Wake up!

Is your credit union guilty of software piracy?

This begins the famous poem, written in 1860 by Henry Wadsworth Longfellow, about Paul Revere's historic ride to warn Samuel Adams and John Hancock that British troops were on their way to Concord. As Revere rode the streets he shouted "Wake up!" to get the attention of all those sleeping in the early morning hours. His warning throughout the sleeping countryside allowed the Revolutionary troops to prepare for the oncoming British.

In today's age of technology and mass media, there is no need for me to mount my trusty stallion and ride around the countryside yelling "Wake up!" to warn credit unions of a possible oncoming threat. But, warn them I must, not about the British, but about the BSA (Business Software Alliance).

BUSINESS SOFTWARE ALLIANCE

The BSA was founded in 1988 and has since been the voice of the world's leading software companies. BSA educates computer users on software copyright, advocates public policy that fosters innovation and expands trade opportunities, and fights software piracy. BSA members include: Adobe, Bently Systems, Lotus Development, Network Associates, Symantec, Apple Computer, IBM, Intuit, Autodesk, Corel Corp., Microsoft, Novell, Visio, Compaq, Intel and Sybase.

BSA operates hotlines around the world for callers who want information about software piracy, or to report suspected incidents of software piracy. BSA initiates audits, conducts raids and brings lawsuits against suspected software pirates. It works closely with law enforcement agencies to coordinate enforcement of criminal copyright laws and takes action against software resellers and enduser organizations that make unauthorized copies of software.

In addition to generating millions of dollars in recoveries from civil actions, the BSA enforcement program has been instrumental in bringing hundreds of criminal cases, closing down pirate Internet sites and pirated software retail outlets and seizing illegal CD presses. All money collected from anti-piracy settlements is used to fund the organization's enforcement, policy and education programs.

LOS ANGELES POLICE FCU & THE BSA

In July of 1997, Los Angeles Police Federal Credit Union was contacted by the BSA regarding possible unlicensed use of software. Los Angeles Police FCU immediately began its own evaluation of its software licenses. Based on these findings and subsequent discussions with the BSA, Los Angeles Police FCU agreed to pay $60,000 to the BSA at the end of 1998, along with providing assurances that the credit union has rectified its software licensing requirements.

RAPIDLY CHANGING TECHNOLOGY

Los Angeles Police FCU, like many other organizations, was eager to take an aggressive approach to forward progress in the area of technology.

Only five years ago, personal computers in the industry were at a minimum. Instead of PCs on employees' desks, "dumb terminals" were the norm. With the rapid development of PCs and the eagerness to replace the "dumb terminals" with equipment that would improve employees' productivity and efficiency, Los Angeles Police FCU began the implementation of personal computers.

MANAGEMENT UNAWARE

Management was also new to this new technological wave that was sweeping the industry. Their lack of familiarity with the laws protecting the distribution of software resulted in controls being inadvertently overlooked. Employees in the data processing department would receive new software and, in their enthusiasm to make it available to all employees, failed to appropriate the proper licenses.

TECHNOLOGICAL LEADERSHIP

With the arrival of Stephen M. Endaya as the new CEO, a new position of vice president of technology was created to oversee the data processing operations and to lead Los Angeles Police FCU forward in the area of technology. I was hired into that position, and was able to establish a higher level of technological awareness within the credit union. Issues such as licenses and software piracy were immediately addressed and plans were put in place to assure that Los Angeles Police FCU became compliant.

A VALUABLE LESSON

It is our understanding that a call placed to BSA's "piracy hot-line" was the source of information that lead to their inquiry.

By the time that inquiry began, we were already well into the process of bringing all software licenses into compliance. BSA recognized our ongoing efforts and worked with us to reach an agreement. Since then, all software has been properly licensed and procedures put into place to assure that only licensed software is installed at the credit union.

BSA'S NOT THE BAD GUY

In 1997 software piracy cost the software industry billions of dollars, with losses of more than $2.7 billion in the U.S. alone. Approximately 27 percent of all business software in the U.S. is obtained illegally. Worldwide that number increases to 40 percent! According to 1996 estimates, software manufacturers lose $21,308 every minute due to piracythat's $2 million every hour and $30.6 million every day. We currently pay for this through higher software costs.

The BSA's objective is to enforce software copyright laws by monitoring organizations in an attempt to eliminate software piracy.

SOFTWARE COPYRIGHT LAWS

In 1964, the United States Copyright Office began to register software as a form of literary expression. The Copyright Act was amended in 1980 to explicitly include computer programs. Today, according to Title 17 of the United States Code, it is illegal to make or distribute copies of copyrighted material without authorization. The only exception is the user's right to make a single backup copy for archival purposes. In 1990, Congress approved the Software Rental Amendments Act, which prohibits commercial rental, leasing or lending of software without the express written permission of the copyright holder.

PENALTIES FOR VIOLATIONS

The penalties for software piracy can get pretty steep.

If you are caught with pirated software, you or your credit union may be tried under both civil and criminal law. A civil action may include damages up to $100,000 per work for copyright infringement and $1 million per mark for trademark infringement.

Criminal penalties may include fines up to $250,000 and jail terms up to five years, or both for the unauthorized reproduction or distribution of 10 or more copies of software with a total retail value exceeding $2,500.

HOW TO AVOID THIS

The best thing to prevent these possible penalties is to be aware.

This awareness needs to begin at the highest level of the organization, with the CEO and board. The extreme level of liability for possible infractions makes this a necessity. If you, as an executive, don't currently know for a fact that all software within your credit union is licensed, you should look into it immediately. You must be able to reconcile all software currently installed at your credit union with license numbers from the software manufacturer. Be sure you have purchased full versions of software and not just upgrades. Upgrades are only acceptable if you also have a registered license for the full version of the software.

It is also important that you have a policy in place to address software piracy within your credit union. A memo should go out regularly to all staff reminding employees of the credit union's policy against software piracy.

HELP FROM THE BSA

The Business Software Alliance offers information to help organizations, through its Web site at www.bsa.org. Publications such as The BSA Guide to Software Management can be downloaded at no cost. It provides valuable information along with a sample memo to staff regarding software piracy and a sample policy that can be customized for each organization.

Also through its site you can download SoftScan, the BSA software scanner that collects and analyzes version information about software installed on a computer. This software is free.

STOP SNOOZING

I hope you all have heard my cry of "Wake up!"

After many of you read this article, you will conduct software license investigations and discover that your credit union does in fact have unlicensed software. You should address it immediately, and in the process realize that in most cases unlicensed software is a result of management and employees not being aware of software licensing laws.

Educate your staff and stay aware of all installed software and licenses within your credit union because, as George Orwell writes in his novel 1984, "big brother is watching." In our case, Big Brother is the Business Software Alliance and they are watching us through the eyes of our employees. *

[Author Affiliation]

Richard G. Taylor is VP/technology for $340 million Los Angeles Police Federal Credit Union, with 34,000 members, in Van Nuys, Calif. Reach him at 818.779.3326.