Second group names L.A. as software piracy capital; businesses here lead the nation in illegal disk copying.

A national trade group that represents the country's largest computer software makers has ranked Los Angeles as the center of illegal program copying, or piracy, in the country. And businesses, the association said, are the main culprits.

A year ago, another trade group that represents more than 1,000 smaller software makers also ranked the greater Los Angeles area as the leader in piracy. That group also said businesses are the main source of piracy.

Representatives of the two associations, both based in Washington, D.C., said last week that piracy of software programs by businesses in Los Angeles is costing programmers tens of millions of dollars in revenues every year and the problem is getting worse.

Robert Holleyman, president of the Business Software Alliance, said of the group's 150 current investigations of illegal copying in the United States, about a dozen are centered in the Los Angeles area. The next highest number of investigations -- nine or 10 each -- are in San Francisco, Miami, New York and Chicago, he said.

The Business Software Alliance represents the nine biggest software makers in the U.S., including Microsoft, Apple Computers, Lotus Development and Novell Corp.

The other industry group, the Software Publishers Association, continues to rank Los Angeles as the piracy capital of the United States. Peter Beruk, litigation manager for the SPA, said his group ranks Los Angeles ahead of New York and San Francisco.

"Our last compilation of figures was about a year ago but there is nothing to make me think the rankings have changed," said Beruk.

The SPA represents about 1,100 computer software companies in the country.

Software piracy involves the illegal copying of computer programs, which under federal regulations are protected by copyright laws. The most basic type of piracy occurs when a business or individual buys a software program that is contained on a floppy disk and then copies it on to a blank disk.

In the case of a business, piracy occurs when it copies a software program several times rather than buying individual disks for each personal computer user.

Under recently updated federal regulations, computer piracy is now a felony and is punishable by fines of up to $250,000, five years in jail, or both. Those found guilty of piracy are also subject to civil penalties of up to $100,000.

This week, Holleyman of the BSA is planning a series of talks and meetings with the media in Los Angeles about piracy in the area. He said his mission is twofold: To alert businesses to the fact that copying software is illegal, and to publicize the seriousness of the problem.

"It is a very serious problem in California that is costing software makers a lot of money. A high priority of our group is to make people aware that this is illegal," he said.

Both the SPA and the BSA investigate piracy through tips received on toll-free telephone lines. The tips usually come from current or former employees, representatives of the two groups said.

When either group receives a tip, it investigates the charge and, if warranted, starts legal proceedings. If the case cannot be settled between the person or business doing the copying and the group, the matter is turned over to federal authorities such as the local office of the U.S. Attorney.

Settlements are usually in the six-figure range and carry a stipulation of confidentiality.

The Business Software Alliance receives about 30 calls a day on its hotline, said Holleyman. A year ago, the alliance received about 20 calls a day.

Of all the calls the group receives, about 20 percent are from California, which is by far the single greatest producer of piracy tips in the country, said Holleyman. He could not break down calls from the Los Angeles area but said most of the calls from California originate from the Southland.

"It's hard to say exactly why California is so active in this but I'm sure it has to do with the fact it is the most populous state and because there are probably more computer users there than anywhere else," said Holleyman.

Both Holleyman and the SPA's Beruk said businesses account for most of the piracy cases, and small to medium-sized concerns are the primary culprits.

"Businesses are always looking for ways to cut corners and they figure copying software is an easy way to save some money," said Beruk. "But it's illegal."

He said all types of business software are copied but probably the most popular titles are known as utility programs. Utility programs show users how to get more out of computer hardware and other software programs, said Beruk.

In its last industry study, which was released one year ago, the SPA said it had settled 34 piracy cases in the previous 12 months in the Los Angeles area. The next highest number was in New York, with 28 settled cases, followed by San Francisco, with 18 cases.

Nationwide, the SPA closed out 200 cases in the preceding 12 months that cost the domestic software industry about $1 billion in revenue.

Beruk said because the cost of software has gone down over the past year, the dollar value of the copied software probably has not increased. However, the number of cases has increased, he said.