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Piracy watchdogs fine eight firms for unlicensed software

Washington-based group worked with Canadian agencies to bring about charges totalling $330,300
by Fawzia Sheikh

Groups leading the charge against software piracy say eight companies in Ontario and Alberta have agreed to pay a combined total of $330,300 for using unlicensed software, but some are concerned that illegal copying in Canada remains higher than in the U.S.

"I think it's the most settlements we've ever announced in a single day," in Canada, said Bob Kruger, vice-president of enforcement for the Business Software Alliance (BSA) in Washington, D.C., which worked with the Toronto-based Canadian Alliance Against Software Theft (CAAST) to bring about charges against the eight firms.

Meanwhile, Jacqueline Famulak, CAAST president and regional legal counsel (Canada) for Apple Computer Inc. in Markham, Ont., is pleased that CAAST and BSA were able to resolve the cases.

"I couldn't tell you exactly how many we (settled) last year, but it was definitely not more than a dozen," said Famulak, adding she could not provide a total figure for 2003 settlements.

CAAST attributed the success of settling these cases to asking the organizations suspected of piracy to conduct a software audit and submit a report to the software-piracy watchdog.

"They were all cooperative. They all agreed not only to delete the unlicensed software and purchase new software, but also to establish compliance policies in the workplace," said Famulak.

An August study conducted by International Planning & Research Corp. of West Chester, Pa. concluded 39 per cent of all software installed in Canada in 2002 was pirated, up one per cent from 2001. The corresponding U.S. figure is 23 per cent, which has dropped incrementally over the past few years, according to BSA figures.

Kruger attributed the rate discrepancy to a number of issues, particularly that U.S. laws are "more strict and comprehensive." In fact, companies found to have wilfully infringed someone's copyright can be held liable for up to US$150,000 in the U.S. for each work copied, compared to a $20,000 charge for similar suits in Canada, he said.

This may all be rooted in different perceptions in the two countries about the seriousness of software piracy, with some in Canada ranking it among crimes such as "petty shoplifting -— taking a towel from a hotel room," Kruger added.

BSA's efforts to stem piracy include offering companies free software-auditing tools and other resources to better manage software.

CAAST's awareness efforts, which consist of radio ads and information mail-outs, are helping to better educate companies about what constitutes illegal software use, Famulak explained.

Famulak said CAAST follows up on every lead, whether it's by phone, anonymous letter or e-mail, and pursues a company when it feels it has enough evidence. This may mean writing a "semi-friendly letter" that wins the cooperation of the organization or going so far as obtaining a search order to enter the premises with the help of police.

The study International Planning & Research undertook also found that software piracy costs Canada $342 million each year in federal and provincial tax losses and inhibits growth of a strong software sector. Furthermore, direct and indirect job losses add up to 32,112 and direct and indirect wage and salary losses weigh in at more than $1.4 billion.

The eight cases CAAST and BSA resolved this month include: NAQ Inc., Focus Corp.,, MI Group, Palcam Technologies, Robertson Inc., Alberta Fuel Distributors and PHH Environmental Ltd.

Among those firms, MI Group, a consulting firm in Mississauga, Ont., agreed to pay $87,500 after a self-audit revealed it had unlicensed copies of Adobe, Microsoft, Network Associates and Symantec software installed.

NAQ Inc., a provider of financial market data in London, Ont., agreed to pay $93,000 following a self-audit by new management that revealed unlicensed software.

f In Alberta, Focus Corp., an engineering consulting firm in Edmonton was fined $30,000 after a self-audit revealed it had unlicensed copies of Microsoft software.

This story first appeared in Computing Canada, January 16, 2004, Vol. 30 No. 1

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