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IBM Sues New York Brokerage for $1.7 Million in Illegal Software Use

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Ouch! A New York-based brokerage company, Euro Brokers, is being sued by IBM for an undisclosed amount for allegedly downloading unlicensed software valued at more than $1.7 million. According to an InformationWeek article, Euro Brokers was once a legitimate IBM customer, having purchased licenses for Informix database software. But a software audit performed by KPMG revealed that over the course of several years the company had installed additional copies that it hadn’t paid for.

Here’s the chronology of events as described by IBM in the lawsuit:

  • September 2008: IBM sends BGC (the parent company of Euro Brokers) an invoice for $1,730,665.24, the retail value of the illegally installed software. According to IBM, the company was not invoiced for the unpaid maintenance fees on those copies.
  • December 2008: IBM offers BGC a new agreement to cover the additional software; BGC rejects the contract. Later that month, IBM terminates BCG’s International Program License Agreement.
  • January 2009: BCG continues to install additional copies of Informix.
  • January 2010: IBM files a lawsuit against BCG for copyright infringement, and asks for an injunction to confiscate all illegal copies of the software.

Admittedly, I’m sure there’s more to this lawsuit than meets the eye. I particularly have a hard time believing that a company accused of piracy, whether guilty or not, would continue engaging in the same behavior that led to a lawsuit in the first place. But on the surface, it seems to represent yet another example of a company that had no software license management controls in place that even gave the impression of a good faith effort to stay legal—particularly with an application that retails in the tens of thousands of dollars.

Whether greed or recklessness led to the alleged misconduct, it sure makes you wonder what kinds of risks they’re willing to take with their clients’ money?