A mobile phone engineer was last week fined £3,400 for illegally sharing software over peer-to-peer (P2P) networks.

Derek Butterworth, from Epping, was identified following a 10-month investigation by the Federation Against Software Theft (Fast). His case highlights the dangers for businesses of unlicensed software use.

From 6 April the implementation of recommendations in the Gowers Review will give Trading Standards officers powers to raid businesses suspected of using illegal or pirated software. Maximum penalties for online copyright infringement of software will also rise from two to 10 years.

Until now copyright infringement has not been policed by a government authority. But changes to the law mean trading standards can enforce copyright offences, and in his Pre-Budget Report chancellor Gordon Brown committed £5m to enforce such offences.

But John Lovelock, director of Fast, says while this sum is a start, it is not enough, and points out firms are often unaware illegal practices are taking place.

‘One training company was astounded this was going on when we showed them the evidence,’ he said. ‘As a result it rewrote its policies for contractors and encrypted its internet lines.’

Lovelock says firms should randomly check what employees are doing, as well as regularly look for unauthorised content.

He believes there are serious issues about the practicalities of enforcing the new laws.

‘The issue now is that Trading Standards officers report to local government authorities,’ he said. ‘Government will not specifically ringfence the money given to local government authorities, so depending on the issues of each authority, that money might be directed elsewhere.’

But Trading Standards could receive a boost to its investigation resources when it recovers illegal software, according to Julian Heathcote-Hobbins, senior legal council at Fast.

‘They will be able to keep 10 per cent of any recoveries they make through enforcement. This may have to be shared with other authorities involved in investigations, but hopefully that will have a snowball effect in getting more cases investigated,’ he said.

Legal issues aside, employees obtaining software through file-sharing on P2P networks also pose a serious security risk, says Susie Winter, director general of the Alliance Against IP Theft.

‘Rather than threatening businesses, we want to say you are putting your business at risk by allowing this to happen to your company,’ she said. ‘With file-sharing you are opening up your systems, which is obviously a massive security risk.

‘Business communities need greater information about the importance of intellectual property to the UK economy.’