Over sushi at the Westin Prince in Toronto, Diana Piquette, spokesperson for the Canadian Alliance Against Software Theft, reflects on the raw state of software piracy in Canada.
Although she says the number of offenders is dwindling,
with the help of work done by the software manufacturers that make up CAAST, the industry still faces a battle changing the mindset of the Canadian government, which has paid little attention to piracy.
CAAST, along with its American counterpart, the Business Software Alliance, use education and enforcement in 65 countries to teach organizations and consumers about the implications of software theft. ITBusiness.ca spoke with Piquette, manager of Microsoft Canada’s licence compliance program, about her efforts to wipe out software piracy as a member of CAAST. Find out how the watchdog determines the impact of software theft on the economy, the companies it pursues and it’s struggle to stiffen copyright penalties.
ITBusiness.ca: What is the leadership structure of CAAST?
Diana Piquette: CAAST is a not-for-profit organization, and its members are made up of software publishing companies such as Microsoft, Adobe, Sympatico. There’s a number of people who are actually associated with BSA, the Business Software Alliance.
ITB: If BSA has 13 global members, why does Microsoft seem to be front and centre?
DP: Microsoft is front and centre in BSA and in CAAST because we have a belief that we should demonstrate leadership in intellectual property and all of the issues around intellectual property. We, in Canada, serve as members only. So we’re actually not on CAAST at a director level, but I know worldwide with BSA that we’re on at a director level. And we just think that it’s our responsibility to show that leadership around intellectual property.
ITB: How much would you say Canadian software companies through CAAST invest in pursuing software pirates?
DP: It would be hard to put a dollar figure to how much is invested, but I know that most of the member companies have their own hotlines. They have their own marketing campaigns that deal with bringing awareness and education around intellectual property around software asset management and other issues like that. So there would be the accumulation of all of the software publishers as well as CAAST itself. We pay a membership fee to CAAST, and then CAAST has cases in which, when penalties are paid, (the money) is used to pursue other cases. So it’s continued that way.
ITB: Are there limits to the extent to which software firms are willing to bring offenders to justice?
DP: Oh, absolutely. I think that it also differs when you think about it in terms of the channel or end customers. Most software publishers would not go far to pursue their customers. I think that we just want to have a good relationship with our customers, and we want to show to them the importance of being compliant. And, quite frankly, most of the time when there’s an issue and they’re out of compliance, it’s just because they have sloppy software asset management policies and procedures. And so it’s something that inadvertently has happened because they haven’t paid attention to the problem. The channel, on the other side, most software companies will take a very hard line with. I know Microsoft takes a very hard line with the channel. And part of that is that our honest channel tells us that it’s our responsibility to keep it clean for them. And so in order to protect honest resellers, in order to protect honest consumers from inadvertently purchasing something that’s non-genuine, Microsoft will make sure that we do what we can to keep that clean. We believe that our role, our goal with consumers as well as organizations, is to provide them with information, awareness, education around software asset management, around licensing, around compliance. And when it comes to the channel, our role is really around enforcement to make sure the channel is kept clean for honest resellers.
ITB: Who tends to call your information hotline to report software theft?
DP: The hotline for CAAST is very different than the hotline at different companies. I know that at CAAST, I believe that it was greater than 90 per cent of the leads came from disgruntled employees. When we look at our own hotline lead, the majority of them actually come from the channel. A lot of times it’s our channel contacting us and letting us know that they’ve had some unfair competition, and here’s the company they think is doing something that’s not legal. Sometimes we get employees from companies as well, but most of the time it’s the channel. And how do we verify that? We follow up every lead that we get. And that’s usually done through undercover purchases. Sometimes we’ll also get consumer leads. So if it had to do with an organization — we don’t get too many cases of this — but we would contact the organization and probably ask them to just have a discussion around are they properly licensed. It wouldn’t be looked at in the same way. It’s certainly not pursued like it is with the channel.
ITB: What’s the methodology CAAST uses to determine how software piracy in Canada impacts the economy?
DP: The dollar figure, I think, that was used in the last announcement was $990 million were lost in retail sales. So this is programs that are installed on people’s PCs, and those products have not been purchased in regular stores. So that means there’s $990 million in retail sales that aren’t sold. When you look at that, that’s one figure. But it’s really a cascade of losses, because if it hasn’t been purchased at a retailer, that means upstream from that there is a distributor that didn’t distribute that product. And he didn’t make his percentage of the money. Going further up from that, there is the software publisher that didn’t get paid for creating that work. In addition to that, on that $990 million of retail sales, there was no taxes paid. So our government has lost that much in taxes as well. Imagine what each province could do with that money.
We do talk about the impact of lost jobs as well, and that is an accumulation of people in the software development sector, the distribution sector and the retail sales sector. And the jobs and the losses are usually heavier going downstream to the purchaser. So even though it’s the software publishers that really talk about the importance of being legitimate and the importance of intellectual property because we developed the product, the majority of losses are actually lost at the distribution and retail level. This year’s study was done by IDC worldwide.
ITB: What is Canada’s current piracy rate?
DP: We announced a few months ago that the Canadian piracy rate was 35 per cent. And what that means is that out of 100 per cent of all software loaded on PCs, 35 per cent of those has not been paid for.
ITB: How does this compare to the U.S.?
DP: The U.S. rate is 22 per cent. So we’re substantially higher than the U.S. And we think that a big part of that is because the copyright laws in the U.S. are much stronger, and the penalties and fines are stronger. And in addition to there being stronger copyright laws, there’s also more government attention on it. The U.S. government strongly believes in the economic losses to their economy. So if you’re not protecting intellectual property, IP jobs are not going to be created in your country.
ITB: Is CAAST trying to change copyright laws in Canada?
DP: CAAST works with the government of Canada to have those discussions. I don’t know what the status is right now. I don’t believe that there’s a huge interest in the government right now to address those copyright laws. There wasn’t much interest in it in the last government as well. I’m sure they’re interested in it, but it’s not a priority to them.
ITB: You’re in the midst of a software audit campaign in Ontario. What does that entail?
DP: Every year the campaigns that CAAST runs are a little bit different. This year we’ve run a few campaigns. This campaign specifically has released the Decima Research study that we’ve conducted. And in addition to that, (it) has a mail-out to 30,000 organizations in the Ontario area that talks about the importance of software asset management, and then has a call to action for organizations to go to the CAAST web site and to have a look at the information posted around software asset management.
ITB: What has been the impact of these campaigns to stop software piracy in Canada or change the way the crime is viewed?
DP: I think if you look at the piracy rate over the last nine years, it’s gone down about nine per cent. And so I think that people are paying attention to it. I think that it’s having an impact. The impact is a little bit slow because you’re changing attitudes. You’re looking at changing somebody’s value of intellectual property, and then their behaviour based on that. So it is something that we will have to continue working on in order to continue to make a difference.