Software Theft (FAST) was formed in 1984. FAST is a not-for-profit organisation limited by guarantee and wholly owned by its members. It was the first organisation to protect software publishers’ rights and advances its mission through education, enforcement and policy initiatives, together with promoting standards and best practice in the professional management of software. FAST advocates IP for growth. www.fast.org.uk

Press Contact:
Robin Campbell-Burt
Spreckley Partners Ltd.
T: 0207 388 9988
E: fastiis@spreckley.co.uk

First and foremost, with all of the buzz in Washington lately around SOPA, it’s important to note that these sites fall under the category of rogue websites that are being targeted by the legislation. The accounts that we’ve read indicated that the seizures were limited to only the websites responsible for selling the goods, not a confiscation of the goods themselves (which would have been a possibility in this case). It leads me to believe that this raid will result in nothing more than a dog and pony show with new sites quickly emerging to continue selling the counterfeit goods. It’s the same game of Whac-a-Mole that we see in the software market: wasting resources on vast and decentralized online distribution channels while not making progress against the real issue.

Of note, however, is the fact that the domains were registered in the U.S. but run from foreign countries, particularly China. As we’ve seen and discussed from research, China is one of the worst offending countries when it comes to software piracy. It’s ingrained in the culture and presents steep compliance challenges for organizations doing business there. (Software vendors: we recently held a webinar on license compliance and recovery strategies for challenging geographies like China. Take a look at the on-demand version here for some useful tips and best practices.)

According to Immigration and Customs Director John Morton, the volume of sales for these sites is not tracked, but likely result in large sums of money that “fuel other criminal activity.” In an article last year on Microsoft’s anti-counterfeit unit, the New York Times uncovered a similar connection between counterfeit/pirated software and a major Mexican drug cartel.

At V.i. Labs, we don’t keep track of where the money from piracy is going, but we do encourage software providers to know where it’s coming from—and how much. Revenue lost as a result of unlicensed software adoption is a burden for ISVs, no matter what size. As we noted in a recent “Software Piracy Turkeys” post here on Code Confidential, too many ISVs are taking the ostrich approach and putting their heads in the sand when it comes to addressing their piracy problems. Now is the time to act and take control of the situation by quantifying the problem and laying out an appropriate response.

Image Credit: http://www.flickr.com/photos/usfwsnortheast/4131096505/

Thanksgiving always brings us to thoughts of spending time with family and friends. It also gives us time to reflect on the events of the past year.  While we are thankful for so many reasons, in this blog post, we’d like to take a look at the five biggest mistakes or “turkeys” that have happened in the software piracy area in 2011.

1.  SOPA. The Stop Online Piracy Act currently being discussed in Congress has been much maligned with claims from many sources that the bill essentially amounts to online censorship. V.i. Labs doesn’t support it either but not because it is censorship, but because it simply won’t stop online piracy. Trying to stop piracy by adding new tools to disable access to the piracy channels is a futile strategy for software vendors. Past experience suggests that these tactics only create new methods and approaches for sharing pirated content (for example, the rise of cyberlocker service providers). We believe software vendors should focus their resources on reducing the piracy of their products by tracking the adoption of unlicensed software and legalizing organizations and users through education and direct compliance programs.

2. The Whistleblower Process. Uncovering software piracy by relying on company whistleblowers is an imperfect process that spawns whistleblowers with ulterior motives. Most whistleblowers are former disgruntled employees with axes to grind.  Some, as in this recent case with Tiger Communications, are actually the culprits who downloaded the pirated software to a company computer then turned them in when he was fired. The Business Software Alliance is also trying a new tactic of entering whistleblowers into a sweepstakes to win $1,000, regardless of whether or not a settlement is actually reached. This is bound to bring about false accusations just so people can enter the contest.

3. Employee apathy. A Federation Against Software Theft (FAST) Barometer Report on software piracy published in September revealed that two thirds of UK workers turn a blind eye to their employers’ use of pirated software. While we don’t think whistleblowing is an effective method of uncovering software piracy use, we do think employees who are aware their employers are using pirated software should encourage their employers to pursue a course of action that will bring them into compliance. As more and more software vendors adopt amnesty programs forgiving past software piracy transgressions in exchange for new compliant customers, this process should improve.

