Ukraine has regularly appeared on the well-known list of pirate countries, mainly because of the use of pirated software in the public sector.
Every year, the use of unlicensed software causes billions in losses to users, businesses and countries. In 2014, the direct losses of all companies worldwide from malicious code in pirated software, related to detection, remediation and data recovery, amounted to $127 billion (not counting the value of lost data). These figures were published in the report "The Dangerous World of Counterfeit and Pirated Software" by the international company IDC.
In 2014, IDC, together with the National University of Singapore, carried out 800 checks of personal computers bought with unlicensed software already installed, of DVDs with unlicensed software, and of unlicensed software and activation keys downloaded from the internet. The results showed that the chance of encountering malicious code in a pirated copy of software is one in three.
In Ukraine, using pirated software is not a problem but a way of life. According to a study by the international Business Software Alliance, unlicensed programs account for 83% of all software in Ukraine. One of the biggest offenders in this area is the state. According to Microsoft, 70% of the corporation's software products used in Ukrainian government institutions are unlicensed. The real scale of the offense is very hard to calculate.
"The use of pirated programs in government bodies slows Ukraine's progress toward building a competitive knowledge economy, damages the country's reputation and exposes it to cyber threats. The widespread use of unlicensed software in government institutions and enterprises is one of the main reasons why the International Intellectual Property Alliance named Ukraine 'pirate No. 1' in 2013 and 2014 ('Priority Foreign Country' status in the Special 301 Report)," says Olena Dmytriieva, head of the intellectual property protection department at Microsoft Ukraine.
According to Yuriy Syvytsky, a member of the supervisory board of the IT consortium Intecracy Group and Vice President of the IT Ukraine Association, the status of a pirate country did not cause Ukraine any direct financial damage that could be measured in money. But it is one of the signals to investors that Ukraine is not a state governed by the rule of law. "As a result, the country's largest IT companies work mainly on foreign projects. In other words, rather than developing their own products, they write code to someone else's 'patterns.' Consequently, there is no growth in our own intellectual capital and scientific base. Our country ranks 5th in the world in IT outsourcing. Yet it is hard to name even five Ukrainian products known abroad. They exist. They are just registered outside Ukraine," he says.
Real risks
The main problem with using unlicensed software is that the user is deprived of absolutely all guarantees from the manufacturer, says Oleksandr Savushkin, managing director of Kaspersky Lab for the North-Eastern Europe region. This primarily concerns technical support and the inability to install updates, including security updates.
"It is no secret that all programs are written by people and may contain errors. As a rule, developers find them fairly quickly and fix them by releasing so-called 'patches,' which are installed automatically during the next program update. Naturally, a user who lacks this option ends up with more and more unpatched 'holes' — vulnerabilities — in their PC over time. Meanwhile, attackers have a whole class of programs, exploits, that use precisely these unpatched vulnerabilities to break into the victim's computer," the expert explains.
Besides, as already mentioned, unlicensed software may contain malicious code — viruses, worms, Trojans, spyware aimed at gaining unauthorized access to user data.
According to Olena Dmytriieva, users spend $22 billion a year on restoring computers infected with malware as a result of using pirated software. "When it comes to government bodies, the risks are much higher than just the cost of fighting viruses or the loss of personal data. Unlicensed software can give malware and hackers access to confidential information on civil servants' computers, which threatens national cybersecurity," she says.
"It is naive to think that pirates crack software and make it publicly available out of love for humanity. 'If you are not paying for the product, you are the product' is a well-known rule. This is a big illegal business whose danger is often underestimated," Yuriy Syvytsky stresses.
The Vice President of the IT Ukraine Association lists the following consequences of using unlicensed software in government bodies: government computers being used in DDoS attacks, civil servants losing time because their computers do not work, and the risk of data leaks through vulnerabilities deliberately left by the cracker.
According to the IDC study "The Link Between Pirated Software and Cybersecurity Breaches," leaks of trade and economic information (59%) top the list of the most dangerous risks at state level named by government officials. In second and third place are unwanted access to government information and cyberattacks on critical infrastructure (55% each).
Liability for using pirated software
Using unlicensed software is a copyright infringement for which Ukrainian law provides civil, administrative and criminal liability.
As Mykyta Polatayko, a lawyer and coordinator of the IT practice at the law firm Sayenko Kharenko, explained, illegal use of software that has caused material damage of UAH 12,180 or more is punishable by a fine, correctional labor or imprisonment for up to 2 years (Article 176 of the Criminal Code). For a less serious violation, Article 51-2 of the Code of Administrative Offenses provides for liability in the form of a small fine (from UAH 170 to UAH 3,400).
