Software counterfeit case puts VAR behind bars

A Toronto-area reseller who was once sued by Microsoft for selling and distributing counterfeit Windows certificate of authenticity labels will be spending his weekends in jail after being convicted of copyright infringement.

An Ontario court sentenced Ross Borge, principal of Raeco Industries Ltd. and, to 60 days imprisonment for selling counterfeit copies of Microsoft Windows 98 Second Edition, Windows 2000 Professional and Symantec’s Norton Antivirus. Borge and Raeco were also fined $105,000, or $15,000 for each of seven counts of copyright infringement.

Though Borge’s is a custodial sentence which will be served intermittently on weekends, it may mark the first time a reseller in Canada has done jail time for pirating software.

The RCMP obtained a search warrant after making “test purchases” of Microsoft and Symantec software last fall. Charges were laid on Dec. 2 under the criminal provisions of the Copyright Act and the Criminal Code. Borge, who did not return calls at press time, is appealing the conviction and his sentence.

A spokesman for Microsoft Canada cheered Borge’s conviction, saying he hoped it would set a precedent for other software pirates.

“I think this is great where it was a case where someone was given jail time. We’re very excited about that,” said Michael Hilliard, the company’s corporate counsel. “We would always hope for the strictest possible punishment . . . If someone goes to the bank to steal money, you put them in jail.”

Microsoft supplied witnesses in the case to confirm that the software being sold was counterfeit, as well as a “victim impact statement” that articulated the effect such crimes in general have on a company such as Microsoft. Several vendors, including Microsoft, have been using an industry association called the Canadian Alliance Against Software Theft to lobby against piracy and raise awareness about it, though its measurements have been called into questions by open source advocates, among others.

“These are crimes of greed, not desperation,” said Lisa Csele, Crown Counsel for the Department of Justice. “A business calculation does come into it.” 

Microsoft had sued Borge for $250,000 last year in a civil case for similar activity. According to a statement of claim filed in the Federal Court that was obtained by Computer Dealer News, Borge allegedly agreed to a settlement in 2002 when he was with another Ontario company that he would not import or sell counterfeit Microsoft programs or documents or infringe its trademarks. It also alleged that in 2003 he consented to a judgment forbidding Borge and two other persons from infringing Microsoft trademarks.

Csele said the Crown recommended the jail sentence, based on the Criminal code and the sentencing guidelines there.

“Really, it was considering specific and general deterrents. Specific because Mr. Borge had been sued by Microsoft on a few occasions before,” she said. “It was a repeated behaviour. In order to be specifically deterred, I thought it was appropriate. “ 

Hilliard agreed, though he said it would be up to Crown attorneys to make the same recommendation in future cases.

“Should there be jail time for first-time offences? Our view would be yes,” he said. “That’s obviously in the interest of our resellers, to have an effective deterrent.” is still online. According to its Web site, the company was established in 2001 as a Canada-wide distributor of computer products to the independent channel in Mississauga, Ont. It lists itself as an authorized dealer of Roxio CD burning software and Envirolaser printer supplies.

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