Software Law Essentials – Dealing with BSA audits involving CNC Mastercam products or Ansys Demand Letters
CNC makes many different software products and they have been around for a while now. According to Wikipedia:
“Founded in Massachusetts in 1983, CNC Software, Inc. is one of the oldest developers of PC-based computer-aided design / computer-aided manufacturing (CAD/CAM) software. They are one of the first to introduce CAD/CAM software designed for both machinists and engineers. Mastercam, CNC Software’s main product, started as a 2D CAM system with CAD tools that let machinists design virtual parts on a computer screen and also guided computer numerical controlled (CNC) machine tools in the manufacture of parts. Since then, Mastercam has grown into the most widely used CAD/CAM package in the world. CNC Software, Inc. is now located in Tolland, Connecticut. Mastercam’s comprehensive set of predefined toolpaths—including contour, drill, pocketing, face, peel mill, engraving, surface high speed, advanced multiaxis, and many more—enable machinists to cut parts efficiently and accurately. Mastercam users can create and cut parts using one of many supplied machine and control definitions, or they can use Mastercam’s advanced tools to create their own customized definitions. Mastercam also offers a level of flexibility that allows the integration of 3rd party applications, called C-hooks, to address unique machine or process specific scenarios. Mastercam’s name is a double entendre: it implies mastery of CAM (computer-aided manufacturing), which involves today’s latest machine tool control technology; and it simultaneously pays homage to yesterday’s machine tool control technology by echoing the older term master cam, which referred to the main cam or model that a tracer followed in order to control the movements of a mechanically automated machine tool.”
However, when you are dealing with a software audit, this glitzy description probably does not give you the “warm fuzzies.” This blog will give you some basic information about handling software compliance audits dealing with this firm, normally you will be dealing with the Business Software Alliance and their lawyers.
Listen to Attorney Steve discuss CNC Mastercam software piracy lawsuits in federal court
VIDEO: Click on the picture above to learn more about CNC CAM (computer aided manufacturing) lawsuits. Also discussed is PDRSS (which tracks geolocation and unauthorized access of their software by machine and tool companies).
Is CNC a member of the BSA?
Yes. You can check their status here – BSA “CNC – Mastercam”
CNC’s position on software piracy
This is a quote taken from their website.
“Software piracy is a serious issue for the software industry. According to some industry analysts, more than 1 out of every three copies of the software installed on computers worldwide was pirated in 2008. Revenue lost to software piracy during this period is estimated at over $50 billion worldwide. CNC Software, Inc. takes piracy very seriously. We have made the commitment to ensure our licensed customers investment is protected by not tolerating piracy of Mastercam software. In addition to our own efforts against piracy which include legal letters and follow up, we endorse the efforts of the Business Software Alliance (BSA), the leading anti-piracy organization in the world, to fight software piracy through education and enforcement activities.”
How much does the Mastercam software cost?
CNC makes a wide variety of products. Check out their website for a complete list. We have provided a link below to a online chat discussing their pricing.
What are some of the typical CNC products?
Here are some of their products:
- Mastercam X7
- Mastercam X7 MUI
- Mastercam X7 MU2
What industries does CNC software serve?
According to one lawsuit filed Milord & Associates Intellectual Property Law Firm some of the industries CNC serves are:
- Consumer Goods
- Job Shop
- Plastic Fabrication
How did Mastercam find out about unlicensed software use / piracy?
There are several ways a software company can typically find out about illegal software piracy. Here are a few:
- A secret Informant (sometimes a disgruntled ex-employee and sometimes a software consultant or reseller, for example if you tried to upgrade your software, and they check and see you have no valid license in their licensing registration database.
- Their software is known to be embedded with PDRSS technology, which upon certain events being triggered (ex. certain thresholds met based upon parameters set by the software provider) certain information will be sent back to CNC who will monitor and analyze the data received (ex. they may be able to retrieve your company identity, location, MAC addresses for all devices that physically connect to your network, name of the computer(s) at issue, version of the software allegedly pirated, and license serial number). According to one CNC copyright infringement complaint I reviewed, this is all spelled out in their End-User-License-Agreement (“EULA”) and Software Licensing Agreement (“SLA”) which according to them must be agreed to before using their software on a computer by forcing the user to click “I agree” up to the first 15 times they trial to use the software.
- Publishing new job postings on sites liked LinkedIN, Job.com, Career Builder, Monster.com, GlassDoor, etc. The idea is that if you are seeking someone with “experience with Mastercam X7 or X8” your company should probably have a registered licensed copy of their software.
- Accolades being posted in Architecture, Engineering and Manufacturing publications boasting of what software was used to create the products, while again, not being properly licensed which they can look up.
- Illegal download of Mastercam software on bitTorrent websites
- Submitting “Crash reports” that indicate an unlicensed copy is being used
- CNC, according to one federal complaint I read, may also go to websites on the internet that sell illegal software, and try to figure out who is using their products without paying for it.
These are some of the main things I see as a software defense attorney.
Are there defenses to these cases?
Every case is different. Here is a blog we wrote featuring common defenses to copyright infringement claims. Many of these BSA software cases can be settled if you narrow it down to the products at issue, figure out who the informant was and what the source of the information was, and come up with a strategy to settle the case. In other cases, the software publisher may take a firm stance (especially if you have ignored their offers to get licensed) in federal court and may seek to litigate the case for statutory damages of up to $150,000 per infringed title (if they can show willful copyright infringement), or may also seek their actual damages (tarnishment), and Defendants profits. Obviously, depending on the industry involved and the nature of the work, this could amount to a “bet the farm” copyright litigation case.
What to do when you get an audit demand letter from an IP Law firm?
As a starting point, we recently did a great podcast on whether or not these software audits are truly “voluntary.” You can here our podcast by clicking on the link. We have also talked about what you should do if you receive an audit letter. The first piece of information is to go over our checklist for dealing with software compliance audits. Few firms can match our passion and thought leadership in this critical area of business defense.
What to do if dealing with Ansys Audt?
According to Wikipedia:
“ANSYS, Inc. is an American Computer-aided engineering software developer headquartered south of Pittsburgh in Cecil Township, Pennsylvania, United States. Ansys publishes engineering analysis software across a range of disciplines including finite element analysis, structural analysis, computational fluid dynamics, explicit and implicit methods, and heat transfer.”
We have heard that Ansys might be tracking users who login to their system (at least one business owner from Canada shared this belief with us), and they may send you a letter (through one of their resellers – in the case we we dealing with it came from Simotech Group). While our firm is not licensed to practice law in Canada and thus we cannot advise on the Canadian laws, it did cause me to look up the Ansys EULA license agreement to see what it said as far as which jurisdiction a federal copyright lawsuit could be filed in. Here is what I found on their website:
“The rights and obligations of the parties hereto will be governed by the substantive law of the Commonwealth of Pennsylvania, excluding the United Nations Convention on the International Sale of Goods and choice of law provisions.
The parties hereto consent to the venue and jurisdiction of the federal and state courts maintaining jurisdiction over Washington County, Pennsylvania for purposes of any legal proceedings arising under or relating to this Agreement.”
Note: Ansys is located in Cannonsburg, Pennsylvania. At any rate, in this case the reseller apparently is willing to sell a licensed version of the software in exchange for a copyright release and settlement agreement. Some of the general issues that popped into my head were:
- What is the settlement amount?
- Are there any defenses to software infringement or mitigating factors?
- Will the release be adequate?
- Does the reseller have the legal authority to bind the software company?
- Will there be hidden traps in the settlement agreement?
- Is contribution or indemnity available from any third party?
- Does general liability or D&O insurance cover the terms of the settlement?
If you have facing an issue involving Ansys or MasterCam CNC, call us to discuss your case with a United States Copyright Attorney.
Listen to Attorney Steve discuss common settlement terms following a license compliance audit
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Firms that are legit (not a scam – don’t throw away the letter without speaking to a copyright law firm).
Many people have told us that they received either an email or a letter and due to the logos they saw, the thought the letter was a joke. For one, the BSA logo looks pretty basic and I think many recipients of the letter are totally fooled when they get it and they often times think it is a nigerian scam and they throw the letter away. Only later when the research the issue further, or receive follow up letters or emails do they decide to look up the lawyer and see what’s going on. As a matter of public interest, if you receive a letter from any of the following lawyers or law firms you should know that we have dealt with these IP firms and/or reviewed their demand letters and yes, they are REAL.
- Weir Johnson (Kelsey Johnson / Jennifer Balmos)
- Donahue Fitzgerald (Care Pittman / Bruce Eads / Stephen Gustavson / Julie Hofer / Andrew MacKay). This firm handles the bulk of “Autodesk” audits often dealing with architect and engineering and design firms.
- Klemchuk (Darin Klemchuk / Corey Weinstein)
- The Venable
- Warner Law Group (Annie Warner)
- Troutman Sanders
- FDK law
- Sullivan Worcester (Solidworks letter – 3D design software infringement)
- Flyer & Flyer (Vero)
- Software Compliance Group
Potential settlement scenario
I recently got off the phone with a representative of the Software Compliance Group. I was informed that my Client first started using the software in 2014 (almost three years ago, and getting close to the copyright three year statute of limitations). I explained some common defenses to software infringement:
- Software fair use (just checking out the software for scholarly research purposes – no commercial use).
- Acquiescence (obviously they were sitting around since 2014 and allowing you to use their software despite their knowledge of infringement
These are some of the main things that jumped to my head when the software representative said the infringing use of the Mill3d software has been going on since 2014. I said “why didn’t you nip it in the bud and send an infringement letter in 2014 instead of allowing the uses to continue to try to rack up the lost profit damages?” I was informed “that’s a good question.” At any rate, the way these settlements work you could see the following:
- They offer to sell you Mastercam 2017 Mill 3d plus basic support for about $14,000
- If you take that, they might be willing to settle the case.
- If you don’t wan that (ex. don’t need the software), they might settle for less, for example by selling you a their “standard mill” software plus basic support for around $6,700.
- Typically they will want to convey you software (through a valid reseller) whether you want or need it, and this is a general price to settle that they may (or may not) offer.
- Upon paying for valid software, they will send you their standard release, (but which you should have a copyright infringement defense attorney review as some changes and additions may need to be made to best protect your rights.
- If you still do not want to settle going this route, we can discuss whether you may want to assert your legal defenses and litigate the case or possibly go on the offensive by seeking Declaratory Judgement.
Free consultation for software audit cases
If you are facing an audit. Don’t stress out, call to discuss with a software lawyer. We can help you get a grip on a response strategy and a flat rate price that will not lead to a shocking legal bill. We have a tremendous amount of experience in this field, and in federal court. Few other websites offer the plethora of legal and scholarly research articles as does our firm. Call us at (877) 276-5084. We can help with any audit dealing with CAD software including Autodesk, Ansys, Surfcam, and CNC/Mastercam.
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