Trade group ranks L.A. as U.S. leader in software piracy.

Businesses in Los Angeles County are illegally copying at least $100 million worth of computer software a year, according to the Software Publishers Association.

And, according to local software programmers, so-called "computer piracy" is costing them tens of millions of dollars in lost revenue annually.

In some cases, officials at local computer program design companies said that for each piece of software they sell, there are between five and 10 illegal copies. In some cases, particularly when it comes to software sold directly to consumers rather than businesses, the software can be illegally copied hundreds or even thousands of times, they said.

Each time a program is copied, which under federal copyright laws is illegal, the software company loses in revenue the sale price of the program.

Last month, the Software Publishers Association, a national trade organization representing software makers, ranked Los Angeles as the "nation's top city for software piracy." The finding, which included all of Los Angeles County, was based on 34 cases of piracy that were settled by the association for the 12-month period ended June 30.

The next highest number of cases was in New York City, with 28 closed, or settled, investigations, and then San Francisco, where the association concluded 18 prosecutions of businesses that illegally copied software.

Nationwide, the association closed out almost 200 cases of software piracy that cost the domestic industry $1 billion, the organization said.

Software piracy is the illegal copying of computer programs, which under federal regulations is 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 rather than buying individual disks for each user within its offices.

Ken Wasch, the Software Publishers Association's executive director, said under an agreement with the companies he could not reveal the names of the 34 local businesses that were caught pirating software.

In return for anonymity, the companies agreed to destroy the illegal software copies and pay the software producer for each copy. He said the restitution ranged from about $5,000 to $120,000 and averaged about $20,000 per company.

In the United States for the 12-month period ended June 30, the national software trade group settled piracy claims against businesses that cost software programmers about $1 billion. Wasch estimated that businesses in Los Angeles County illegally copied about $100 million worth of software during the latest reporting period.

He said the primary violators of piracy laws in Los Angeles County are manufacturing companies, followed by consulting/services firms, and then retail operations.

Other local businesses that pirated software are in the financial, engineering, educational and health care industries, he said.

"There is no doubt that piracy is a serious concern for programmers but it's safe to say the situation is getting better because in 1990 it cost programmers (in the U.S.) $2.4 billion and it has been steadily declining ever since. I credit that to more awareness that piracy is illegal and can carry some stiff penalties," he said. In the most recent 12-month period, the association said piracy resulted in $1 billion in losses to software makers.

A company or individual can be liable for a fine of up to $100,000 for each copied disk under current copyright laws, said the association.

The Washington, D.C.-based association initiates investigations on tips it receives on a telephone hotline. Investigators from the association conduct audits of businesses. If the businesses are using pirated software, which can be determined through serial numbers on disks, negotiations are started on a settlement. If a settlement is not reached, the association initiates legal action.

Wasch said the size of companies illegally copying software is also changing. Two years ago most of the businesses that pirated software had between 100 and 300 personal computers but now most of the offenders have between 20 and 50 PCs, he said.

Gary Hecker, a Los Angeles-based attorney who represents software companies in copyright cases, called piracy "a persistent and pervasive problem, especially among producers of popular software products."

He said in some cases, the Federal Bureau of Investigation and the U.S. Attorney's office investigate piracy cases, but in most instances the matter is between the software producer and the user company.

Lance Merker, marketing manager for Funsoft Inc., which operates under the name Mainstay, estimated that every software unit it sells to a business is copied between five and 10 times.

Mainstay, which recently moved from Agoura Hills to Camarillo in Ventura County, sells about $3.7 million worth of software to businesses every year for programs that range from $100 to $500 per copy. About 25 percent of its sales are in California and most of those are in the Los Angeles area, said Merker.

"Prices of software have come down but they would come down a lot more if there wasn't any copying. We have to keep our prices high to cover the cost of the piracy," he said.