THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, July 11, 1996 TAG: 9607110375
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MARC DAVIS, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: 72 lines
It turns out that America's biggest computer software manufacturers were right: You can't run a software rental business without paying a penalty.
Software Hogs, a Virginia Beach store that was sued in February by the manufacturers, has closed its doors and will pay an unspecified sum of money to settle its case.
The settlement will be filed in Norfolk's federal court by the end of this month.
Software Hogs is one of six stores nationwide that was sued by the manufacturers - including giants IBM, Intuit and Corel - for violating federal copyright law by renting software.
All six have lost their cases or agreed to settlements that include some cash payment, said the manufacturers' attorney.
The software makers called it a victory in their ongoing war against software piracy. ``Hopefully, the message will be getting around,'' said Geoffrey G. Gilbert, a Chicago lawyer who represents the Software Publishers Association.
Software Hogs' owner declared it a loss for consumers.
``I firmly believe in the customer's right to see the software before buying it,'' Paul W. Aponte said. ``The bottom line is: Who are we protecting? And at whose expense?''
Neither side would say how much money was paid in the settlement. Aponte's attorney, Craig L. Mytelka of Norfolk, said it was ``pretty small.'' Aponte agreed. ``They were pretty reasonable. If they really wanted to destroy me, they could have easily done it,'' he said.
The case was scheduled to be tried in October.
The unspoken issue in these cases was the manufacturers' fear that many customers were renting programs and copying them on their home computers.
At Software Hogs, customers signed membership applications that included a warning against copying software. ``We definitely didn't encourage piracy,'' Aponte said Wednesday.
In the end, though, it didn't matter if customers copied or not. Federal copyright law bans the rental of any computer software because it is so easily copied. Congress created the law in 1990 by expanding an existing ban on record rentals.
Case law was on the manufacturers' side.
Last year, a federal judge in New York ruled that a store's ``deferred billing plan'' - customers took home software after paying a ``deposit,'' then returned the software if they didn't want to buy it - was really a rental scheme that violated federal law. The judge awarded the software companies $150,000.
In the Software Hogs case, there were seven plaintiffs, producers of some of the most popular software in America: IBM, Intuit, Broderbund, Claris, Corel, Symantec and Software Publishing Corp.
The manufacturers sought a court order to stop Software Hogs from renting programs and unspecified money damages for past rentals.
The store closed its doors March 11, two weeks after the lawsuit was filed. Aponte said business was poor and he had planned to close the store this summer anyway.
Aponte's attorney, Mytelka, said he understands why software makers want to protect their copyrights. ``They have a lot of time put into developing software. The only thing they have to show for it is sales,'' Mytelka said.
Aponte, however, said he has less sympathy for the manufacturers, many of whom - like Microsoft's Bill Gates - are rich and powerful.
``I look at the law as being anti-consumer. They look at it as protecting their business,'' Aponte said. ``You wonder, are they protecting the overall majority of people who are consumers? Or are they protecting big software companies?''
Gilbert, the manufacturers' lawyer, said no new lawsuits are imminent, but ``the companies are accumulating information on other (rental) businesses . .
KEYWORDS: LAWSUIT SOFTWARE SETTLEMENT by CNB