What Is Software Piracy? A Comprehensive Guide

Learn what software piracy is, how it can affect business owners and individual users alike, and what you can do to prevent it.

Updated:

Jan 20,2023

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Software piracy is widespread and affects thousands of businesses and millions of users globally. Even with laws and regulations set in place to tackle this issue, it still manages to damage the rights of many copyright owners within countless industries.

In this article, we’ll explain the main types of software piracy, go over the most common risks, and see how major companies prevent this practice.

The Definition of Software Piracy 

Software piracy is the intentional or unintentional illegal copying, selling, using, or sharing of software that’s legally protected. When you buy any program, you become a licensed user, and are allowed a specific number of licenses. The process of pirating software involves cracking or changing specific software files so the license-checking system can be disabled or fooled, leaving additional features unlocked.

In most cases, you’ll have a chance to copy the software you purchased as a backup in case you accidentally delete it or no longer have access to your device. However, if you copy and share the software with someone else, you’re in direct copyright violation and could face legal repercussions.

Internet users often indulge in activities they deem completely legal without even realizing they’re committing software piracy. To stay within the bounds of the law, we should be able to recognize piracy types and stop ourselves from taking part in damaging the owners, writers, and developers of the software we use.

Types of Software Piracy

There are five different types of software piracy. While you may have heard of some, others may be entirely new to most people. These are:

Counterfeiting 

The illegal copying or distribution of software that’s copyright-protected is called counterfeiting. It’s typically done to imitate the original product and redistribute it. Other than the counterfeit software itself, elements such as security features, license agreements, labels, packaging, and registration cards can also be copied.

Many users aren’t always able to tell that a software program is counterfeit and, therefore, an illegal copy, since the program itself and any additional elements have been carefully made to seem almost entirely authentic. These products are usually sold at lower prices than the original software programs to attract more buyers.

Internet Piracy

Internet piracy also involves copying and uploading licensed software to the internet. Users who download pirated programs are also held legally responsible for internet piracy. Even those committed to only purchasing software from official vendors can easily be tricked into piracy because websites can be made to look almost identical to the official publisher’s page.

There are a few types of websites users should always avoid: Auction websites that sell counterfeit material, sites that let you download software for free, or peer-to-peer (P2P) software trading platforms.

Some peer-to-peer networks that let you transfer copyright-protected programs should also be avoided because it’s hard to tell which programs are under copyright protection and which aren’t. While peer-to-peer networks are entirely legal, you’ll be committing a crime if you download copyrighted content.

Softlifting

Softlifting, softloading, or end-user piracy is the most widespread type of software piracy. It usually involves one person buying a licensed copy of the software and then sharing it with many people who are not legally authorized to use it. This mainly happens when the licensed user is allowed to use the program on only one device but acts as a software pirate and shares it with many others.

End-user piracy can often be seen in friend groups or among students who might not be fully aware of how serious such actions are. Additionally, having unlicensed software installed is common within homes and even workplaces.

Softlifters frequently capitalize on the benefits of software upgrades they don’t have a legal right to and use software without having a proper license.

Hard Disk Loading

Hard disk loading is commercial software piracy that happens when computer sellers install unauthorized copies of the software program on the computers they sell, so potential buyers will find them more attractive. Apart from appearing to offer better deals, these people expect customers to come back for a software upgrade or to buy other programs from them.

These programs are also illegal copies of authentic software programs, and some of the most common illegally distributed programs installed on computers are operating systems.

Client-Server Overuse 

Similar to softlifting, client-server overuse is a software piracy type in which one legitimate software copy is used by more users than intended by the end-user license agreement. However, what distinguishes client-server overuse from softlifting is that the software installed on a local area network (LAN) is used on multiple computers within that network.

On average, this sort of online piracy represents willful infringement, and software pirates do it to cut costs. This can sometimes be seen in workplaces or group university projects, too.

Dangers of Software Piracy 

The effects of software piracy are far-reaching and severe. It affects businesses, individual users, and the software industry as a whole and poses legal, productivity-related, and security risks.

Security Risks

A third of all websites that distribute stolen content, including software, expose internet users to various kinds of malware. Moreover, users who pirate content are 28 times more likely to have their devices infected with malware than those who only visit mainstream, licensed websites.

As you can see, this is not the safest cyber environment to find yourself in. You can either download an infected file or get a program that will put your device to risk, since it doesn’t include a subscription to the necessary updates.

Using software that can’t be updated leaves room for possible threats that can exploit existing vulnerabilities and infect your entire network. One of the main reasons our programs get updates is that they’re regularly being improved with security patches that can prevent novel attacks.

If you pirate software or content in the United States and get caught red-handed, you face up to five years of jail time, a $250,000 fine, and a felony record. However, since piracy is a federal crime, that might not be the end of your troubles.

The copyright owner is entitled to sue you for damages, which can result in additional hundreds and thousands of dollars you’d have to pay. If you’re a business owner, you’d be risking your freedom, complete financial collapse, and the loss of all your assets (including the company itself).

