Small Canadian firms, school division fork out $270,000 in “piracy” damages

Five Canadian organizations – four small businesses and a school division – have paid $270,091 in damages after investigations found unlicensed software installed on their computers, the Business Software Alliance (BSA) says.

The five organizations named are just a fraction of the companies investigated for piracy allegations by the BSA each year. The alliance has about 100 investigations underway at any given time and collected more than $1 million in fines last year, according to Jenny Blank, senior director of legal affairs at BSA.

“Software piracy is a broad problem, not one owned by any specific economy sector,” she says. “This announcement is meant as a deterrent to other companies. Ultimately, it will cost more to pirate software than to just purchase it in the first place.”

The Alliance represents such leading software publishers as Adobe, Microsoft, Autodesk and Symantec.

The five organizations are:

  • Swift Current, Sask.-based Chinook School Division, covering 62 schools and 6,000 students paid $191,543
  • Richmond Hill, Ont.-based Valcoustics Canada Ltd. provides acoustics engineering services and paid $22,980
  • Edmonton-based Capital Engineering is an engineering firm that paid $22,980.
  • Richmond Hill, Ont.-based Ion-Ray Ltd. manufactures the Q-ray bracelet and was fined $20,886.
  • Montreal-based Stack-Trak Group, Inc. is a Web-based interactive content producer and paid $11,702.

Companies are no doubt feeling the sting of the fines, given an already tough economic climate, says Marc Perrella, vice-president, technology group at Toronto-based IDC Canada.

“In this day and age, any amount is a lot of money,” he says. “They’re trying to send a message to small companies that might not think anyone is going to come after them for unlicenced software. But the risk isn’t worth it because you’re going to pay a hefty fine.”

The fines are assessed based on an audit of an organization’s computers, Blank says. The amount is determined based on the number of unlicenced software copies and how expensive the software is. The organization also must pay a fine to resolve its liability for the copyright infringement.

Chinook School Division was slapped with the heaviest fine of the five organizations. It will be tough to pay it up, says Rebecca Chynoweth, communications coordinator with the division.

“It is definitely hard to handle as a public enterprise and we’ll have to compensate by cutting back in other areas,” she says. “Our fine was much higher than anyone else’s.”

The investigation began last July and was resolved by October, Chynoweth says. It was determined that teachers had installed copies of software they liked to use on computers in one school’s computer laboratory.

The school division is the result of a 2005 amalgamation of nine divisions, she explains. It was a challenge to bring together many different procedures and combine them into one coherent organization.

“We’ve stepped it up considerably. We want to follow the rules and we understand copyrighting is there for a reason,” she says. “Now everything goes through our tech department and people are not allowed to install anything without permission.”

Organizations audited must agree to efforts at maintaining legality of their software licences as part of negotiations with the BSA, Blank says. Companies must also delete or purchase the software licenses they need to meet legal requirements.

The alliance is tipped off about possible software piracy via its Web site at or its phone hotline at 1-888-NO-PIRACY. It then gives the organization an option to cooperate with a shared audit of its computers, or settle the matter in courts.

No one has every insisted on going to court, Blank says. “It’s too much of an obvious decision to agree to work with us. We can work together to resolve the problem and save a lot of time and money.”

The organizations named in the announcement by the BSA weren’t intentionally pirating software, says IDC’s Perella. More likely, the small firms were not properly following licencing procedures and were unaware of the problem before the audit.

“You’re not supposed to be able to take one copy of your software and perpetuate that on to another PC or two,” he says. “But that’s the way it works. The devil is in the details for end users to comply with any software agreements they have in place.”

Too often, smaller organizations don’t take the time to read their software license agreements, or don’t have any policies about how software gets installed on company computers, he adds. It’s more common for legally purchased software products to be used on more machines than they are licenced for, than for a company to outright pirate software by intentionally not purchasing the product in the first place.

Most people just don’t understand that under-licensing software is against the law, he says. “If someone has software on their desktop, they’re probably going to take that software and put it on their notebook.”

Software piracy – intentional or not – has caused a loss of about $1 billion in Canada last year, Perella says. About one third of all software installed on computers in Canada is pirated.

The BSA does sometimes take into consideration the method by which unlicensed (or under-licensed) software came to exist on an organization’s computers when deciding on an appropriate fine, Blank says. But this is done on a case-by-case basis and there is no set difference between investigations of intentional pirating or unmanaged licences.

Each company is responsible to know what is on its computers and to manage the machines appropriately, she says. “Whether its intent or a problem with oversight, the result is the same – the software isn’t paid for and damage is being done.”

The alliance urges businesses to conduct their own audits and become compliant with the law on their own accord.

Free software tools to help conduct those audit’s can be downloaded from the BSA’s Web site at

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