They many not be Bluebeard but software pirates sink companies

Bethesda firm's football game falters because of piracy

Gridiron, a football software program created by Bethesda Softworks, was the firm's first program and an instant success when it hit the market, winning major awards including the best sports simulation game of the year in 1986.

But within days after Gridiron began selling, a software "pirate" broke the program's codes and introduced them on his bulletin board. In one fell swoop, the pirate gave the program away to thousands of computer users, leaving the creators shocked by the theft and bemused by the thief's audacious boast, via his bulletin board, that he stole the program.

"We never in our wildest dreams thought someone would do that," said Chris Weaver, president and founder of the Rockville-based company.

Moreover, Softworks, which managed to sell nearly 20,000 units of the program before it was pirated, was left with a dead product. Worse, complicated codes must now be used, making it difficult to access programs, which penalizes the customer more than it stops pirates.

"We spend a lot of time and trouble in protecting our [programs]," Weaver said ruefully.

In the software industry, such stories are legion, and they have opened a rapidly expanding area of litigation for law firms as piracy becomes pervasive not only in this country, but worldwide, due to intense competition among nations.

"It's become a fruitful field," said John Baumgarten, attorney with Proskauer Rose Goetz & Mendelsohn. "There's a lot of litigation going on."

While it's difficult to measure, observers say a substantial number of law firms in the past few years have engaged in piracy litigation that includes not only software, but records, films and other intellectual properties. Local figures were not available, but nationally, the membership of patent, copyright and trademark attorneys at the American Bar Association has risen steadily since 1984, from 6,871 to 8,823 this year. However, these figures don't include all attorneys practicing in the field of intellectual properties.

While piracy on the homefront already presents its share of litigation, a greater threat to producers is overseas where at least eight countries (many of them with emerging economies) have been put on a "priority watch list" by the federal government because of suspected or known piracy cases, which have cost the industry billions in revenues.

Piracy in this country isn't really considered piracy since it's mostly unauthorized copying done by individuals at an ad hoc level, and usually not for profit. But internationally, piracy involves a conspiracy to copy and sell software.

Since at least 70 percent of the world's software is produced by U.S. manufacturers, domestic software is highly susceptible to being pirated, according to a recent report by the Annenberg Washington Program, a D.C.-based policy study group.

In recent years, action on the domestic and international level has provided leverage in the battle against piracy, including legislation restricting imports on nations that don't adequately protect intellectual property rights, and the inclusion of the United States into the Berne Convention, which gives the U.S. a stronger position from which to also battle international patent and copyright infringement.

Carol Risher, executive director of downtown-based International Intellectual Property Alliance, said that since joining Berne, the U.S. has established copyright agreements with 22 countries that it didn't have before.

For law firms, piracy and the initiatives being taken to stop it are expanding the definitions of intellectual property, and opening an entirely new niche in the practice that promises to increase business for some time to come.

"There is going to be increased litigation," said Gary Hoffman, a partner at Dickstein, Shapiro & Morin, and author of several articles on piracy, including the Annenberg report.

Much of the litigation involves filing criminal penalties and, since pirates are rather tough to catch, using practices such as search and seizure orders to prevent them from moving their operation to another location.

"What I need to do is show up with a U.S. marshal in the middle of the night with a search warrant," Hoffman said.

But criminal sanctions can backfire sometimes, said Robert Greene Sterne, of the firm Saidman, Sterne, Kessler & Goldstein. "A judge is much more willing to settle in a civil dispute than a criminal dispute," Sterne said. "The more effective approach is to be very hard in the civil suit."

Quite often piracy cases are made on a civil level, but settled out of court. Companies want to avoid revealing trade secrets, and paying the costs it takes in time and money to prosecute. Last summer, for instance, five companies including Microsoft Corp. and WordPerfect Corp. settled for $100,000 after filing suit against New York-based book publisher Facts On File for software copying.

Law firms won't just be tackling litigation in the quest to check piracy, however, for attorneys will also play active roles in lobbying for more comprehensive legislation. At the moment, there is only one bill pending before the Senate, the software rental amendment, which requires licensing of software products to prevent pirating. But congressional sources don't expect passage until next year.

As well, attorneys will also become involved in educating businesses on the furtive ways of pirates.

Indeed, since it is often difficult to find and catch pirates (the Gridiron pirate is still at large), companies have been organized in the past few years strictly for the purpose of tracking down the culprits.

"Lawyers in some of these companies have conducted seminars in how to combat piracy," Hoffman noted. Seminars include, for instance, explaining how to make inquiries of customers who report seeing your software at another store.

One local industry group that is involved in finding pirates is Software Publishers Association on Connecticut Avenue, which installed a toll-free number (1-800-388-PIR 8) last month so such incidents can be reported quickly. The association's counsel has already filed 25 lawsuits.

"We've had some really good leads from [that number]," said Jodi Pollock, a spokeswoman for the association.

Still, the industry has limited defenses in fighting piracy, Pollack said, and the principal one has been moral persuasion; advertisements and public relation campaigns urging users not to copy.

But no matter how intense the efforts legal or otherwise, piracy, as in most other criminal activities, will always pose a threat.

"We will never stop it," Hoffman said. "We will curb it."