The quandary of EDA software piracy

As piracy increases, vendors face difficult decisions on prevention, detection, and keeping customers happy.

By Tam Harbert, Contributing editor -- EDN, July 5, 2011

Piracy of electronic design automation (EDA) software is getting worse, and the industry is in a quandary as to what to do about it.

There are no specific numbers on the amount of revenue the industry is losing. The organization that tracks software piracy in general, the Business Software Alliance, focuses only on PC software and doesn't break out EDA software specifically. But the anti-piracy committee of the Electronic Design Automation Consortium (EDAC) estimates that 30 to 40% of all EDA software use is via pirated licenses, according to Dane Collins, CEO of AWR Corp and an EDAC board member. "It's huge," he said. "It's one out of three users worldwide."

The rise in piracy is attributed to several factors. Some EDA software has become simpler and easier to use. There are more low-end versions of EDA software that run on PCs and low-end workstations than before. The more similar it is to mass-market, shrink-wrapped software, the more prone it becomes to piracy. Perhaps most important, however, is the fact that the electronic design market has become increasingly global and its software is therefore used by designers in emerging countries, such as China, that have bad records in protecting intellectual property.

The problem has grown to proportions that EDA software vendors can no longer ignore.

"We started out just accepting the fact that some of our software was going to be pirated. It was basically our lower-end software," said Bill Krueger, IT director for information security at Cadence Design Systems Inc. "You could almost claim that it helped you get people using your product." But as the market extended into emerging countries, vendors are getting more aggressive about preventing, or at least, discouraging piracy.

At least one vendor has gone to the courts. Last August, AWR sued ZTE Corp, a Chinese telecommunications company, accusing it of circumventing copyright protection mechanisms in order to use the software without purchasing licenses. AWR specializes in design software for radio-frequency products. "With the rise of the semiconductor industry in China, where respect for intellectual property does not carry the same cultural significant that it does in the West, EDA firms have increasingly been forced to contend with the reality that a growing number of designers are using their software without authorization," the company said in a press release. In the charges, AWR claims that ZTE got unauthorized versions of AWR software from rogue Web sites and that it obtained cracked software keys that enabled engineers to use AWR without a valid license. In mid June, the judge in the case found ZTE liable for using unauthorized key codes and also ruled that ZTE was bound by a software agreement that its engineers "clicked through" when they installed the software. A trial to consider other claims in the suit, as well as damages, is set to begin in August. (Meanwhile, AWR was acquired by National Instruments on June 30. Company representatives told EDN that they will continue the court case against ZTE as AWR, a subsidiary of NI.)

EDAC formed its anti-piracy committee about six years ago. Its goals are to quantify the problem, understand the technologies used in the piracy and study technologies that can be used to thwart them, said Robert Gardner, EDAC's executive director. The committee has worked with the predominant software license management vendor in the EDA industry - Flexera Software - to strengthen the encryption on its technology. The committee also talks to vendors of a variety of technologies that might be used to prevent or detect piracy.

The committee stresses that software piracy hurts the entire industry, not just software vendors. After all, a company that uses pirated design software has a cost advantage that may enable it to undercut the price of upstanding competitors that are paying for legitimate software.

But the problem isn't easy to solve. "The overall theme is that there are many things you can try to do, but in the end it's kind of a whack-a-mole game," said Collins. "[The pirates] just go to the next vulnerability." Despite the industry's best efforts, "we seem to never be able to find [a solution] that wouldn't create a lot of pain in the legal customers but would create a real deterrent in the illegal user base."

There are three basic ways to pirate EDA software, according to Jayant Shah, vice president of product deployment at Magma Design Automation:

1)      Break the encryption that protects the key generator, which enables pirates to create their own license keys. Although Flexera has strengthened its encryption, making its licensing software harder to crack, this is still a common method of piracy, according to observers.

2)      Duplicate the unique machine address of the server on which legal software is running, allowing copies of the software to run illegally on other machines. There are companies that provide hardware keys that must be plugged into USB ports in order to allow users to run the software, but these, too, can be cracked. And for customers with hundreds of copies of the software, having to use a hardware key for each one is a burden.

3)      Tamper with the actual binary executable code that the EDA vendor sends to customers, completely bypassing any licensing check.

The second method, sometimes called host ID spoofing, is of particular concern as more and more companies virtualize servers, said Victor DeMarines, vice president of products of Vi Laboratories, a company that has developed technology that detects piracy.  "In a virtual environment, I can change anything on that machine," he said. "I can change the host ID and create a new environment for that application."

Jas Lochab, IT group director of networks and information security at Cadence, said the company has participated in EDAC's work to develop a more robust host ID that would work not only on physical but also virtual machines. The hope is to develop technology "that would let us discover or track instances where the license is being cloned or spoofed in the customer environment or otherwise has been illegally obtained," he said.

Such a feature, whereby the software would "phone home," is at this point only a possibility, noted Krueger. "That is not done today," he said.  But "we all think it'll happen somewhere in the future."

It may take time for customers to accept that technology, he acknowledged. Historically, EDA users have resisted software with such a feature. "We have particular ways customers want to do things," said Krueger. "Changing that can sometimes cause problems."

Meanwhile, Cadence is trying to control the problem in other ways. For example, the company is providing its software as a service in the cloud, rather than distributing actual copies of the software to customers. "When we have software as a service, either at our own cloud or an external Cadence-certified cloud, we basically retain control of the environment, including the licensed server," said Lochab. "Licensing becomes a non-issue."

Cadence has also put additional auditing provisions into its contracts. Onsite auditing of customers has not been common in the past, he said, but until better piracy prevention and detection methods are developed, the company feels it needs "some level of compensating controls such as auditing rights." These audit programs can also benefit the customer, Lochab pointed out. By coming onto the premises and examining a customer's software environment, Cadence may be able to help the customer become more efficient in how it uses the software, he said.

Gradually, EDA vendors seem to be changing their focus to detection, rather than fighting the whack-a-mole strategy of prevention.  After all, the first step after discovering piracy is to try to convert the user into a paying customer, said Dave Graubart, director of software engineering at Synopsys and chairman of EDAC's anti-piracy committee.

That is the focus of Vi Labs. The company's CodeArmor software can be OEMed into the EDA software and can detect pirated use and send information back to the EDA vendor to help identify the user, said DeMarines. Rather than preventing or catching individual pirates, he said, the company's focus is identifying businesses that may be using pirated software on a large scale. Once an EDA vendor knows that, it can approach them to try to recover that revenue.

"We've seen situations in large companies . . . [where] one engineer in one office may download one version to do just this one project, but that ends up on a server on network, then others assume it's legal and start to use it," he said. "We can pinpoint that sort of situation rather than doing an invasive compliance audit."

Without such a technology, EDA vendors are left with old-fashioned, hit-or-miss methods of detection, which seems to be how AWR became aware of ZTE's alleged piracy. In the charges against ZTE, AWR said that 11 ZTE engineers registered on its Web site to access support and documentation. When AWR held seminars in China, at least 14 ZTE engineers attended and "asked AWR representatives sophisticated questions regarding the AWR software that only experienced user would know to ask."

Once it has a way to accurately detect piracy, an EDA vendor can then use a carrot-and-stick approach. It can make the customer legitimate and get the revenue. Larry Disenhof, group director of export compliance and government affairs at Cadence, estimates that one third of such piracy could be turned into revenue. If that doesn't work, it can get legally tough, as AWR has, and try to punish flagrant piracy. "Walking away does not send the right message," Collins said.


Links:

BSA piracy report

Latest report from EDAC anti-piracy committee