A Toronto firm has agreed to fork out $73,300 after an audit revealed the company was using unlicensed software, according to anti-piracy watchdog Canadian Alliance Against Software Theft (CAAST).

Toronto firm fined for unlicensed software use

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The Canadian Alliance Against Software Theft (CAAST) has got yet another company to pay the price for software piracy.

The anti-piracy watchdog yesterday announced a Toronto firm has agreed to fork out $73,300 for using unlicensed software. It said Curran, McCabe, Ravidran and Ross, a construction consulting firm, agreed to the settlement after an audit revealed the company was using unlicensed copies of Adobe, Autodesk and Microsoft programs.

CAAST – a coalition of software industry companies battling software piracy – believes such crackdowns are vital to the success of goal of stamping out piracy.

Others within the industry, however, take a very different view. For instance, an Ottawa-based open-source software advocate believes that CAAST has adopted a flawed approach.

The anti-piracy body acted within its rights in leveling fines, but its actions exhibit a failure to adjust to technology and economic trends, according to Russell McOrmond, policy coordinator of CLUE (The Canadian Association for Open Source). CLUE promotes the use and development of free and open-source software.

“CAAST’s problem is not the lawlessness of their customers, but their own failure to embrace new business models suited to the Internet era,” said McOrmond.

He said the business model adopted by CAAST members – that charges a fee for every copy of software – is at odds with the very nature of the Web. For years the Internet has allowed users and developers to create and exchange software unencumbered by patent agreements, he said.

“The best way to manage improperly licensed software,” said McOrmond “is to switch to Free/Libre and Open Source Software (FLOSS) where there are no per-desk, per-user, or per-server obligations.”

He explained that some of the largest software companies such as IBM, Novell, Sun Microsystems and Apple Computer have adopted the FLOSS model.

While his organization strongly supports the right of software creators to protect their interests through copyright, McOrmond said, he doubts if lawsuits against users will benefit creators. “Don’t litigate, use creative licensing.”

For instance, he said, musicians who have chosen to license their creations based on the open source concept are still able to protect and generate revenues from their creation. Radio, television stations, advertisers and other commercial users that play the songs still pay the artist’s royalty fees.

The head of CAAST, however, believes it is the duty of businesses to ensure the software they use is licensed.

“Companies should implement policies that demonstrate the importance of using licensed software. The cost of doing business otherwise can be very high,” said Jacquie Famulak, CAAST president.

She noted that a study released by the research firm Framingham, Mass.-based International Data Corp.(IDC) in May, 2006 revealed that 33 per cent of software installed in Canadian computers was pirated. This represents a loss of $943 million to software producers. The global loss from piracy is $41 billion in 2005, according to the study.

In most cases, Famulak said, CAAST is alerted to software piracy by someone who has worked for or is working in the company in question.

Their normal procedure is to inform the firm about the allegation and request in writing that CAAST be allowed to conduct an audit.

“In about 99 per cent of the cases the company’s cooperate. But if they refuse and we feel we have a strong case we report the matter to the police,” said Famulak.

A Toronto-based analyst agrees with Famulak that software companies have to right to go after businesses using unclicensed copies of produced by CAAST members.

“In any society that values intellectual property, these type of enforcement methods have to be done,” said Marc Perella, vice president, technology group, for IDC Canada.

Perella also said users of unlicensed software run the risk jeopardizing their operations. “Using unlicensed software hampers a company’s ability to seek support or critical upgrades from the software maker.”

Press coverage of involvement in pirating activities also have a negative effect on a company’s public image, Perella added.

Famulak said in the three years she has headed the organization she has not come across a company that refused to settle. The CAAST president said the money that companies pay in the settlements represents the costs of the unlicensed software they are using.

The money received from erring companies is funneled back to CAAST to fund its operations which includes public awareness campaigns and piracy law enforcement.

Funds are also used for activities which Famulak described as “working with government to see that laws are updated and that we have a voice.”

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