Code Confidential: The V.i. Labs Blog
A to Z of Software Piracy – AWR vs. ZTE
EE Times’ Dylan McGrath has reported on electronic design automation (EDA) vendor AWR Corp. filing a complaint in U.S. federal court against telecom equipment supplier ZTE. AWR alleges that ZTE has installed and used unlicensed versions of its software.
The complaint details an interesting picture of software piracy “brought by a small but successful technology company against one of the largest telecom conglomerates in the world.” (Complaint, p. 1)
Software vendors aren’t the only ones that should be upset – this case highlights the advantage an infringing business in China has over its western competitors when it avoids paying millions of dollars in license costs that their competitors incur as normal part of doing business. It also reinforces the data our CodeArmor Intelligence customers are reporting: 40-50 percent of the infringement data is coming from China.
Consider these allegations included in the complaint:
- AWR believes that “ZTE’s total assets exceed the equivalent of $10 billion (United States Dollars)” and that “by using AWR Software without authorization, ZTE has not only avoided paying millions of dollars in license fees, but has been able to develop the commercial products that have made ZTE one of the most successful telecom giants in the world.“ (Emphasis added. Complaint, p. 6)
- “AWR has discovered unauthorized copies of its software on over 40 computers belonging to ZTE or using IP addresses registered to ZTE.” (Emphasis added. Complaint, p. 6)
- “AWR Software has been used on these computers without AWR’s authorization nearly 300 times.” AWR believes “this represents only a fraction of the unauthorized uses.” (Emphasis added. Complaint, p. 7)
The complaint names specific computers where AWR discovered unauthorized copies of its software. It also names some of the “eleven (11) ZTE employees [that] have registered on AWR’s website to obtain access to support services and documentation” from just one of the IP addresses AWR identified. (Complaint, p. 7)
Most software vendors who have dealt with piracy will not be surprised to read that ZTE employees attended no-cost seminars that AWR held to educate the telecommunications industry on the benefits of using AWR’s software:
“In March and April 2010, at least 14 ZTE employees, from ZTE offices throughout China, consisting of engineers and other technology developers, attended these seminars. At these seminars, ZTE employees asked AWR representatives sophisticated questions regarding the AWR Software that only experienced users would know to ask.” (Emphasis added. Complaint, p. 8)
AWR alleges that “ZTE placed great importance in allowing its employees to attend these seminars, which were all-day in duration, because the engineers and technology developers that attended did so during business hours.” (Complaint, p. 8)
A case like AWR vs. ZTE underscores that real and significant license revenue recovery opportunities exist when software vendors identify businesses that can and should pay for licenses. The challenge for software vendors, now, is to:
- Improve the ways they identify businesses using unlicensed software and how they collect evidence of infringement, and
- Develop efficient and scalable business processes to pursue and collect license revenue from these infringing businesses
We’ll be watching this case with interest and will share our comments and any best practices we can glean.