THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, February 29, 1996 TAG: 9602290277
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY MARC DAVIS, STAFF WRITER
DATELINE: NORFOLK LENGTH: Long : 108 lines
Seven of the country's biggest computer software companies have sued Software Hogs, claiming the Virginia Beach store illegally rents software in violation of federal copyright laws.
The companies seek an injunction against Software Hogs and unspecified monetary damages for past rentals.
The lawsuit was filed Monday in Norfolk's federal court as part of a national blitz by the Software Publishers Association, a Washington-based group with about 1,200 members.
Similar lawsuits were filed simultaneously against stores in four other cities: Fayetteville, N.C.; Austin, Texas; Portland, Ore.; and Brea, Calif.
The Norfolk lawsuit was filed against Software Hogs at 5045 Virginia Beach Blvd. and its owner, Paul W. Aponte, personally. The store has been in business nine years, the last three as Software Hogs, the previous six as Family Video and Computer Center.
Aponte protested Wednesday that the lawsuit is an attempt by big businesses to squash mom-and-pop businesses and stick it to customers.
``What they're doing is protecting the profits of the software companies. They could care less about the consumer,'' Aponte said. ``They want you to buy the software blind. You're stuck with it if it doesn't work. They make no bones about it.''
Plaintiffs in the lawsuit are IBM, Intuit, Broderbund, Claris, Corel, Symantec and Software Publishing Corp. Collectively, the companies produce some of the most popular computer software in America, including Quicken, Norton Utilities, CorelDraw, Print Shop and OS/2 Warp. The lawsuit alleges that Software Hogs illegally rented out these and other programs.
This is the first lawsuit of its kind locally, and among the first in the country. No other local lawsuits are contemplated, said Conrad M. Shumadine, the software companies' local attorney.
``You know what's happening,'' Shumadine said. ``Customers are taking (software) home, copying it and bringing it back. . . . Stopping it is the main goal of our clients.''
``Sure it happens,'' Aponte acknowledged Wednesday. ``But it happens less and less with the CD format.''
Computer programs on floppy disks are easy to copy to another disk or to a computer's hard drive because they are relatively small. Each holds up to 1.44 million bytes of information. Compact disks, however, can hold more than 600 million bytes of information each and cannot easily be copied to floppies or a hard drive.
New machines are now on sale that let consumers copy from one CD to another, but they cost $900 or more - well beyond the average hobbyist.
Federal copyright law bans the rental of all computer software because it is so easy to copy. Congress created the law in 1990 by expanding an existing law that prohibited record rentals.
To get around the law, the lawsuit says, companies like Software Hogs technically do not ``rent'' software, but ``sell'' software on an installment basis. Customers pay a deposit that is a fraction of the software's price - $5 to $20 at Software Hogs, for example - then take the software home for two days. Customers can return the software if they do not want to keep it, or pay the full price. In the process, some customers copy the programs.
This is really a rental scheme under a different name, the lawsuit says.
``In substance, transactions under the `installment buying' plan are rentals, and the defendants' program could more accurately be called a `rent-before-you-buy' plan,'' the software companies argue in a court memo.
At Software Hogs, customers sign a membership application that includes a one-sentence warning about software copying. ``If I decide against keeping the software I will erase any copies (whether on a hard drive or floppy disks) that I have made of the package,'' the application states.
The same warning is contained in the company's sales ticket, which customers sign when they make deposits and take software home.
The software companies say Software Hogs doesn't discourage copying.
The software companies sent private investigator Mark D. Wills to Software Hogs on Dec. 29, according to a court affidavit. There, Wills claims, an employee ``confirmed that virtually all the software in the store was for rent.''
Then, Wills says in the affidavit, the employee ``told me that Software Hogs encourage their customers to make a copy of the rental disks so that nothing is `written' to the rental disk when it is being used. He volunteered that they work on an `honor system,' and that nobody is going to check on me to make sure I don't keep a copy.''
Wills said he returned to the store on Feb. 6 and rented a copy of CorelDraw 6 for $10 for two days. The program, on four CD-ROMs, sells at Software Hogs for $230.95.
Gilbert said one recorded court case has gone to trial on this issue. Last year in New York, a federal judge ruled that a similar software store policy called a ``deferred billing plan'' was really a rental plan that violated copyright law. The judge awarded the software companies $150,000 in damages, Gilbert said.
In the Norfolk lawsuit, the software companies say they have no way of knowing how many Software Hogs customers keep a copy of the rented programs after returning the originals, so the companies have not asked for specific damages. That could be determined if there is a trial and Software Hogs is forced to turn over its customer records.
Aponte said he did not know how he will fight the lawsuit - either by himself or in alliance with other software stores. ``If they think by knocking down all these software rental stores they're going to get a lot of extra money (from sales), forget it. People can't afford it,'' Aponte said.
There is no hearing date for the preliminary injunction request. ILLUSTRATION: RICHARD L. DUNSTON
The Virginian-Pilot
Software Hogs, in Virginia Beach, faces a suit from seven of the
country's biggest computer software makers, who claim it illegally
rents their products, allowing patrons to copy, not buy, them.
KEYWORDS: LAWSUIT by CNB