Technology company; Innogrit Corp., has fallen foul of Synopsys Inc.’s software license agreement leading to a difficult lawsuit that has resulted in court disclosure of forensic evidence gathered by Synopsys.
The case begins in January 2017, when Innogrit Corp., an organization headquartered in Shanghai, China, as well as locations in Taiwan and the USA, invested in Synopsys’s Electronic Design Automation (EDA) software for its internal business processes, which included a legal commitment to adhere to the terms of the End User License Agreement (EULA). Crucially, the license was specified for sole use of Innogrit in China.
The lawsuit, filed in Californian courts and primarily relying on violations of the Digital Millennium Copyright Act (DMCA), states that Synopsys technology includes electronic safeguards that restrict its software from being deployed beyond the limits of the EULA. These safeguards included electronic license restrictions on the number of licenses that could be deployed, as well as provisions to ensure that deployments could not be made outside of China by referencing MAC addresses of company computers to determine geolocation.
Merely months after signing the agreement, in May 2017, Synopses accused its customer of breaching the terms of the EULA and deploying the software in its offices in San Jose, California. The Computer Forensics team of FTI Consulting Technology, which was instructed by Synopsys, found that Innogrit had employed counterfeit license Keygens and Password crackers to break beyond the controlled installation quantity limits defined by Synopsys.
Further revelations from forensic analysis pointed to Innogrit USA “circumventing technological measures” by reassigning Chinese MAC addresses to its US computers to simulate software use in China rather than USA, thus allowing Synopses software to be run beyond stipulated geographies.
In requesting a Preliminary Injunction, Synopsys claims that software piracy is costing it $500 Million per year and creates downwards pressure on its license pricing, as it must compete with cost-free pirated software from the internet. Synopses also states that its software was still being used illegally by Innogrit, in flagrant disregard of the EULA, months after the lawsuit was filed. Synopsys detected its software being used by Innogrit in Canada as late as May 2019.
Judge Lucy H. Koh signed the order granting preliminary injunction on June 26th, 2019.
Software compliance cases rarely go to court – in most cases, they are settled before a court is even notified and by internal mechanisms. Prohibitive legal fees, countless lost man-hours and potential reputational damage, as is the case in this lawsuit, point to a potential settlement, or court award, that could reach Millions of Dollars. It is essential that SAM programs are continuously aligned and refreshed to avoid such legal quagmires.
Reference: Synopsys, Inc. v. InnoGrit, Corp., Docket No. 19-CV-02082-LHK
United States District Court, District of Northern California: San Jose Division