Enforcement efforts by software makers resulted in 44 settlements with American companies in 2001.
A report being released Monday by the Business Software Alliance, which includes companies such as Microsoft, Apple Computer and Adobe, attributes the shift to growing computer markets in countries that traditionally have high piracy rates, such as Vietnam, China and India.
"The number of people using PCs in (these) countries are exploding," said the group's president, Robert Holleyman. "The numbers of legal software sales are not keeping up."
Until last year, worldwide piracy rates had dropped steadily since the trade group's first such study in 1994.
Vietnam has the highest business software piracy rate in the world, according to the study, at 94 percent. Russia, Ukraine and other former members of the Soviet Union typically have high rates of unlicensed software as well.
Twenty-five percent of business software programs in the United States was pirated in 2001, a percentage point increase from the previous year. The worldwide piracy rate jumped from 37 percent in 2000 to 40 percent in 2001, costing the industry about $11 billion.
Companies in 17 states targeted by the trade group are paying nearly $3.1 million to settle piracy claims. Holleyman said the suits usually stem from complaints made to the group's hot line or Web site by disgruntled former employees of a company.
Intellectual property protections are a hot issue in Congress. A bill introduced by Sen. Ernest Hollings, D-S.C., would call for every electronics device to include a "copyright chip" that enforced a particular encryption scheme approved by the government.
The measure is backed by entertainment companies like Disney and News Corp. The entertainment industry is distressed by falling music CD sales and rampant Internet piracy, including reports that the most popular new movies and music - such as rapper Eminem's latest CD and the movie "Spider-Man" - were available on the Internet even before their release in stores and movie theaters.
Even if the Hollings bill passes the Senate, it is unclear whether there is much interest in the idea in the House. At a meeting of a key House subcommittee on these issues, several lawmakers last week said they would prefer that the industry figures out how to protect digital content on its own.
"If there is a technology mandated, it will quickly be circumvented by smart techies," said Rep. Zoe Lofgren, a California Democrat who represents many consumer electronics companies fighting the bill.
Holleyman said his member companies - including Microsoft and Adobe, which were present at the House hearing - prefer industry-led initiatives as well as stronger law enforcement and education.
"As technology companies, we know that there is not a simple government-mandated technology that can solve our problem or the problem with the entertainment industry," Holleyman said.
By D. Ian Hopper