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Wednesday, May 18, 2022

Software Alliance Roils Some With Aggressive Stance

Software Alliance Roils Some With Aggressive Stance


Staff Reporter

The Business Software Alliance’s most recent sweep through California netted the trade group more than $1 million in fines for unauthorized software duplication.

It also has raised hackles at a number of firms.

The complaints reflect wider concerns that the alliance has been a heavy-handed instrument of its constituents, which include software powerhouses Microsoft Corp., Adobe Corp. and Apple Computer Inc.

“The fines can be overwhelming, and there’s a culture of fear in getting involved with them,” said Scott Lundstrom, chief technology officer at AMR Research, a technology research firm in Boston. “The guilty-until-proven-innocent-by-audit approach is what companies object to.”

Still, said Brian McPhail, vice president of corporate development and strategy at Macrovision Corp., a Santa Clara-based provider of anti-piracy technology for software manufacturers, the group has helped protect intellectual property rights.

“The Business Software Alliance has been instrumental in promoting a safe and legal digital world,” he said.

Among the local companies hit with fines were Fresh Enterprises Inc., the Thousand Oaks-based operator of the Baja Fresh fast-food restaurant chain, which paid $50,000; Youbet.com Inc., an online wagering operation based in Woodland Hills ($228,000); and Calabasas-based Innovative Merchant Solutions, a bank card processing company ($90,000).

“These are good, reputable companies that bought software and kept installing it without buying any more,” said Jenny Blank, director of enforcement at the BSA. “Our goal is to encourage companies to be proactive and get legal.”

While those companies settled out of court, Pacific Advance Civil Engineering, a landscaping company in Huntington Beach, was taken to court before settling for $80,000 earlier this month, according to the BSA.

Several of the fined firms acknowledged the violations.

“We had a new IT director come in and solve the problem,” said Gene Cameron, vice president of marketing at Fresh Enterprises. He declined to elaborate.

Victor Gallo, Youbet.com’s general counsel, blamed the piracy on the company’s former management and questioned the timing of the software alliance’s Aug. 5 press release that identified Youbet.com. The company shook up its management team in 2002 and disclosed the penalty in an SEC filing in November that year.

“I’ve taken my medicine, and they chose to do the press release this many months later. I didn’t really appreciate that,” Gallo said.

Gallo said Youbet.com was unaware of the piracy until the BSA contacted it. The auditing process that followed involved three employees doing a company-wide check of the software installed on its computers. Based on the audit, the BSA proposed to settle with Youbet.com for $824,000, twice the alleged value of the unauthorized software installed. The company eventually settled for $228,000.

“It wasn’t something where we were upset with the Business Software Alliance. We’re a software company too and would appreciate them if they were there for us,” said Gallo. “We need to be upset with the people who let this happen in the first place.”

The Washington trade group, representing some of the largest software companies, was founded as a non-profit organization in 1988 and has been collecting the penalties ever since.

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