Although software is the fastest growing sector of the Spanish computer industry, piracy has become a big problem and is costing companies an estimated $37m each year in lost sales. Spain is second only to Thailand in the software piracy league, with a reported 90% of personal computer programs being used illegally. Thailand’s record is even worse at 97%. Despite the shocking figures, software and services accounted for 41% of total computer sales or $300m, in 1991, a rise of 12% on the previous year. The market for custom software grew even faster at 27%. Although little data is available on the services side, this market is said to be healthy too. Estimates are that the Spanish computer industry as a whole will turn in negative growth for the first time this year, but this is attributed to poor hardware margins and not the effects of piracy – take away hardware and growth becomes decidedly positive. Spain boasts some 1,000 software houses – this figure includes multinational companies, small businesses and distributors. But piracy is hitting the small firms that offer only one or two software packages hardest, and many are going under as a result.
Culprits
Multinationals can afford to let the problem go to a certain extent as the impact on revenues is not so noticeable. According to Piedad Bullon, press officer for the Spanish Association of Computer Companies, SEDISA, which has 140 members, the main culprits of piracy are large companies and home users. The most likely software to be copied, she says, are popular personal computer packages, such as Lotus Development Corp’s Lotus 1-2-3 and Microsoft Corp’s Windows, as well as programs aimed at vertical markets, especially architects and doctors. Piracy of mainframe and mid-range packages, though, is virtually unknown. Brad Smith, director of the UK branch of the Business Software Alliance, and Florenci Bach, director general of SEDISI stated in Madrid last week that other prime candidates for piracy are utility programs, such as Symantec Corp’s Norton Utilities, and Xtree Co’s Xtree file and disk management system; word processing packages, and to a lesser extent, video games. The two organisations have been working together for three years to try and eradicate software piracy in Spain by means of both litigation and a public awareness campaign. However Bullon says that a major barrier to change is that people simply do not regard piracy as a crime. The situation is not helped by the Spanish legal system. Spain has actually had legal protection against the problem since November 1987 under the ‘law of intellectual protection’, which makes the act of software piracy a criminal offence.
By Catherine Everett
But according to Laurie Fort at the Business Software Association, the fact that piracy comes under the heading of criminal law as opposed to civil law, as in the UK, constitutes a problem in itself. It means that the litigation process is much more expensive and long-winded; for example, police cannot simply act on a tip-off and walk into a company unannounced to search for pirated software. They have to apply to the courts for a warrant. The case against Mapfre Vida SA, a Madrid-based life assurance firm, prosecuted for using illegal programs copied from Ashton Tate Corp, Lotus, and Wordperfect Corp took a full three years to settle. Cases are being filed by various international companies against 11 other Spanish firms at the moment, and another 250 cases are currently in dispute. Nonetheless, Spain is in the process of amending its law, which Ms Fort states has placed an undue burden on software providers. The amendment should be passed within the next six months. Software houses will be afforded further protection by the new European Community Software Directive, which must be implemented in all member states by January 1 1993. According to the Department of Trade & Industry, the directive requires that all computer programs be protected by copyright as literary works. This means that the expression of a program is protected, but not the ideas and principl
es that underlie that expression. It requires that copyright owners shall have the sole right to authorise reproduction, translation, adaption, arrangement, alteration, distribution and rental of their programs. However, lawful users of programs do have the right to decompile them, but only to the extent necessary to obtain information needed to enable other programs to interoperate. The UK and Spain have had a reciprocal protection agreement for several years. According to a report in El Pais, Jaume Olle, director general of Sabadell, near Barcelona-based Logic Control SA, claimed that the situation has not been helped by a lack of commitment to national software from government, although levels of professional training are high. He believes that Spain’s real talent lies in bespoke software. Logic Control is Spain’s second largest software company behind Eritel, which was formed by a merger between Telefonica de Espana SA’s Entel SA and the Spanish Institute of Industry’s software company, Eria. Olle’s view was backed up by Javier Ollero, director general of Madrid-based TransTools SA, who complained of a lack of public funding for software. The two main sources of government aid, he says, are the National Electronic and Computing Plan, managed by the Electronics and New Technologies Office; and the Centre for Technological and Industrial Development, which provides low-interest finance. Some European funding is also available.
Stimulate growth
Director general of SEDISI, Florenci Bach, commented that more incentive policies rather than subsidies were needed to stimulate growth. But, despite all the apparent odds, Ollero, still believes that the Spanish software market has a considerable future. The country, he says, has many good programmers, and an increasing number of young businessmen, who are prepared to take the risk of setting up their own companies despite relatively little political support. President of SEDISI, the Spanish Association of Computer Companies, Ignacio Orduna, agrees, saying that Japan may have the chip, the US the standard software package such as spreadsheets, databases, and word processing programs, but Europe has the solutions. He sees Spain as a link in this chain, and he believes the country is capable of competing with anyone in software develoment.