Productivity Issues

Businesses relying on unlicensed software solutions should rethink their strategy, as these programs can slow down or eventually halt their operations. Since pirated software runs thanks to various hacks, it often might lack the features necessary for completing tasks.

If you can’t update it, chances are it might not work properly, leaving you unable to catch up on your daily activities. When that happens, and you need to contact technical or customer support, you’ll realize that pirating wasn’t the best decision, since you’re not entitled to any aid if you didn’t legally obtain the program.

Software piracy is a severe problem for those who spend months and years developing solutions that millions benefit from. Publishers are losing money to pirates, and their companies cannot thrive as they could.

These resources could be used for research, improvement, and development of new programs, and publishers would be able to offer lower prices for their products and services. The entire industry is affected, and that’s why serious measures are being taken to tackle this problem.

Moreover, companies from various industries are suffering significant setbacks due to competitors that see no problem with pirating. The main motive of competitors who pirate is to save money they would otherwise spend on original software, thus putting companies that legitimately obtain needed software at a disadvantage.

Software Piracy Prevention

If you are an individual user, always carefully read the End User License Agreement to see whether you’re allowed to make backup copies and how many devices you can use the software on.

Note that, when you get the software upgrade, you still won’t be allowed to sell or distribute the previous version. Moreover, if you’re buying a program online, ensure that you’re doing it from the official website and not a fake look-alike.

Finally, if you purchased software and think it might be a pirated version, report it to the authorities. By doing this, you’re helping the publishers, the software industry, and fellow consumers.

If you’re a business owner, you can educate your employees on the terms and conditions of the software they’re using and establish a clear software policy that will explain how and in what way the staff can use any given program. It would be best if each employee could sign an anti-piracy statement; you could also train your staff to recognize different software piracy examples.

Let’s see what other ways companies employ to deal with piracy:

Tamper-Proofing

In an effort to challenge piracy, some software companies equipped their products with protocols that immediately shut down the program whenever someone tries to modify the source code. This solution was created because pirates often try to change the program’s code when copying the software.

License Keys

Most programs you purchase will require a key to unlock the software. You can find it on the packaging, or there will be instructions on where to look for it. The key consists of numbers and letters and guarantees that only one person will be able to use the purchased program.

Antipiracy Incentives 

Software owners compete not only with other publishers but also with software pirates. To motivate consumers to buy authentic products instead of pirating them online, they work toward ensuring better benefits, more affordable prices, and extra features that users can’t get if they download a pirated alternative.

Antipiracy Software

Some companies can help you track who is using your software and in what way. With antipiracy software, you can encrypt the source code and protect it from getting manipulated or stolen.

The History of Software Piracy 

The beginnings of software piracy were pretty benign. At the very start, people simply shared simple applications between personal computers. Still, they didn’t have much at their disposal, and the computers of the time couldn’t really do many things, so there wasn’t even a software piracy definition, let alone prevention measures.

As the internet and computers developed, more and more people joined the internet, and various software piracy methods gained popularity and became more sophisticated. As seen above, businesses are losing billions of dollars to different types of piracy.

The first US law made to protect developer rights was passed in 1980, and it was called the Computer Software Copyright Act; nearly a decade later, it was followed by the decision of the US Patent Office to issue patents to program creators in 1989.

While this regulated many processes and helped owners claim credit where it was due, we’re still far from the ideal. In 2022, piracy is still flourishing all around the world.

With the rise of peer-to-peer torrenting networks (and Napster before them), access to illegal software was made much easier, so many people acquire software exclusively this way. It is much harder to track these activities than it was in the time of disk-based distribution, and most of the downloading via peer-to-peer platforms goes unnoticed and unpunished.

Final Thoughts

Software piracy poses a risk for almost everyone involved - product owners, those who pirate and use it, as well as the entire software industry. It doesn’t seem likely that this problem will be solved anytime soon, but there are systems in place that help prevent software piracy to a degree.

Now that you know more about this issue and can tell the different types of software piracy apart, you’ll know what to avoid to stop yourself from taking part in such activities on purpose or by accident.

FAQ
What are the 3 types of software piracy?

There are five types of software piracy, with the three most common being end-user piracy, internet piracy, and hard disk loading. While these may seem similar, end-user piracy is typically when one person buys software and shares it with several people, typically colleagues or classmates.

Internet piracy is when users illegally copy software and upload it online or when others download that illegal program. Hard disk loading is done by computer vendors who include pirated software in their computers, to present a better deal for potential buyers.

Is software piracy a crime?

Any sort of copying, distributing, or selling copyrighted material is illegal. Hence, pirating any counterfeit software is considered a criminal offense - more specifically, it’s a federal crime.

What are the risks of pirated software?

There are numerous risks affecting both businesses and individuals. Still, one of the most important factors is that you can catch a variety of viruses and even ransomware if you download pirated software. Many of these products are intentionally infected with malware to damage your device, enlist it in a botnet, or steal your data.

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