4.  China. While the Chinese government claims software piracy issues in their country are not a major concern, the facts continue to tell a different story. Companies that operate in China and other locales where software piracy laws are not strongly enforced steal an estimated $1.6 billion from their in-market competitors, according to a recent report from Microsoft. The bottom line is that governments need to strengthen their anti-software piracy laws so that all companies that operate within their borders are on the same even playing field. It will promote better competition and better quality products.

5.  Our last turkey is not a turkey at all, it’s actually an ostrich: all the software vendors who stick their head in the sand and ignore their own software piracy issues. These vendors believe that turning a blind eye to software piracy provides them with a form of viral marketing. In reality, they are losing revenue (that they cannot even quantify), creating an unlevel playing field for their customers, and giving the appearance that the use of pirated software is an acceptable and commonplace practice.

Thank you for your continued support and interest as we work together to confront software piracy and license overuse!

Unfortunately, the frenzy over fears of censorship has quickly overshadowed the actual intent and purpose of the bill: to take action against online piracy, theft of intellectual property and copyright infringement. Our concern echoes the sentiments of Congressman Mark Amodei (Nev.), who observed during yesterday’s hearing that in our pursuit of good, we’ve lost sight of the true goal by becoming wrapped up in the pursuit of perfect.

Our take
Dialog around the issue of piracy at both the public and government levels is good. It’s a step in the right direction. The legislation itself, however, is misguided and has no chance for success as a tool to stamp out piracy. Therefore, we do not support it in its current form.

Research and history have both shown that fighting piracy in the channel is a hopeless endeavor. Michael O’Leary, Senior Executive Vice President of Global Policy and External Affairs for the MPAA said it best during his testimony yesterday: pirates will always be one step ahead of us. It is the simple truth of crime. This is why Microsoft can take down nearly a million links from rogue Websites each month without even making a dent in piracy rates, and it’s why current and former legislation has utterly failed to make a difference.

What should be done?
We must first understand that piracy cannot be stopped. Reactively attacking the channel is a fruitless endeavor; however, focusing on the adopters of pirated goods – understanding their motivations, methods and needs – has been proven to reduce piracy rates and help intellectual property owners recoup much of what was lost to piracy. For many companies, it can mean millions of dollars in recovered revenue.

Instead of giving law enforcement carte blanche against site owners and providers, this bill should give content owners the tools to better educate the public about the risks and impact of piracy, and capabilities to better identify and pursue individual infringers that are significantly and negatively affecting their livelihoods.

Although our interest and experience lies in software piracy, the SOPA legislation addresses the broader issue of piracy across all industries. Is it perfect? Not at all, but a step in the right direction? We think so.

What’s next
Witnesses from yesterday’s Judiciary Committee hearing have been given five legislative days to submit additional materials for the case, which for some must include positioning and responses to DNS security concerns that have been raised. The bill faces a long road filled with opposition, and must pass debate and voting in both the House and Senate before it reaches the President’s desk. Yesterday’s hearing was only a blip in the saga. Ultimately, we hope the bill will continue bringing critical and constructive conversations to the piracy table.

Piracy business intelligence is a radar of sorts, revealing the true picture of software use, and what it reveals is critical for determining a course of action. For example, an ISV may decide not to have a sales or marketing presence in an emerging region like Russia because customer data suggests that there is a low adoption rate in the country. Yet data from piracy business intelligence reveals a sizeable group of users that have taken advantage of free/cheap and unlicensed versions. Not only are these specific users now potential targets for compliance and revenue recovery, but it also opens up the door for future legitimate business.

When addressing the geographic spread of piracy, there are a number of factors that need to be taken into consideration, especially when data reveals previously unknown customer bases and markets. Software vendors need to understand what causes are contributing to higher rates of piracy. How strong is the region’s IP enforcement? Are legal versions of the software readily available? How strong is the industry and economy in the region?

In countries such as Russia and China, weak intellectual property enforcement has fueled what we refer to as a “culture of indifference” toward piracy – it is widespread, widely known and not a concern. The challenges that these countries present should not deter ISVs from dismissing them as a lost cause. In fact, they represent significant opportunities for growth. Successful license compliance and anti-piracy programs that generate significant revenue in these regions are a reality.

We will be hosting a webinar later this month to explore the realities of uncovering new customers in emerging markets, as well as approaches for license revenue recovery. On Monday, November 21, our own Victor DeMarines will be joined by JP Seuren from Software Compliance Group to present examples of revenue recovery in Russia, Vietnam and Thailand, and some of the lessons learned while building license compliance programs in these regions.

