Novell Wins Software Piracy Suit

Novell , a Web services developer to corporations
around the world, won a key battle against a group of Georgia-based
software pirates, officials announced Tuesday, resulting in $3 million in
fines.

The case highlights the seemingly slow wheels of justice in the American
legal process, which take months (if not years) to determine intellectual
property fraud, and the persistence necessary to get recompense.

The Provo, Utah, software company first brought its copyright and trademark
infringement lawsuit to the Northern District Court of Georgia in 2000,
claiming Puhr Entertainment Group and ACL Learning Centers were buying
discounted Novell software and reselling the product on the open market for
a profit. The discount is only available to educational institutions,
giving the two companies a significant mark up on software resells.

“It’s always a little frustrating when you’re dealing with the court
system,” said Nathan Gage, North American anti-piracy program manager at
Novell. “But overall, we’re very pleased with the results.”

It’s uncertain whether the co-defendants — Joseph Robertson, Gino Barrett
and Robb Adams — will appeal the ruling. The three are lucky,
however: according to software piracy laws in the U.S., guilty parties can
face jail time (up to five years) in addition to a fine.

Ed Morin, Novell’s anti-piracy manager, said in a prepared statement he was
pleased the courts recognized and upheld the company’s intellectual
property rights.

However, he added, “it’s disappointing that these individuals tried to take
advantage of a program designed specifically to benefit educational
institutions.”

Novell’s anti-piracy division, like many software companies in the U.S.,
has been struggling to bring software pirates around the world to justice,
with mixed results. In the U.S., it’s only stopped several this year — the
ruling today, another in April for $500,000 against a company distributing
counterfeit and stolen software, and a third in January settled out of
court (for $750,000) against a company repackaging stolen and counterfeit
software.

Gage said there are roughly a dozen lawsuits sitting on the desks of its
legal team at any one time; announcing every victory, however, isn’t always
possible, he said, since some of the cases have non-disclosure clauses
attached to the settlement.

Overseas, it’s even worse. Novell, which has a Web site devoted to its
anti-piracy efforts in other countries around the world, is essentially
bare, containing only a welcome message and sometimes a tie-in to its
Novell software line.

Bob Kruger, vice president of enforcement at the Business Software Alliance
(BSA), an international group lobbying for intellectual property rights and
the shutdown of illegal software distribution, said overseas enforcement of
software piracy makes the U.S. look good in comparison.

According to the BSA’s 2001 global software piracy report, the U.S. has a
25 percent piracy rate (the lowest in the world) resulting in $2 billion in
lost sales. That means one in every four computers has illegal software in
its hard drive. China, on the other hand, has a whopping 92 percent piracy
rate, though investigators in the country are taking a more
active role in enforcement
.

Kruger said many software companies don’t follow through with lawsuits
overseas, because of a legal institution even slower than the process in
U.S. courts.

“If anything, moving through the courts overseas is even worse, it can be
very slow,” he said. “Rights owners sometimes lose interest overseas
because it takes so long.”

According to Gage, the fact there aren’t announcements on the overseas
sites has more to do with geo-political considerations than a perceived
lack of success in overseas enforcement.

“Because of different customs and laws (overseas), we don’t use litigation
as much as we do in the U.S.,” he said. “The fact you don’t see anything
on our site doesn’t mean we aren’t doing anything, but that we used
different means to getting results.”

The judgment over whether to pursue litigation overseas is likely a pure
business decision. Losing billions around the world to pirated software can
be a painful, though more economical, “cost of doing business.” Hiring,
maintaining and paying lawyers worldwide to track down and prosecute every
software pirate in years-long court battles would result in huge retainer
fees.

So far, the U.S. government has been a little more effective nabbing
software pirates. In April, the Federal Bureau of Investigations (FBI)
arrested more than two dozen in an international
piracy ring
originating in the San Jose, Calif., area.

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