"In both cases we are talking about fines paid to the state, while the rights holder can claim compensation for moral damage, compensation for losses or, instead of compensation for losses, statutory compensation of between UAH 12,180 and UAH 60.9 million," the lawyer clarified.
According to Mykyta Polatayko, criminal and administrative liability is borne by the person who intentionally installed and/or used the unlicensed software. Any person who used unlicensed software bears property liability. "If we are talking about employees who were given pirated software by their employer or at the employer's instruction, then the employer will bear such liability," he adds.
Given that pirated software is used everywhere in government bodies and this fact is not denied, officials can be held liable and compensation can be recovered from government bodies, the lawyer says.
"The practical side is more complicated, since any violation has to be documented, then you have to go through 2–3 court instances, and in the end it will turn out that the budget does not provide for paying the awarded sums and the State Treasury cannot enforce the court decision. After that, there will probably be an application to the European Court of Human Rights, and so on," Mykyta Polatayko notes.
Ways out
Officials understand the scale of the offense, but only a handful are working to solve the problem. For example, Economy Minister Aivaras Abromavičius said in an interview with Ukrainska Pravda that his department plans to become the first ministry in the government to abandon non-certified software. In particular, he has already held talks with one of Microsoft's executives. "They (Microsoft — Ed.) strongly support us in this initiative, and we are looking for ways to pay for the software we already use without having the money," he said.
Microsoft Ukraine said the company is always open to dialogue and ready to discuss various licensing options for government bodies. "Ukraine has every chance of becoming one of the world's innovation hubs, but this requires taking intellectual property protection in the country seriously. This issue is extremely important for Microsoft," Olena Dmytriieva said.
According to her, Microsoft has been cooperating with European governments, public institutions and businesses, including Ukrainian ones, for more than 20 years. Over the past six months, two important agreements were signed with the Ukrainian government. In December 2014 came an agreement on the Government Security Program. Under this program, Microsoft gives the state access to the source code of its products. Using this information, Ukrainian specialists can, for example, create and deploy secure local IT infrastructures.
The second agreement was signed with the Ministry of Internal Affairs of Ukraine in April this year. The memorandum of understanding enshrines the parties' mutual interest in cooperating on data protection, information security and cybersecurity.
According to Yuriy Syvytsky, there are three ways to solve this problem. "We believe that all of them should be combined, based on what makes sense in each specific case," he explains.
1. Free software
Expensive corporate software can be replaced with free open-source solutions. This applies both to the operating system (OS) and to application software. "New-generation document management systems make it possible to use a free office suite that is distributed completely free of charge. For the user, there is no difference at all. In a number of cases, it makes sense to use websites built on open-source solutions," says Yuriy Syvytsky.
However, using ready-made software with open licenses comes with a number of limitations (development, implementation, support). Government agencies use a great deal of corporate software written for Windows, and developing such systems for Linux would cost more than a license. In addition, installation and configuration must be handled by highly qualified IT specialists, and the public sector may simply not have such specialists.
"Free software is not always a full replacement for paid software, but in many cases it can perfectly well be used," says Yuriy Syvytsky.
2. Cloud services
Cloud services make it possible to use software, disk space and other computing resources on demand, paying only for the resources actually used, which significantly reduces the burden on the budget.
"Most vendors' software is available as a service. That means the state pays only for what it actually uses. In this case, IT costs can be cut by 65–70%. Subscription services are available for office applications, electronic document management systems, antivirus software and other technologies," says Yuriy Syvytsky.
The problem, however, is that the state has absolutely no idea how to consume cloud services, even though it sees the growing role of cloud technologies in the modern world. That is why a draft law "On Amendments to Certain Laws of Ukraine (Regarding the Processing of Information in Cloud Computing Systems)" was prepared. The document provides for the possibility of introducing cloud technologies to process open government information.
3. Discounted purchasing
According to Yuriy Syvytsky, Ukraine should set up a body that would assess the real software needs of government agencies and conduct the relevant negotiations with vendors. "It is possible and necessary to negotiate lower prices for the public sector with vendors and/or their partners. They are ready to meet us halfway if licensing volumes increase. Clearly, the price of licenses for tens of thousands of computers will differ greatly from the price for 10–15 computers," the expert concludes.
Source: UBR