Software Infringement Updates – Exocad settles with former client for $220,000 for using cracked version of software

July 2022 Updates:  We have seen the Business Software Alliance ("BSA") send an audit demand letter over the alleged pirated use of DentalCAD Gmbh.  We expect more of these cases to be brought in 2022.

Introduction

Dentistry is “going digital” like many other industries.  Dentists and dental labs need to be careful in making sure their software is validly licensed and used within the terms of the EULA (end user license agreement).  If not, lawsuits can be filed – and so can press releases that can harm your companies public image.

Allegations in one Ecocad complaint

Here are some sample allegations I found in one federal court complaint filed in Utah (complaint alleged copyright infringement and DMCA anti-circumvention of technological measures):

“On or about November 21, 2017, Defendants sent an email to exocad in which Defendants admitted that, among other things: (a) one of Defendant's employees introduced Defendant Jung to the web sites trafficking in the “cracked” or counterfeit exocad software; (b) that Defendant Jung, personally and as a managing agent of Defendant B & D Dental, purchased the “cracked” or counterfeit software; (c) that Defendants shouldn't have purchased the “cracked” or counterfeit version of the software, but did so; (d) one of Defendants' customers emailed Defendants and stated that Defendants had installed a “cracked” or counterfeit version of exocad software on the customer's computer; and (e) that Defendant B & D still owes exocad money.”

“Defendants then manufactured, offered to the public, provided or otherwise trafficked in the hacked or cloned, counterfeit exocad DentalCAD Software Program that were primarily designed or produced for the purpose of circumventing the encryption software on the legitimate security dongles that effectively control access to the exocad DentalCAD Software Program. The hacked or cloned versions of the software imported, offered, copied, distributed and trafficked in by Defendants had no or only limited commercially significant use other than to circumvent the encryption software contained in a legitimate exocad security dongle. Defendants imported, offered, copied, distributed and trafficked in the illegal, counterfeit exocad DentalCAD Software Program for the sole purpose of circumventing the encryption software contained on the legitimate exocad security dongles that effectively controls access to the exocad DentalCAD Software Program.”

“Thereafter, Defendants copied, offered, distributed and trafficked in the illegal hacked and cloned exocad DentalCAD Software Program to enable and facilitate the infringement of the software program by Defendants and third parties. On information and belief, Defendants then made additional illegal copies of the exocad DentalCAD Software Program and distributed those illegal copies in violation of U.S. Copyright laws and the Agreement.”

The DMCA anti-circumvention claim was alleged as follows:

“The exocad Security Dongle – Technical Measures Controlling Access to the exocad Software Program and Protecting the Rights of the Copyright Owner 17. The exocad DentalCAD Software Program can only be used when a security dongle is inserted into the USB drive of a computer. The security dongle is a technological measure within the meaning of 17 U.S.C. § 1201 that effectively controls access to the exocad DentalCAD Software Program and protects the rights of the copyright owner, Plaintiff. When distributing the software, exocad licenses security dongles to its distributors, who in turn sublicense the security dongles to end-customers by distributing one or more security dongle(s) to each customer. Prior to distribution, Plaintiff loads the memory of each individual security dongle with a unique serial number and type. This serial number cannot be altered by any ordinary means. An additional area of the security dongle memory is initialized, but not enabled.”

“By purchasing an illegally hacked and cloned, counterfeit copy of Plaintiff's exocad DentalCAD Software Program as alleged in this Complaint, Defendants willfully circumvented the technological measure, namely, encryption software contained within each security dongle, which effectively controls access to Plaintiff's exocad DentalCAD Software Program.”

Dental Software Piracy (DentalCad)

According to the Exocad website:

“The USA-based customer had purchased a ‘cracked' version of exocad DentalCAD software from a website offering counterfeit exocad software, which came to the attention of exocad's License Compliance team. As part of the settlement, the former customer will pay exocad the sum of US $220,000.00 in damages.”

Contact a Software License Compliance Law Firm

Our firm is a leader in the United States in handling software disputes, audits, compliance issues, and litigation in federal court.  We have helped many companies both large and small get through the process of responding to an audit demand letter and settling their case confidentially.  In this area of law, there is no substitute for experience and many times we have worked with inside counsel to get these cases resolved. 

For more information call us at (877) 276-5084 or drop us a line through our contact form.