Provided you can locate an APK file outside of the Android Market, it really isn't all that hard to install illegally obtained copies of paid apps onto your Android phone at no expense to yourself (unless you use an AT&T Android phone, har har har). Seeing the potential trouble this could cause for hard working developers hoping to turn a buck off the legitimate sale of their software, Google is introducing a new licensing service for apps purchased through the Android Market to make it harder to use pirated wares.
The new service works by querying a Google server at launch of an application to check purchase records and make sure the person using the app actually paid for it. The hope is that the new system will provide better protection from unauthorized use of applications than the current copy-protection methods in the market. The new system will become standard over the coming months. You can read more about it at the Android Developers Blog.
Using the service, you can apply a flexible licensing policy on an application-by-application basis – each application can enforce licensing in the way most appropriate for it. If necessary, an application can apply custom constraints based on the licensing status obtained from Android Market. For example, an application can check the licensing status and then apply custom constraints that allow the user to run it unlicensed for a specific number of times, or for a specific validity period. An application can also restrict use of the application to a specific device, in addition to any other constraints.