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  1. Technology
November 25, 1993

NERVOUS ITALIAN BUSINESS GETS TO GRIPS WITH THE NEW SOFTWARE COPYRIGHT LAW

By CBR Staff Writer

At a recent seminar in Rome on the country’s forceful new software copyright law, Italian Supreme Court magistrate Raffaele Foglia sought to reassure a group of Italy’s corporate users about their potential culpability in having used illegal copies of packaged software. I don’t believe that ‘aiming to profit’ can be associated with ‘aiming to save money’ and ‘avoiding major costs,’ but must be associated with a productive, lucrative, entrepreneurial activity, Foglia said of the law’s key provision that sets up penalties for profiting from software copying. Public agencies and private companies are unlikely to be charged with ‘aiming to profit’ and, thus, would see less severe penalties. Foglia spoke late last month at a conference on Legislative Decree 518 organised by the Rome chapter of the Italian Association for Informatics and Automatic Calculation, in an attempt to shed some light on the law that has created a stir, if not a panic, among users since it took effect in January. In contrast to its reputation as one of Europe’s worst offenders of software piracy, Italy was the first country to pass a national law based on the European Community’s software protection directive. Italy may have been quickest to act since it had no specific law protecting software copyright and no punishment for abusive copying. Civil cases were more or less resolved through jurisprudence which, after a few attempts, recognised that existing copyright law could be applied to software, as an engineering work.

Taboo

But imposing penal sanctions was impossible, since software copying was not specified a crime. In fact, abusive software copying could not be considered theft or misappropriation because those crimes must involve taking something from the possessor and software copying does not deprive the titleholder of the use of the product. The law approved by the Italian Parliament contains four fundamental points: software copying is prohibited except within the confines of the licence agreement; modifying a program is taboo, particularly decompiling a program to get at its source code (with the exception of those parts that must be examined or modified in order to ensure interoperability with other programs); the Italian Society of Authors and Publishers must institute a software register (critics say the measure is useless because it calls for the register of only information about the software and licensee, not the program itself, making it impossible to verify if a particular program was copied from the original on deposit), and; those that copy software for commercial gain commit a crime and are subject to fines and imprisonment. Since it took effect, virtually every packaged software manufacturer in Italy, including Microsoft Corp, WordPerfect Corp and Borland International Inc, have received dozens of phone calls from users wanting to regularise their software installations. Beginning in the spring, their revenues began exceeding their monthly previsions by factors of between two and four times. At that time, companies were no doubt further frightened by reports in the press that the country’s tax police were circulating with search warrants to large companies, looking for illegally copied software. Raffaello Nemni, a Milan-based attorney who worked closely on the new law, said the scare was unwarranted, as the law does not impute fiscal fraud to users of illegally copied software.

By Marsha Johnston

The tax police, Guardia di Finanza, can be called in, however, if a charge of illegal software copying is made against a company, Nemni explained. If a charge has been made, the guardia di finanza can come in and check all of the company’s books. That is what companies are afraid of, he said. Certain manufacturers, notably Microsoft SpA, report that the increases in sales have slowed somewhat since the spring, which is probably due to confusion in the user community over what penalties they may incur and how much it will cost them to set things straight. We know there are still people out there with non-approved progra

ms, but we are trying to clarify the situation in terms of how many licences we must buy, said Silvio Torracchi, data processing project manager for CAM, the Tuscany-Liguria branch of food distributor Conad. There are cases, for example, where we bought 32 licences, but we really only use four of them, or where I have a network with 100 users, but only 10 of them use the program. How many licences do I buy then? Right now, it’s not clear. Even the distributors will tell us, ‘Well, yes, in principle, you need X licences, but we can talk about it…’ Torracchi said. Mauro Bellini, editor of Milan-based Computer Dealer & value-added reseller, cautioned users that distributors, value-added resellers, resellers and software houses, cannot plead ignorance. A survey by the magazine showed that 95% of 231 respondents were familiar with the contents of the law. The arrival of the law has been accompanied by a significant drop in the street price for software, which many observers attribute to the existence of forceful legal protection. Now you can get a package deal of, say, Windows and a couple of office applications for 800,000 lire (approximately $530), where before they would have been 1,500,000 lire each ($1,000)!, Torracchi said. He is among many in Italy who believe that the high prices which used to characterise the Italian software market helped contribute to rampant piracy. The text of the law itself concerns both the proper use of packaged software and the protection of a company’s original software, but the seminar’s presentations made clear that its biggest immediate impact is in the domain of packaged software. Among presentations by Alitalia, ENEL SpA and Ferrovie dello Stato SpA (Italian National Railway), only the railroad representative talked about the law’s effect on in-house programs. Somewhat defensively, all three companies detailed the measures they have taken to stop the proliferation of illicit software copies. Gian Giorgio Cadeddu, head of planning, architecture and data design for Alitalia’s information services division in Rome, said, We have set up certain procedures for access to software. I, for example, do not have Excel on my personal computer, but when I select it, the server sends it to my personal computer. We’re also trying to set up site licences, including a Select agreement with Microsoft. He said an analysis of Alitalia’s installed base of 1,000 personal computers, which were running 4,000 programs, showed only 30% of applications and 40% of operating system software had the trappings of original copies (licence, manuals, commercially labelled floppies). Alitalia also discovered that for 30% of its non-standard software, such as Lotus’s Symphony, it is often impossible to find the original licence, Cadeddu said. The possibility of protecting the rights to the software it develops opened up a topic largely unknown to the newly privatised railway, for various reasons, said Giovanna Samoggia, an assistant data processing director.

Sensibility

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It’s only been a few years that the railroad, with its passage from state-owned entity to private enterprise, has seen a diffusion of a culture aimed at the safeguarding and valuation of its total assets. If we have, in some fashion, arrived at quantifying property and infrastructural assets, we are still a long way from the valuation of other tangible and intangible assets, she said. To begin that valuation, the Ferrovie’s Divisione Informatica detailed a methodology for verifying the quality of their software development process, in compliance with ISO 9000 parameters and with the new law, and has set up a process of registering software that it considers of commercial value with the Italian Society of Authors and Publishers. In our context, this decree has brought with it a big increase in our sensibility toward the value of software, she told the seminar.

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