Romania bucks world trend by taking a cutlass to software piracy

Slowly but surely Romania has started to crack down on software piracy. The rate has fallen 1 percent in each of the last seven years, including 2009, according to the Global Software Piracy Study, released this month. But the figure is expected to stay at 65 percent this year. Meanwhile, the value of illegal software in use locally reached USD 183 million last year.

Otilia Haraga

Worldwide, the rate of software piracy increased by 2 percent last year to 43 percent. Within the European Union, the rate remained at 35 percent for the third year in a row, although in several individual states in Western Europe, including Austria, Germany, Greece and Italy, piracy actually went up.

Over the last five years, the rate of software piracy has fallen 7 percent in Romania from 72 to 65 percent, as a result of joint efforts from the business software industry and national authorities, combined with numerous campaigns promoting respect for intellectual property.

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The piracy rate in Romania in 2009 amounted to 65 percent, according to the seventh global study by the Business Software Alliance (BSA), an international association which represents the software industry, and global IT market intelligence firm IDC.

The global software piracy study was published in mid-May. It covers the illegal duplication of all programs that run on PCs (desktops, laptops and netbooks included). Its scope spans the operating systems, system software such as database and security packages and software applications. The research also takes into account free legal and open source software but not software that runs on servers and mainframes.

Although the study does not specify the rate of software piracy separately for the two categories – residential and corporate users – it does observe repeatedly that the rate of software piracy is considerably higher among residential users than it is for companies, organizations and institutions.

The commercial value of pirated software in Romania last year amounted to USD 183 million, which represents 65 percent of the market. From this, it can be extrapolated that the total market, combining both licensed and illegal software, would reach approximately USD 282 million, according to attorney-at-law Magda Popescu, BSA representative in Romania.

Piracy has more victims than just the software manufacturers whose products are illegally downloaded and reproduced. The state budget is also affected because it collects less tax. And labor market takes some collateral damage. The 2008 BSA/IDC study found that a theoretical 10 percent reduction in the piracy rate at a global level over four years could generate 500,000 new jobs, and inject approximately USD 140 billion into local economies.

“To illustrate the tangible impact that piracy has on certain industries, the study states that for every dollar spent on software, another USD 3-4 are generated for local companies providing associated services and distribution,” says Popescu.

At a global level, the software piracy rate rose 2 percent to 43 percent last year. In this context, the BSA applauds the continued decline of the local figure, especially in the context of the economic crisis, adds Popescu.

The drivers of piracy, which is still high nationwide, include the growth in the number of residential users, a segment where piracy is typically more widespread than in the business or institutional area. A fall in the purchase of new PCs, which usually come with pre-installed licensed software, thereby removing the need to pirate it, is also a factor. So too is the proliferating availability of pirated products on the internet.

Piracy penalties include between one and four years in prison and a fine for individuals. Companies face a hefty fine of between RON 5,000 and RON 600,000. In addition, punishments may also include the dissolving of the guilty company, partial or total suspension of the firm’s activity, closing some offices, or a temporary ban on participating in public acquisition procedures. Aside from the legal repercussions, individuals and companies convicted of piracy are ordered to compensate those whose royalty rights have been violated.

Data from the General Inspectorate of the Romanian Police, the Direction for Fraud Investigation, shows that between January and September 2009, 420 inspections or raids which affected 994 individuals and companies were carried out. The total loss suffered by the BSA amounted to EUR 3,254,000. Between 2009 and March 2010, courts in Romania handed down 28 sentences for software piracy.

A major shift in treatment of piracy came in 2009 when the infringement was criminalized at a corporate level, and the first legal sentences were made against companies, which were ordered to pay a fine and now have a corporate criminal record. Not only were the firms held legally accountable but so too were their administrators, who were separately convicted. And both were liable to pay damages to the businesses that were affected.

“This does not mean that these were the first cases where companies were convicted for using software without a license. Such convictions existed even before 2000, but until that point, only the administrators of the companies were given a criminal record as individuals while companies were just ordered to pay damages and were not given criminal sentences. Since 2009, they too have started to get criminal sentences,” explains Popescu.

“We hope that the declining trend in the piracy rate will continue, particularly when we look at the performance in 2009, a year of crisis, which was positive in contrast to the growing global piracy,” says the attorney.