586 Part IV • The Information Management System
creation should be rewarded, so they have copyright and
patent laws that grant its creator exclusive ownership
rights that allow that person to profit from the creation of
the intellectual property. But societies also recognize that
eventually intellectual property should be in the public do-
main, so the ownership rights to intellectual property are
granted for only a limited time. Societies differ widely in
exactly what is to be protected, how it is to be protected,
and for how long. Protection for intellectual property is
built into the U.S. Constitution in Section 8 on the powers
of Congress, which includes these words: “To promote the
Progress of Science and useful Arts, by securing for limit-
ed Times to Authors and Inventors the exclusive Right to
their respective Writings and Discoveries.”
The patent and copyright laws were first devised
when printing was the primary medium of expression that
needed protection. However, IT separates the information
from the media that contains it—one can no longer protect
information by controlling the piece of paper on which it is
written. The development of photography, motion pictures,
sound recorders, copiers, computers, CDs, and the Internet
have continuously changed the environment, and it has
been quite a challenge to adapt these laws to each new
reality. This is further complicated by the fact that each
country has its own history of laws, which differ from one
another. With globalization and the international reach of
the Internet, the result is a messy situation.
Within the complex topic of intellectual property
rights, we will discuss two areas that are currently of great
interest—software piracy and digital entertainment piracy.
Software Piracy
Software piracy is a serious problem for the software
industry. According to the Business Software Alliance
(2010), 43 percent of the business and consumer PC soft-
ware installed worldwide in 2009 was pirated, which cost
the software industry over $51 billion. This does not
include software installed on servers and mainframes. It
should be noted that despite this loss of revenue, the soft-
ware industry has managed to remain profitable.
Software piracy rates varied significantly by region,
with North America the lowest at 21 percent, Western
Europe at 34 percent, both Asia/Pacific and Middle
East/Africa at 59 percent, Latin America at 63 percent, and
Central/Eastern Europe leading the pack at 64 percent. In
dollar terms, Asia/Pacific led with $11.6 billion in losses,
followed by Western Europe with $10.6 billion and North
America with $8.1 billion. Several countries have over an
80 percent piracy rate, including Armenia, Vietnam,
Venezuela, Pakistan, and Indonesia. Until the last few
years, China had the highest piracy rate, but more
aggressive government action has brought the rate down to
79 percent.
Many of the highest software piracy rates are in for-
merly communist areas where there is no tradition of intel-
lectual property rights. Also, in developing economies
there are strong incentives for the government to ignore (or
even encourage) software piracy. Software is essential to
becoming a modern economy, it is expensive to purchase
legally, and foreign exchange resources are scarce, so low-
cost domestic copies can be a significant advantage to a
developing country.
Copyright Protection
The ownership rights of developers of computer software
are protected by both copyrights and patents. One cannot
copyright an idea, but one can copyright a specific written
expression of that idea, whether it is on paper, magnetic disk,
or CD, or in some other electronic form. Except for certain
“fair use” exceptions, the copyrighted material cannot be
copied without the copyright holder’s permission. Computer
programs can be copyrighted, and that means that they can-
not be used without the developer’s permission because they
must be copied into your computer memory in order to be
used. For most software, the copyright owner does not sell
the software itself, but only the right to use it under certain
specified conditions. If the user violates those conditions, he
or she is deemed to have violated the copyright.
U.S. copyright laws make it illegal to copy software
and use it without the software vendor’s permission, and
there are severe penalties for violating these laws. Although
this is difficult to enforce against individuals, software ven-
dors have become vigilant in prosecuting large companies
that have (knowingly or unknowingly) allowed software to
be copied. Most well-managed companies have strict poli-
cies against copying software, and they check periodically to
make sure that an individual’s office PC hard drive contains
only authorized software. That is why the business software
piracy rate is so low in the United States. However, individu-
als can copy software for personal use without much fear of
prosecution, so whether or not one copies software depends
primarily upon one’s ethical position on that issue.
Patent Protection
A copyright provides effective protection against software
piracy, but it does not prevent someone else from creating
another computer program that does the same thing as the
copyrighted program. This is where patents come in. A
patent on an invention or process gives its creator the
exclusive right to the manufacture and use of the new
design or method for a limited period of time. One cannot
patent laws of nature, natural phenomena, mathematics, or