Like an untreated cancer, the unauthorized duplication of copyrighted computer programs threatens to kill the software development industry, Sen. Orrin Hatch said Wednesday during a field hearing on a bill that would stop the practice.
On Aug. 10, Hatch introduced legislation - the Computer Software Rental Amendment Act of 1988 - designed to amend existing copyright laws to address unauthorized software duplication.Representatives from several software manufacturers offered testimony during the hearing that will be presented to the U.S. Senate Subcommittee on Patents, Copyrights and Trademarks of the Senate Judiciary Committee. Hatch is the ranking minority member of the subcommittee.
"Were computer programs to be rented for a few dollars a day, the multimillion-dollar investments necessary to bring new software to the market could no longer be amortized, and one of the brightest stars of the modern U.S. economy would be extinguished in its infancy," Hatch said.
"As with the record industry (in 1984), there is now in existence the embryo of a business of rental of software for the purpose of copying. Unless Congress acts quickly, this rental industry could soon grow out of control, becoming a cancer that would kill off the legitimate software development industry by which it was created."
Hatch said those who rent software for copying "become robbers of the creative work of these (software) industries."
Because of the legitimate need buyers of authorized software have to make backup copies, technological methods of limiting unauthorized duplication has proven impractical.
"The impact of software rental could be particularly devastating here in Utah Valley, which has sometimes been referred to as the Silicon Valley of software," Hatch said.
Hatch received no argument from WordPerfect Corp. President Alan Ashton or Novell Corp. Executive Vice President Craig Burton, who testified at the hearing.
Ashton said the incentive to rent software for copying is much greater than with records because software is much more expensive.
"The development of a large-scale rental business would jeopardize the future of companies such as WordPerfect. The prices we charge for our software reflect the costs of creation," he said.
If WordPerfect, located in Orem, were unable to amortize the costs of investment, Ashton said, the corporation would be unable to update and improve products or invest in the research and development needed to remain competitive.
"We are asking only that the right to authorize rental be given to us, the copyright owners."
Burton said widespread unauthorized software copying likely would destroy Novell's incentive to create new and upgraded products.
"While a WordPerfect software package has a suggested retail price of $495, Novell's software products sell for as much as 10 times that amount," he said. "The average selling price for the Netware Software Operating System is around $3,000."
Heidi Roizen, president of T/Maker software company in California, said the disproportionate price software rental outlets charge proves that the purpose of software rentals is to facilitate unauthorized copying.
Action must be taken soon to protect U.S. leadership in software development, said Thomas Chan, deputy general counsel for Ashton-Tate Corp. in Virginia.
He said one unauthorized software copy is made for every one legally sold in the United States, and for every legal copy sold in Asia, the Middle East, Latin America, Italy and Spain, 10 unauthorized copies are sold.
"The time to act is now, not after this industry has suffered unnecessary and perhaps irreversible losses, and before the United States becomes the software pirate capital of the world," Chan said. "The time is now critical for Congress to act."