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Piracy is generally understood to mean copying the actual program
files and making them available to other people without them paying a license
fee to the software manufacturer. Often this involves "hacking" the
executable files to remove copy protection or distributing a license
key that can be shared by everyone.
I know there are lawyers on the list so feel free to correct me, but
legally piracy is a form of copyright violation. It is clearly
illegal and it is a big problem for the software industry. It is one
of many reasons why it is difficult to be successful in consumer
software.