Software hijacking on the info highway.

The Information Superhighway may be a fascinating new frentier for PC entrepreneurs, but--by most accounts--the Internet and other-on-line services are also a growing channel for software piracy. One developer recently called the Internet a "conduit of criminal activity; so many copies of Windows 95 have been passed around electronically that Microsoft now offers a bounty for anyone who can help track down the source of the leaks. Consumer software developers, whose products tend to have short life cycles, seem to be especially vulnerable: Pirated beta versions of id Software's Doom II were in wide distribution at least a month before the final version showed up on retail shelves.

Not surprisingly, the Software Publishers Association has made the Information Superhighway a major target for its antipiracy efforts. The SPA recently hired a full-time "infobahnmeister" to pursue on-line piracy, in addition to four other investigators who work part-time on electronic cases. We spoke recently with Sandra Sellers, a veteran intellectual property lawyer who last summer took over as the SPA's director of litigation:

How pervasive is the on-line piracy problem?

"It's impossible to tell. But over the past few years, the SPA has assembled a database of over 1,600 bulletin boards that carry unauthorized, copyrighted software. Many of these boards are interconnected, as well as connected to the Internet. One of the boards we've followed is the Davy Jones Locker BBS in Massachusetts. We filed a civil lawsuit against the system operator, Richard Kenadek, in June 1992. In late August 1994, Kenadek was indicted for federal copyright infringement; he pled guilty and will be sentenced on March 9. The Davy Jones Locker bulletin board had paying subscribers in 36 states and 11 foreign countries; subscribers were given access to a special section of the board that contained over 200 copyrighted programs, including popular business and entertainment packages."

But an even more visible on-line piracy case, a criminal action against MIT student David LaMacchia, was tossed out of court recently when a judge ruled that no actual crime had been committed.

"The LaMacchia opinion has been greatly misunderstood. The judge didn't rule that 'no crime had been committed'--he dismissed a wire fraud charge. The issue of whether LaMacchia committed criminal copyright infringement was not before the judge, because LaMacchia hadn't been charged with that offense."

Why wasn't he charged with copyright infringement?

"There's an issue of whether the current copyright infringement statute covers actions like LaMacchia's, where a system operator creates and operates a bulletin board over which a million dollars of unauthorized copyrighted software is transmitted--but the system operator receives no money. There's no legal precedent for this situation. We'll probably need new legislation to plug this hole in the statute."

The SPA has been running an ad--"What Kind of Evil-Minded Slimeball Reports Their Small Business Colleagues for Illegally Copying Software?"--that encourages readers to call a hot line and turn in software pirates? Is this approach working?

"The SPA has averaged 25-30 calls a day to this hotline for the last few years. Several callers a day indicate they got the number from our new ad, but I think the ad is still too new to generate a significant increase in our normal number of callers."

There's a lot of shareware and other quasi-free software being distributed electronically these days, sometimes by commercial developers who hope to build an installed base for future upgrades. Do these offers send a confusing message to users about whether all online software is free?

"Most people who use on-line services are aware that there are several different types of software available electronically--public domain software, freeware, shareware, and software for which one must remit a fee. Additionally, most software contains a simple statement in one of the opening screens that explains whether a fee must be remitted. SPA hasn't received reports from confused software users, so I believe this is not a significant problem."

Sandra Sellers, director of litigation, Software Publishers Association, 1730 M St., N.W., Washington, D.C. 20036; 202/452-1600.