Toronto firms fork out fines to settle piracy claims

Four Toronto-area companies have recently dished out a total of $95,000 to settle claims of unlicensed software on their computers.

They’ve also agreed to delete all unlicensed copies of software, acquire appropriate licenses and commit to stronger software management policies, according to the Business Software Alliance (BSA), the principal global copyright-enforcement watchdog for the commercial software industry.

The companies include Creative Outdoor Advertising, Menupalace.com, Sufen Ltd. and ACO Container Systems.

When it comes to software piracy, even well-managed companies don’t always pay enough attention to their software licensing requirements, says one industry insider.

Michael Murphy, chairman of the BSA Canada Committee, says these types of settlements help organizations understand if they have an internal process problem – perhaps they have poor controls in place, or possibly even renegade employees.

Would a CEO know if the company’s software was under-licensed?

Probably not – it typically falls to the procurement and IT departments to understand what they are buying, where it’s deployed, and whether it’s over-deployed or under-licensed.

“That’s where most organizations get into some trouble,” said Murphy.

They know about software piracy, but usually have reactive projects – where, for example, they’re trying to get a server up and running and need to install a productivity application. Somebody in IT assumes they have a license for product X or intends to buy one next week.

“It’s willful, but I think it’s unintentional.” Murphy says there is a difference between “willful stealers of software and unintentional stealers.”

But either way, he said, there’s a need for education and awareness.

The BSA represents a range of software vendors, and its membership includes companies such as Microsoft, Symantec and Apple.

Its role is three-fold:

  • To represent the interests of member companies
  • Provide education and awareness around software piracy
  • Investigate software theft leads and bring them to closure through actions such as settlements

According to the BSA, the piracy rate in Canada is 34 per cent, and it hasn’t been dropping over the years. It’s almost equivalent to the global piracy rate of 35 per cent.

“I guess it’s okay to be average, but we’re also a developed country,” said Murphy.

Stealing software, he said, also has far-reaching economic consequences.

It costs jobs in the IT sector and bumps up the price of software. It also means the government loses out on tax dollars and the channel community loses out on business opportunities.

According to a study by research firm IDC Canada, reducing the piracy rate in Canada by 10 per cent would add about 5,200 more jobs to the IT sector, as well as more than $700 million in tax dollars.

“The government needs to get involved in changing the laws around copyright,” said Murphy, adding that piracy is lower in the U.S. by 11 or 12 points – and penalties there are far more severe.

“The penalties go up to the C-level suite,” he said. “I think that’s what gets their attention.”

Not everyone agrees with that notion, however.

“I’m fairly skeptical of that claim, because we do have effective laws in place, and our border agents do have authority to tackle this kind of illicit trade,” said David Fewer, staff counsel at the Canadian Internet Policy and Public Interest Clinic (CIPPIC).

“We’ve got the mechanisms in place – it’s up to the parties to be using them.”

Fewer believes we should be doing a better job of measuring software piracy.

He notes that we’re witnessing a lot of propaganda on the part of the intellectual property lobby groups and business associations, trying to get more resources put into policing and border measures with respect to IP.

“To the extent that’s merited, I would endorse that 100 per cent – it’s important that commercial piracy be stamped out as much as possible.”

But there’s no evidence to suggest that’s the case, he added.

“The really big issue I have is the numbers floated around about how much software piracy is out there generally have no bearing in reality.”

Canadians have a vested interest in getting a better understanding of what the real numbers are, so we can make good policy choices about where we’re going to allocate resources.

The biggest concern is not individual piracy, said Fewer, but rather organized groups engaged in what they know to be counterfeiting activity – who are ripping off Vista, for example, and trying to pass it off as legitimate software.

“I think that’s a bigger percentage of the marketplace, and we all have an interest in stopping that kind of activity because that doesn’t only screw Microsoft and the vendors, that screws consumers who think they’re doing the right thing.”

On an individual level, most software companies don’t mind a little bit of piracy, he said.

Microsoft would much rather have university students using a pirated version of Windows as opposed to Linux or – God forbid – Apple.

Because once they’re out in the workforce, he said, they’re more likely to buy that brand over a competitor’s version.

“Having a little bit of piracy out there gets you into that world,” he said.

Vendors are also learning to take care of themselves.

Microsoft has its Genuine Advantage program that certifies an authentic version of its software. This may be somewhat burdensome to consumers, said Fewer, but it’s probably not an unreasonable price to ask them to pay.

“We’ve got an effective regime in place right now that gives software companies all the tools they need to enforce their rights.”   

We should not change those laws on the basis of a “myth” that there’s an “innovation-sapping plague” of counterfeiting going on out there, Fewer says.

Rather, he says, we should focus our efforts on identifying the appropriate level of public resources that should be devoted to this issue.

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