Microsoft Corp. has filed lawsuits charging copyright infringement against six Toronto-area resellers.
In a major sweep of 80 businesses, investigators for the software giant say they have identified as many as 21 merchants they claim are pirating software. The company settled with 15 of them and launched lawsuits against six, three of whom also agreed to settle.
Most of the charges related to a practice called hard-disk loading, in which vendors install software on a number of computers from one CD-ROM, and then sell the computers without that disc.
The three resellers who were sued and later settled are Central Tech Computers of Thornhill, Computer Plus Systems of Brampton and Union Computers & Electronics of Toronto. The remaining three cases are still before the courts.
The lawsuits claim damages of $20,000 for each case of copyright infringement.
Microsoft conducts about four or five such sweeps each year, said Microsoft Canada director of law and corporate affairs Michael Eisen. He described the Toronto sweep as "one of the larger ones."
The company has been conducting these sweeps for about three or four years, he added, and handled about 120 cases as a result.
In the sweep, investigators posed as customers seeking to buy new computer systems.
The company focused its attentions on 80 resellers who had been named by those who contacted Microsoft anti-piracy investigators via a telephone hotline or by e-mail. Most of the tips, said Mr. Eisen, come from resellers whose prices are being undercut by pirates or customers who have become suspicious of the products they purchased.
Investigators posed as customers looking for new computer systems. They answered ads printed by companies suspected of engaging in piracy in the classified sections of newspapers and on the Internet.
Working through lawyers, Microsoft sent the resellers cease-and-desist letters threatening legal action.
"We conduct sweeps on a regular basis on behalf of consumers who end up getting ripped off," said Mr. Eisen.
"Pirated software leaves the consumer vulnerable to viruses, bugs and crashes and deprives the purchaser of valuable product support."
The Canadian Alliance Against Software Theft, an industry organization representing major software developers, has reported that Ontario's software piracy rate was 37 per cent in 2000. The global piracy rate is also 37 per cent.
The Canadian rate had fallen 3 per cent over the previous year, the first time it had dropped after four straight years of increases.
In Ontario, CAAST said in a report released in May, more than one in three business software applications has been pirated.
In November, a study by the Business Software Alliance and the International Planning and Research Group for CAAST estimated that over all, piracy cost Canadians $457-million in retail sales and $1.9-billion in wage and salary losses, and more than 32,000 jobs. The figures are for business software such as office suites, computer-aided design programs and productivity packages, but not operating systems, games or home programs, CAAST president Allan Steel said.
Piracy figures are based on a formula used by the International Planning and Research Group, which calculates the number of computers sold in a certain area and compares that with the number of software licences sold in that area.
CAAST was created in 1990. Among its member companies are Adobe Systems, Apple Canada Inc., Autodesk Canada Inc. (Mr. Steel is general manager of Autodesk), Bentley Systems, CNC Software/Mastercam, Eicon Technology Corp., Macromedia, Microsoft Canada Co., Softimage, Inc., Symantec Corp. and UGS.