Plans to use Trading Standards to crack down on businesses using unlicensed software are in tatters.
Funding that was made available to Trading Standards by the government to protect copyright is being redirected by local authorities, the Federation Against Software Theft (FAST) said.
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The organisation has raised concerns that the campaign it has been running with local Trading Standards offices to search business premises might be derailed.
It had run successful campaigns in Cardiff and East London that were intended to act as a blueprint for future activity across the UK.
Under Section 107A in the Copyright, Designs and Patents Act 1988, which came into force in April 2007 Trading Standards are able to enter premises they suspect of holding counterfeit product.
Money that had been allocated to the programme, which included £5m set aside by the government in 2007 and a further £7.3m in 2008, has either been cut completely or redirected to other activities.
"We were fully co-operating with Trading Standards so that together we could support the legitimate use of software at work and we were working towards the same ends," said John Lovelock, chief executive at FAST.
He added that it had been "doing some groundbreaking work and exploring new boundaries granted by legislation to protect the software industry in the UK. That opportunity has now gone."
Lovelock said that the problem was the money set aside to implement the recommendations set out in the Gowers Report to protect intellectual property had not been ring-fenced.
"So that financial investment is either being axed or redirected to investigate more visible and consumer-oriented activity such as health and safety in kebab shops. This was not the intention of this initiative and it is the equivalent of taking a step back in time of three years," he said.
A version of this story appeared on MicroScope.co.uk.