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Software Producers Seeking Ways To Curb Illegal Copying by School Systems, Others

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Copyright infractions are becoming a major problem for manufacturers of computer programs.

Not only is illegal copying of their materials costing them as much as 30 percent of their profits, say industry officials, but the piracy is discouraging development of the more sophisticated programs that many educators contend are necessary to make computers more effective teaching devices.

Such copying--which is said to be widespread in schools--is extremely difficult to monitor and control, the officials point out. Information contained on the small plastic "disks," which provide instructions for microcomputers, can be readily copied onto blank disks and endlessly duplicated.

Producers say three groups are responsible for this straight disk-to-disk copying--individuals making copies for personal use, institutions such as schools making copies for large groups, and black-market enterprises making copies for resale at considerable discounts.

A more important area of concern to software producers is that industrial competitors can copy the "logic" of a program--its precise arrangement of instructions to the computer--without liability if they change the way that logic is expressed. A program, for example, that takes a student through a drill-and-practice session on numbers, using pictures and numbers, could be modified to become a lesson in vocabulary, using different pictures and words.

"The logic of the program is not protected by the copyright law," says Thomas M. Gould, attorney for the National Audio-Visual Association (nava). "I can rewrite a program in my own words without violating the law. This is the biggest [concern for prospective manufacturers].''

Determination of whether the content or the form of the program is copied--and therefore whether copyright protections have been violated--can be made only on a case-by-case basis in the courts, say Mr. Gould and others. So far, there have not been enough court decisions to serve as a guide for computer users or manufacturers.

"It becomes very difficult to determine whether there is a significant difference in programs," adds Charles Eisenberg, vice-president for marketing of the Milliken Publishing Company. "There are supposedly 40 or 50 themes that are in works of literature, and if you use [one formula] it doesn't mean you're copying. Maybe way down the road there will be [a comparable number of approaches to programming]."

Edward H. Currie, president of Lifeboat Associates, a software firm, estimates that the industry loses about 30 percent of its proper revenues because of illegal copying.

Software producers say all of this makes them increasingly reluctant to invest heavily in research and development for new sophisticated software programs.

A survey by the Educational Products Information Exchange (epie) found that 95 percent of educational programs are drill-and-practice exercises--the easiest software to produce.

"A great number of traditional publishing companies have not made the commitment to get involved in new technology," says Mr. Eisenberg. "It takes a lot of money to develop good software. They're taking a wait-and-see attitude, letting the little guys get bloody. Legislation is desperately needed."

The question of what parts of computer programs can be legally imitated will not be resolved for a long time, industry experts agree. The simple reproduction of disks is a more clearcut legal issue, but difficult to enforce.

The Congress last amended the copyright law in 1980 to allow reproduction of programs only for archives or if copying is "an essential step in the utilization of the program in conjunction with the machine." But the widespread copying continues. Producers often have the most difficult time in dealing with schools, says Marcia Friedland, president of Krell Software Corporation, because "they say it's for the kids, and they're a nonprofit group."

"We have to make schools and individuals aware that the net result [of illegal copying] is high software costs and less development," Ms. Friedland adds. "They're going to pay one way or another."

Manufacturers have tried to prevent disk-to-disk copying by writing codes into the software programs, but they concede that users can easily break the codes and make copies anyway. About two-thirds of them no longer bother to build protection codes into their programs, according to one survey.

"It becomes a little bit of a game between the users and producers,'' says Mr. Eisenberg. "To my knowledge, no one has made a code that can't be cracked."

Adds Mr. Gould: "I know of some cases where copying is taught as part of a [classroom] computer lesson. The kids are told to go to work to unlock the program."

With codes failing to protect their products, manufacturers have been looking increasingly at the leasing rather than outright sale of programs. A leasing contract can include provisions for company officials to verify that the contract is being honored.

The advantage of licensing, says Mr. Gould, "is that you don't have to deal with the copyright law ... which is pretty foggy. You can have it all spelled out in the contract." The approach is hard to develop, however, because of a resistence on the part of users to being "policed."

Other ideas for protecting producers from disk-to-disk copiers include:

Offering rewards for information about illegal copying. The Krell Software Corporation offers $25 and anonymity to people who report evidence of illegal copying.

Changing the chips. The only certain way to prevent copying is to alter the makeup of the hardware. One software manufacturer, the Scott Foresman Publishing Company, developed programs that could be copied only by changing codes in the hardware with which it was used. But the company abandoned the approach, which was designed for use with Texas Instruments machines, because it restricted the number of machines that could use its software.

Making copying economically unnecessary. Many companies have offered significant discounts for programs bought in bulk quantities, so that the school system has no need for copying. Many extra copies cost as little as $10 apiece.

Accepting copying losses and making the profit on other ventures. Carol Risher, a staff member of the American Association of Publishers, says that some producers have compensated for software losses by making money on supplementary materials such as guides, workbooks, and tests, which must be purchased with the software.

Taxing the equipment used for copying, and distributing the money to producers of the reproduced material. Bills were introduced in both houses of Congress that would have authorized the Copyright Royalty Tribunal of the Library of Congress to tax equipment for taping motion-picture cassettes.

The agency would determine the amount of money that producers would receive by a "mini-Nielson" survey of copiers, says an official for the private consulting firm Wexler, Harrison and Schule in Washington.

Software producers could devise similar compensation policies, the official notes.

Creating a national software library. P. Kenneth Komoski, the executive director of epie, suggests that all producers send their materials to a national "clearinghouse," where educators and others could purchase copies.

Mr. Komoski says such an organization would create more accountability between publisher and buyer.

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