Electronic distribution of pirated software and other copyrighted materials didn’t start with the advent of the worldwide web during the 1990’s. A full decade earlier, people have been using dial-up modems to connect to private bulletin board systems (or BBS), which in many ways can be regarded not only as a precursor to the web, but also to the illegal and widespread electronic distribution of copyrighted materials.

Two decades of constant growth have made the internet a ubiquitous commodity, and its potential as a vehicle for piracy is now at an all time high.

A recent piracy study by internet intelligence company Envisional has shown that distribution of piracy accounts for almost 25% of the global Internet traffic. Content is distributed in multitude of methods – the most widespread being BitTorrent peer-to-peer file sharing which is responsible for half of the traffic, and the rest divided by other peer-to-peer networks, Cyberlocker sites, infringing video streaming sites, and Usenet newsgroups dedicated to piracy.

Electronic distribution of pirated materials grows at an alarming rate, and with it are the losses in revenues for content publishers and other intellectual property owners. This resulted in individuals, organizations and governments becoming far more active in their battle against piracy. On the technological front, more and more independent software vendors have chosen to integrate software- and hardware-based protection against software piracy. Depending on the implementation, this has proved to keep much of the problem at bay. In contrast, protection against media piracy is far less practical, which is why publishers of music, video and written content have invested more effort on the legislative and law enforcement fronts.

Legislation against digital copyright infringement was first brought to the spotlight by the Digital Millennium Copyright Act of 1998 (DMCA), a United States copyright law that criminalizes activities such as circumvention of copy protection and licensing controls (DRM), website linking to software and media which has been stripped from such controls and more.

The PRO-IP Act of 2008 (Prioritizing Resources and Organization for Intellectual Property Act) added further changes in areas such as civil and criminal enforcement, and coordination and funding of federal efforts for protection of intellectual property. This act served as the basis for numerous operations against infringers, including seizures of counterfeit products and resources used to facilitate distribution of pirated content, such as server hardware and even domain names.

Among the many legal actions based on the PRO-IP Act it is probably the Megaupload.com crackdown that created the most media frenzy. Earlier this year, the FBI shut down this popular file sharing site, arrested seven of its key members and seized approximately $50 million in assets. According to the Virginia federal court indictment against the site, these individuals were responsible for operating a network of websites which reproduced and distributed infringing copies of copyrighted works, allegedly generating more than $175 million in criminal income since its founding in 2005, and causing more than half a billion dollars harm to copyright owners. If found guilty, the arrested members face maximum penalty of 20 years in prison.

The massive potential punishments against Megaupload soon convinced other file sharing websites Filesonic.com and Fileserve.com to fold or change their business model. These “voluntary” changes nicely demonstrate that although copyright law enforcement is fighting an uphill battle against the immense growth of online piracy, it’s is not necessarily destined to be a losing battle.

In part II of this post, I’ll discuss other copyright infringement legislation initiatives, as well as actions taken by organizations and companies in the battle against piracy.