Perils of software piracy

Written by ProfitGuide Staff

Try explaining an expense like this at your AGM: a $30,000 fine for harbouring pirated software on your company computers. That’s exactly what Focus Corp. had to do after the Canadian Alliance Against Software Theft (CAAST) discovered unlicensed copies of Microsoft software on PCs at the Edmonton-based engineering consultancy.

Focus Corp. isn’t alone. Each year hundreds of Canadian firms pony up big bucks for software theft. CAAST, an alliance of most of the top software publishers, recently released the first estimate of the extent of piracy in Canada: fully 35% of all software used. While it settles most cases out of court for an average of $27,000, the Toronto-based watchdog makes an example of a few offenders, such as FSA Group, a direct marketing and mail-order operation in Markham, Ont. that paid a Canadian record fine of $175,000. CAAST investigates based on anonymous phone calls and online reports, typically from a firm’s current or ex-employees.

Paying the fine wasn’t the end for Focus, a fast-growing company with annual revenue of $60 million. A newspaper story and a CAAST press release followed, prompting embarrassment the firm never wants to relive. “Customers mentioned it,” says COO Ian Jesney. “Everybody takes their shots at you.” Focus ran into trouble because its IT staff in Edmonton failed to keep on top of what was being installed at the company’s 11 other offices. To stay on the right side of the Canadian Copyright Act, Focus upped spending on managing its software assets by “a couple hundred thousand dollars,” says Jesney. Now it electronically centralizes licence tracking, does random scans for illegal software, dedicates the equivalent of two to three staff to licensing issues and educates staff about its software policy.

Urging employees not to be pirates may seem like a no-brainer. Yet 42% of Canadian staff interviewed by Decima Research last July said they’d never been briefed about it. CAAST says educating your workforce is the best way to fight software theft. Its website offers a menu of anti-piracy resources, including educational tools such as a sample memo explaining why stealing software is a bad idea.

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