The global market is critically important for businesses today and for ISVs it means understanding geographic nuances and having a detailed plan in place to address piracy of their products.

More information is available here:  http://info.vilabs.com/new-customers

We hope you’re able to join us for this conversation and encourage you to bring questions!

Click to enlarge

Apple technology and the Mac OS in particular have become increasingly important to enterprise companies to accomplish their business goals. CodeArmor Intelligence 3.3 now allows ISVs developing software for this platform to know if it is being used improperly and provides them with the information and means necessary to seek out these infringing users and get them to become paying customers.

It has been our experience that most infringing companies are unaware that they are using noncompliant softwareand want to become paying customers once made aware of the oversight. With that in mind, CodeArmor Intelligence 3.3 also includes Amnesty-aware capabilities that let users know when they are using a noncompliant version of the software. It provides information on how they can then become compliant, paying customers, thus driving new business leads to the ISV.

CodeArmor Intelligence continues to improve so that it offers the best software business intelligence solution for both ISVs and their customers to drive new business opportunities and safeguard against software misuse. To learn more, contact us.

In order to be successful in any endeavor, you have to know what you’re dealing with from a strategic preparedness and measurement standpoint. For license compliance and software piracy, ISVs need to know the user base specific to their products – are students the primary users or businesses? Are unlicensed versions being used by unknown organizations or by existing customers? Has the license been deliberately cracked or merely overused?

We continue to emphasize the need to make intelligent, informed and data-driven decisions about license compliance and piracy. As we’ve said time and time again, reacting to piracy is ineffective – it’s too late to change the circumstances and lashing out becomes an exhausting and fruitless effort.

Take a look at what we prepared for IDG Connect here, where we offer more depth and insight into the process of treating software piracy as a revenue opportunity instead of a bottom line loss:

IDG Connect: Best Practices for Software License Revenue Recovery

Recently, our friends across the pond at FAST polled UK office workers about their attitudes toward pirated software and the use of unlicensed software in the workplace. Specifically, the group looked at workers’ familiarity with “whistleblower” protection and willingness to report piracy.

The results are interesting, though not entirely surprising, and reveal an overall cultural of indifference toward software piracy (something that might be expected more in regions like China and Taiwan than in the UK).

Despite legal protection and the ability to report piracy anonymously, the overwhelming majority of professionals would not report piracy in their workplace. According to the survey, 13 percent of respondents feared losing their job; 22 percent feared the stigma of being a “whistleblower;” and an “astonishing” 49 percent simply didn’t care if the software they used at work was legally licensed or not. Less than a quarter of all respondents would consider reporting piracy.

A similar survey of IT professionals conducted by Network World found that nearly 70% of respondents have directly witnessed IT staff looking the other way when employees install unlicensed software.

This indifference is a threat to innovation and economic growth in the software sector. As much as it is an attitudinal shift, the growth of piracy distribution channels makes it trivial for users and businesses to obtain and adopt unlicensed software. It’s easier than ever to obtain pirated software and spread it within organizations without the users themselves even knowing that the software is illegal.

End-user organizations and ISVs alike need to proactively address software piracy. At stake for the end-user organizations is the loss of credibility, significant compliance fines and potential security risks. For the ISVs, it’s a matter of recovering lost revenue (click here for a great panel discussion on the topic of license revenue recovery with FAST, SIIA and V.i. Labs). At the end of the day, the answer is in gathering intelligence on the use and misuse of software and acting upon it.

With workers reluctant to report piracy, ISVs should consider piracy business intelligence tools such as CodeArmor Intelligence as a way of identifying license overuse and overt piracy and turning them into revenue recovery leads. These tools reduce the reliance of ISVs on personal reports of piracy, which can be inaccurate or influenced by ulterior motives, by providing unbiased and indisputable data on the use of unlicensed software.

Is it really marketing if you're not measuring it? Learn how vendors can leverage unlicensed usage to generate new revenue streams.

Listen to learn:

• Why some software vendors consider unlicensed use and piracy to be a form of viral marketing
• How software business intelligence can help vendors actually measure the impact on their bottom line and convert unlicensed usage to paying customers
• The benefits of collecting data on unlicensed use so you can make data-driven decisions to recover revenue

Dan Thompson and Michael Goff

Listen Now (6:00)

Here's the video on the license amnesty program we mentioned in the podcast - learn how you can automate software license revenue recovery by notifying unlicensed users and giving them a way to become customers: