Software Piracy News – Illegal use of crack codes to get around trial software limitations can lead to DMCA and copyright infringement charges

Introduction

Did your company receive a infringement notice, or worse, served a federal lawsuit for using VB Conversion software?  If so, this blog may be helpful.  If you were sent a legal demand letter, infringement notice or lawsuit served by the Law Office of Donald M. Gindy call us to discuss your legal rights.  If your business is being sued for using crack codes or key generators (or other technology circumvention techniques in violation of another company's End User License Agreement (“EULA”) we can help explore legal defenses, exposure and seek to negotiate a settlement of your case.  One way you may have been BUSTED is installing one copy of software on multiple computers in violation of the EULA.  This could trigger a large monetary demand award.

Watch Attorney Steve® explain "software phone home technology" and why you got BUSTED in this video.

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VB Conversion Important Insights – Overview of their copyright claims process!!

This company is basically a total joke to work with in my opinion.  I deal with a ton of different software companies and their lawyers, but this one takes the cake. Here is what I see as their process:

1.  User download a copy of their VB conversion software
2.  User may not have negotiated a separate “enterprise version” (as is to me, buried in their EULA), and may instead share the software with other internal users UNWITTINGLY.
3. VB Conversion has some sort of tracking beacon that collects certain information and “phones home” (they claim they are permitted to do this per the EULA, but note I was not able to verify that the EULA permits them to share information with a third party, such as a mediator, or arbitration).  To me, this is shoddy drafting in their EULA, but this issue remains pending and we intend to raise this issue if litigation goes forward.  According to the counsel the EULA must be strictly followed.  WE WILL BE GETTING TO THE BOTTOM OF THEIR PHONER HOME TECHNOLOGY VERY SHORTLY AND WILL POST UPDATES.
4. They also claim a EULA binds an end user to mediation and/or arbitration (yet in one case I am working on, I asked for the proof that my Client clicked “I agree” (who and when) and I am having a heck of a time trying to get this simple evidence.  THEY HAVE TO HAVE PROOF THAT SOMEONE AGREED TO ARBITRATE OR MEDIATE ANY DISPUTES.  DO NOT TAKE THIS FOR GRANTED.  THEY DON'T GET TO MAKE UP THEIR OWN RULES.  I would never assume that everyone is bound by their EULA as this is something they should be forced to prove with c0mpetent evidence.  For example, what if some third party downloaded, installed and used the software, perhaps it is this third party company that is bound by the EULA.
5. Then, their copyright law firm gets the case and tries to force you into mediation.  From my perspective, they want to go to mediation (not arbitration) but I don't like this route unless the parties are working in good faith and with their firm that has been difficult to do.  I HAVE HAD THE WORST TIME TRYING TOP NEGOTIATE IN GOOD FAITH WITH THIS COMPANY'S COPYRIGHT LAW FIRM.  If you call them, I think you will experience the same thing.
6. They like to believe any sharing of their software is a big deal and from what I have seen believe an infringement may be worth as much as 100k or more.  YET, I DID NOT FIND ANY EASY WAY TO SIGN UP FOR AN ENTERPRISE VERSION ON THEIR WEBSITE.  IS THIS A TRICK?  A TRAP?  Be very careful.

Some key things to thing about with dealing with a VB conversion infringement letter:

1. Do you have California software counsel to represent you?  They want to mediate or arbitrate the case (allegedly per the EULA) in California, using the ADR services neutrals.  We have offices in San Diego, San Francisco, Santa Monica (serving the greater Los Angeles area), and Newport Beach (serving Orange County).
2. We offer predictable flat rate fees for most cases.
3. DO NOT TALK TO THEIR COUNSEL – the chances are very high that this will be used against you.  Contact a copyright IP counsel before you even think of engaging with them.
4. Their counsel may claim you shared registration keys with other employees.
5. Make them prove the EULA.  Make them show that you “agreed” to arbitrate or mediate.
6. The law firm I dealt with tried to pick a neutral that was a member of his own copyright club in Los Angeles, for example.
7. He also tried to contract my client directly, knowing he was represented by counsel.

BE very careful with VB Conversion and their legal team.  This, to me, is a company you have to be very very careful with if you are accused of copyright infringement or software piracy.  WORD TO THE WISE!!!

What is VB conversion software?

VB conversion software helps companies convert visual basic software code to C# programming language.  Whereas this could take hours and hours of time to do with a programming team, the VB software helps convert the code easily and quickly saving companies large amounts of time in engaging in a tedious code conversion software.  The company sells the software for a couple hundred bucks, and offers a trial version of the software.  However, the trial version EULA has certain terms, restrictions and limitations and specifically prohibits taking steps to illegally use and access their software.   As noted below, the Digital Milenium Copyright Act (“DMCA”) prohibits these technology “anti-circumvention measures. In VB Convernsion, LLC lawsuits, it might be alleged that their software was being used in violation of the EULA terms and in violation of both the copyright laws (Direct and/or Contributory infringement) and a DMCA section 1201(a) violation.  They may be seeking up to $150,000 for willful software infringement and may be seeking an Injunction.

Basically, VB (visual basic) is a very important software programming language created by Microsoft.  As noted by Wikipedia:

“Visual Basic .NET (VB.NET) is a multi-paradigm, object-oriented programming language, implemented on the .NET Framework. Microsoft launched VB.NET in 2002 as the successor to its original Visual Basic language. Although the “.NET” portion of the name was dropped in 2005, this article uses “Visual Basic [.NET]” to refer to all Visual Basic languages releases since 2002, in order to distinguish between them and the classic Visual Basic. Along with Visual C#, it is one of the two main languages targeting the .NET framework.”

However, many developers are now moving over to C# (pronounced “C sharp”) programming language, which Wikipedia notes:

“C# (pronounced as see sharp) is a multi-paradigm programming language encompassing strong typing, imperative, declarative, functional, generic, object-oriented (class-based), and component-oriented programming disciplines. It was developed by Microsoft within its .NET initiative and later approved as a standard by Ecma (ECMA-334) and ISO (ISO/IEC 23270:2006). C# is one of the programming languages designed for the Common Language Infrastructure.”

So in these cases the allegations can include using their software multiple times to covert Visual Basic code to C#.   Here are some sample allegations I found in one federal court case using the Online Federal Court Pacer Search Tool.

“VBC licenses its copyrighted program online at vbconversions.com. VBC subscribes to the Shareware philosophy of offering its program in a trial version for a limited time and with reduced conversion limits to potential purchasers. In this instance, it is offered for 15 days. A party is permitted to try out the program and see if it is suitable for their needs. Users are provided with up to 2,000 lines of Visual Basic programming to convert to C#. If they find the program appropriate for their needs they may apply for a license by paying the standard market fee. However, prior to being permitted to use the Trial version, a prospective purchaser must first affirm an End User Licensing Agreement (“EULA”).”

“C# is intended to be a simple, modern, general-purpose, programming language. The language is intended for use in developing software components suitable for deployment in many different environments. For instance, C# compilers exist for just about every platform imaginable, including Mac, Linux, Windows, Solaris, etc. C# is suitable for writing applications for both hosted and embedded systems, ranging from the very large that use sophisticated operating systems, down to the very small having dedicated functions.”

“On Tuesday, December 18, 2012, at 9:36 a.m., EST, a user, presumably named “Jacky,” accessed the VBC website and installed the program on the remote computer. The computer is identified by the title: JACKY- 38DDACCC1. Its Public Internet Protocol address is 216.241.86.192. The American Registry of Internet Numbers (hereinafter “ARIN”) identifies this address as within the Net Range of addresses assigned to defendant, XX Technologies, Inc.”

“Jacky” has now commenced converting Visual Basic lines of programming into C# by reason of his illegal use of VB.Net to C# Converter. Initially, he converts VB into 911 lines of C#. Nine minutes later, at 11:53 a.m., he converted VB into 10,025 lines of C#. Finally, at 1:38 p.m., he converted VB lines into 101,665 of C#.”

At all times mentioned herein, VBC had in force a confidential 25 digit alphanumeric code designed to control access to his copyrighted software. It is only when a legitimate purchaser affirms the terms and conditions of the End User Licensing Agreement and pays the standard market fee that unlimited access to the licensed product is permitted. When adherence is satisfied plaintiff will issue to the licensee a non-exclusive, non-transferable license and provide legitimate code enabling unlimited access to the copyrighted program.”

“The code is intended as a technological measure for the purpose of protecting VBC's proprietary program. To gain access requires knowledge of the confidential 25 digits issued by plaintiff. It is intended to exclude those who seek to circumvent the code and gain unauthorized access.”

As you can see, the Plaintiff in these lawsuits is monitoring internet usage, and logging the illegal usage.  When the number of illegal access reaches a certain level a lawsuit could be filed.  These lawsuits can put the reputation of a company at stake (lawsuits can be easily searched online), and the Defendants are put into a position where they either have to settle the case, or litigate if a defense to copyright infringement exists.

Common questions when you get a letter or served a summons and complaint

Here are some of the question you might have if you are named in a DMCA lawsuit:

1.  Will VB Conversion settle the case?
2. Will they be able to recover their attorney fees?
3. What amount will they take to settle?
4. Should we allow them to take a default judgement?
5. If our company is named as a “DOE DEFENDANT” will we be named in the suit?
6. What are the typical amount of damages for willful copyright infringement?

What does it take to prove a DMCA section 1201(a) violation?

First off, section 1201 of the Digital Milenium Copyright Act states:

§1201. Circumvention of copyright protection systems2 (a) Violations Regarding Circumvention of Technological Measures. — (1)(A) No person shall circumvent a technological measure that effectively controls access to a work protected under this title.

In  Realnetworks, Inc. v. DVD Copy Control Ass'n, 641 F. Supp. 2d 913, 931–32 (N.D. Cal. 2009), a Northern District Court of California case the federal court noted: “DMCA's anti-circumvention and anti-trafficking provisions establish “new grounds for liability in the context of the unauthorized access of copyrighted material.” See  Chamberlain Group, Inc. v. Skylink Technologies Inc., 381 F.3d 1178, 1194 (Fed.Cir.2004). The DMCA created new causes of action both for circumvention of access controls in ways that facilitate copyright infringement and for trafficking in circumvention devices that facilitate copyright infringement.” The Realnetworks Court also discussed damages, penalties and remedies under the Act:

“The DMCA provides for the following remedies: “any person injured by a violation of section 1201 may bring a civil action in an appropriate United States district court for such violation” and “the court may grant temporary and permanent injunctions on such terms as it deems reasonable to prevent or restrain a violation of DMCA]” See 17 U.S.C. § 1203(b)(1). Under the DMCA, “injunctive relief is appropriate if there is a reasonable likelihood of future violations absent such relief and, in cases brought by private plaintiffs, if the plaintiff lacks an adequate remedy at law.”

Another infringement case added:

“The DMCA authorizes a court, “in its discretion,” to allow recovery of costs and to award “reasonable attorney's fees” to the prevailing party. 17 U.S.C. § 1203(b)(4), (5). The Court agrees that an award of costs and attorneys' fees is appropriate here, especially in light of Mr. Legault and Divineo's willful violations.  See Sony Computer Entm't Am., Inc. v. Divineo, Inc., 457 F. Supp. 2d 957, 967 (N.D. Cal. 2006)

Statutory damages are also available which also provides a powerful remedy:

“The DMCA provides for “statutory damages for each violation of section 1201 in the sum of not less than $200 or more than $2,500 per act of circumvention, device, product, component, offer, or performance of service, as the court considers just.” 17 U.S.C. § 1203(c)(3)(A). “The court in its discretion may reduce or remit the total award of damages in any case in which the violator sustains the burden of proving, and the court finds, that the violator was not aware and had no reason to believe that its acts constituted a violation.” Id. § 1203(c)(5)(A); see also Peer Int'l Corp. v. Pausa Records, Inc., 909 F.2d 1332, 1336 (9th Cir.1990) (“[T]he court has wide discretion in determining the amount of statutory damages to be awarded, constrained only by the specified maxima and minima.”). Courts may award statutory damages for each device sold. Sony Computer Entm't America, Inc. v. Filipak, 406 F.Supp.2d 1068, 1074. (N.D.Cal.2005) (“[Section] 1203(c)(3)(A) authorizes a separate award of statutory damages for each device sold”); Craigslist, Inc. v. Naturemarket, Inc., 694 F.Supp.2d 1039, 1064 (N.D.Cal.2010) (treating each unit sold as a violation).  See Dish Network, L.L.C. v. Vicxon Corp., No. 12-CV-9-L WVG, (S.D. Cal. July 26, 2013).

So depending on the good faith / bad faith and intentional or willfulness of the case the damages can vary.

A few known litigation cases

​VBConversions LLC. v. Waste Management, Inc. et al. (2014)

VBConversions LLC v. Gulf Coast Ventures LLC et al. (2012): Copyright Infringement action with a substantial award from the court.

VBConversions LLC v. Honeywell International, Inc. et al (2010)

VBConversions LLC. v. Procter & Gamble et al. (2014): Copyright Infringement action which was resolved prior to trial.

Contact us – we accept federal copyright cases nationwide

There are other questions you might have when you receive a DMCA notice of infringement, of course, so BEFORE you call the opposing counsel to try to settle your case, you should consider hiring an intellectual property law firm to represent you and help protect your legal rights.  We offer a no cost initial consultation for business owners facing legal action. Call (877) 276-5084.  Click here to learn more about our federal court experience.  Meet Attorney Steve Vondran.  Check out our Avvo reviews.