Novell settles 1998 software theft suit

Novell has finally settled a lawsuit that began when hundreds of CDs were stolen from a contractor in Ireland in 1998.

In a statement on Monday, the company said it had been awarded a $680,000 judgment against Computer Commodity Inc (CCI) of Ft Lauderdale, Florida, and its owner, Michael Jacobson. Novell brought the suit against CCI and Jacobson for copyright and trademark infringement, alleging that the company distributed illegal software at cut-rate prices.

Novell is a vocal member of the Business Software Alliance (BSA), an organisation of companies that actively pursues and files claims against individuals and companies that engage in software piracy.

In the company's lawsuit, it alleged that CCI and Jacobson participated in an illegal scheme with two other companies, MBC Enterprises of Salt Lake City and Irish company AU Industries. MBC Enterprises settled with Novell in 2000 and paid out about $93,000, while AU Industries paid about $30,000 to the company as part of a 2001 settlement. Both firms were also permanently barred from dealing in Novell products.

The initial theft of Novell CDs occurred in 1998 in Ireland, where Novell was manufacturing most of its software products for the EMEA region. The subsequent investigation, which included authorities in Ireland, Germany and the US, showed that hundreds of CDs slated for destruction had disappeared, and these same discs began to reappear in the US and were being sold for significantly less than their retail value.

It was believed that as many 2,000 discs, worth $1.8 million, were stolen in the 1998 theft, although CCI and Jacobson were accused of selling just 1,000 copies.

In its suits against MBC, AU and CCI, Novell alleged that the three firms were offering the software at discounts between 68 percent and 95 percent off the price that Novell typically offered to its authorised distributors.

In the most recent ruling, the US court found that CCI and Jacobson had acted wilfully, despite their claims of innocence. "Defendants' evidence of a few phone calls to Novell to ask whether some of the [software] serial numbers were "good" and not "registered" is not persuasive of a lack of intent," the court ruled.

The court also found that after Novell uncovered the apparent scheme and contacted Jacobson about it, the defendant attempted to cover up the situation and continued to distribute the software.

© ENN