Anti-Piracy group accused of ‘intimidating’ firms that can’t fight back

An anti-piracy group representing major software vendors is being criticized by a mid-sized manufacturing business that was forced to pay a large fine, and an Internet law expert.

Twelve Canadian companies have settled with the Business Software Alliance (BSA) for a combined total of more than $431,000, the BSA revealed last week.

Companies in B.C., Alberta, Ontario and Quebec were hit with fines for having unlicenced copies of software installed on their computers.

The heftiest fine of $128,800 went to Oldcastle, Ont.-based A.V. Gauge & Fixture, Inc. Now that firm says the BSA “intimidated” them and took advantage of the fact they didn’t have a legal department.

“You get a threatening letter right out of the gate,” says Antosh Pieniazek, manager with A.V. Gauge & Fixture. “They’re going after the small and middle-sized companies and intimidating them. We don’t have the time or money to fight them, but I wish we did.”

BSA often acts on tips by current or former employees to the Alliance’s hotline at 1-888-NO-PIRACY or its Web site — www.nopiracy.ca. Tipsters provide leads for companies using unlicenced software. From there, it sends a letter asking the company to perform an audit of its software and report back to the BSA, explains Jodie Kelley, general counsel and vice-president of anti-piracy.

“We work with the companies,” she says. “We can determine whether or not the audit is in the range of reasonableness.”

Companies always choose to work with the anti-piracy group rather than face going to court. Under Canadian law, a fine of $20,000 for each copy of software installed without a licence is possible.

BSA asks that companies comply by paying for the licences they need to for their use to be legal. Then they settle on a punitive fee for the unlicenced software.

A.V. Gauge & Fixture was fined for unlicenced copies of Microsoft and Autodesk software, Pieniazek says. He says the copies were not made intentionally, but because of poor IT policy at the company that saw computers passed on from the engineering department to other departments without formatting them.

“We didn’t have an IT department, computers really aren’t our gig,” he says. “We had two or three extra seats we weren’t supposed to, but we weren’t using them.”

The company has since put an IT department in place and reformed its process to avoid the same problem in the future, he adds.

The BSA is also coming under fire for statistics it commonly uses to make a case that piracy is rampant in Canada.

The numbers in question were again cited in the Sept. 14 announcement about fines brought against Canadian firms and comes from IDC’s Global Software Piracy Study for 2008, conducted on behalf of the BSA.

Software piracy continues to be a serious problem in Canada,” the press release states. “32 per cent of PC software installed on Computers in Canada during 2008 was pirated, with a retail value of $1.2 billion.”

But those numbers just aren’t credible, according to Michael Geist, an Internet law expert at the University of Ottawa. Canadian firms were never surveyed by IDC for its study, meaning the data is a best guess.

“This is part of a very concerted, ongoing effort to try and paint Canada as a piracy haven,” Geist says. “It has sowed some real seeds of dissent amongst those who don’t like the direction the association is taking.”

The IDC study set its piracy rate by determining the number of computers there are in a country and how many of them had software installed on them over a given year. It then compares that to the amount of packaged software shipped to a country and subtracts the difference to equate the amount of unlicenced software.

An annual survey asks companies what software was installed on each computer, and was done across 24 countries in 2008. But Canada wasn’t among them. Still, the study makes definite statistical claims … for instance that piracy rates in Canada dropped by one percentage point compared to the previous year.

“To be pointing to data with such specificity and not even have a survey really undermines their credibility,” Geist says. “One of the problems we’ve had in this debate is the utter absence of reliable statistics. The same numbers get floated again, and again, and again… some of these have literally been pulled out of the air.”

The BSA defended its statistics, saying the survey is just one element that goes into the statistical model.

The model also includes estimates by analysts and spot inventory checks, says Jesse Feder, director of international trade and intellectual property at BSA.

“It’s not a guess,” he says. “It’s a calculation that includes some numbers that are estimates.”

Countries that haven’t been surveyed in a given year were often surveyed the previous year, he adds. Those that aren’t are correlated with other countries that have similar characteristics.

Feder couldn’t state for a fact when Canada was last surveyed for the annual report. But he did characterize Canada has having a low piracy rate.

“It’s certainly at the low end and it’s improving,” he says.

Meanwhile, getting hit with a fine has had other effects at A.V. Gauge & Fixture besides creating an IT department. It is also moving away from Microsoft software as much as possible, instead finding open source alternatives.

That includes using Mozilla software, as well as OpenOffice.org tools to replace Microsoft Office, Pieniazek says. Turned off by the threatening approach of the BSA, the manger seems to have a bitter taste in his mouth for software vendors that are members of the group.

“It’s a joke,” he says. “They should take a page out of the other software companies out there and have reasonable prices.”

The BSA also picked on his company because it doesn’t have a legal department, Pieniazek adds. “The bigger guys have legal departments, so they don’t go after them.”

That’s not the case, BSA’s Kelley says. The group follows up on credible evidence it receives about unlicenced software.

“We do not choose them based on whether they have a legal department,” she says. “Some of this is intentional, and some of it is ineptitude. But the law requires that if you’re using the product, you pay for it.”

The BSA doesn’t reveal all of its settlements with companies, but does release examples as a way to educate other companies about the importance of legal software. Since October 2006, the BSA has released five such announcements about settlements with 27 companies.

The list doesn’t include any enterprise-sized firms. It does include small and medium-sized businesses from across many different industries, and one school board based in Saskatchewan.

The school board paid the highest listed fine — $191,543.

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