Canadian firms fork out $250,000 for using unlicensed software

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Some 11 Canadian companies from diverse industries have agreed to pay a total of $252,093 to settle claims that they were using unlicensed software, according to two anti-piracy watchdog groups.

In a statement issued yesterday, the Canadian Alliance Against Software Theft (CAAST), an organization of 11 software companies agreed to pay the settlements after individual self-audits revealed that their manufacturers, and its international partner the Business Software Alliance (BSA) said the computers contained unlicensed software.

Among those that paid the most were:

• Chartwell Technology Inc. a developer and supplier of Internet gaming software systems based in Calgary, AB.

• Portfolio Management Canada Inc., a company that specializes in the area of debt acquisition and subrogation management, headquartered in London, Ont, paid $40,001.

• Inon Media Corp. an interactive online media company, located in Kingston, Ont, paid $40,000 for installing more copies of Adobe, Microsoft and Symantec programs on its computers than were originally licensed.

These companies were running unlicensed copies of applications from companies such as Adobe, Borland, Microsoft and Symantec.

Last year CAAST announced a similar operation which netted a total of $269,548.

A Toronto-based technology industry analyst said it is a lot wiser for companies to voluntarily pay such fines rather than risk prosecution.

“By agreeing to pay the amounts upfront, these companies mitigate the risk of facing legal action,” said Michelle Warren, analyst for Evans Research Corp of Toronto.

“The legal fees alone could easily top what they agreed to pay for and the negative publicity would not bode well for their image and the relationships they have with vendors and clients,” she added.

Warren said she agreed with CAAST’s “informal” approach where companies are encouraged to come forward with results of their self audit because it limits litigation but shows a pro-active stance against software piracy.

Jacquie Famulak, CAAST president, said most cases begin with an informant contacting their office to report suspicions of illegal usage of software.

CAAST then contacts the company involved through their lawyers and invites them to work together on an “informal resolution.”

The agreement involves an internal audit by the company to determine the veracity of the report.

“In most cases, the companies comply, but we have had instances in the past when software raids had to be carried out,” said Famulak.

The CAAST raids may have contributed to piracy rates dropping in Canada. A CAAST study earlier this month indicated that Canada’s software piracy rate decreased three percentage points from 36 per cent to 33 per cent in 2005, falling below the worldwide piracy rate, which remained stable at 35 per cent.

Famulak said should a self-audit reveal that unlicensed software was being used, CAAST asks the company to destroy these copies or purchase licensed software.

“The settlements paid by the companies go back to CAAST to fund our operations,” she said.

Famulak said there have been minimal instances of software piracy in Canada compared to other part of the world.

According to a study by International Data Corporation (IDC) Inc., 33 per cent of software installed on computers in Canada was pirated in 2005, representing a loss of $943 million.

Globally, software piracy resulted in a loss of $41 billion in 2005.

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