Microsoft is teaching local authorities a legal lesson, reports Stephen Phillips.

ONE of America’s poorest local education authorities, the Philadelphia school district, could face multi-million dollar fines after being ordered by software giant Microsoft to investigate the use of bootleg computer programs in classes.

The authority has rooted out about 467 illicit programs since March, according to chief information officer Ron Daniels, each of which carries a potential $150,000 (pound;105,000) fine under US copyright law.

The probe alone, spanning more than 30,000 computers across 264 schools, has so far cost Philadelphia an estimated $100,000 (pound;70,000). “We are paying money to see how much more money we have got to pay,” said Daniels.

The Los Angeles school district was left with a bill running into millions of dollars in 1998 after an audit uncovered hundreds of illegally copied programs. Although the fine was only $300,000, the district had to pay $3 million for new program licences and $1.5m to hire internal software police.

In March, the San Jose metropolitan education district in California was ordered to pay $50,000 for using unlicensed programs. Both actions were brought by the Business Software Alliance, which enforces licence compliance on behalf of Microsoft, Apple and other firms.

In Philadelphia’s case, the cost of the anti-piracy drive adds to a cash crisis. It is wrestling to keep a school system of 210,000 pupils afloat with a projected $217m budget shortfall for 2001-2.

Unless it receives a massive cash injection from state or federal government coffers, the district has said it will be unable to pay its 27,000 staff.

Mr Daniels said that the process had been “disruptive”, tying up one-quarter of his computer staff, but that Microsoft had made no legal threat against Philadelphia, instead ordering it to produce valid licences for every program it used after learning of a piracy incident in January. The company has been “very supportive” during the audit, he added.

Microsoft insisted it was helping Philadelphia to reduce its legal exposure. “We have communicated the risk around software compliance,” said Toby Richards, a Microsoft marketing director.

Educators said Microsoft was being unnecessarily heavy-handed.“I’d much rather see them go after large corporations,” said Robert McClintock, director of the institute for learning technologies at Columbia University. “For most schools, it’s either repair the roof or pay for more software.”

The software alliance is currently investigating up to a dozen cases involving schools in the UK.