{"id":23356,"date":"2026-10-14T09:53:34","date_gmt":"2026-10-14T13:53:34","guid":{"rendered":"https:\/\/www.virtulexavocats.com\/?p=23356"},"modified":"2026-10-14T09:53:46","modified_gmt":"2026-10-14T13:53:46","slug":"pirated-software-copyright-damages-disgorgement-profits-quebec-business","status":"publish","type":"post","link":"https:\/\/www.virtulexavocats.com\/en\/pirated-software-copyright-damages-disgorgement-profits-quebec-business\/","title":{"rendered":"Years of “Cracked” Software: Nearly $1.9M to Pay, Plus Punitive Damages"},"content":{"rendered":"

The software knew. Since 2014, a built-in reporting device had been quietly sending its publisher the address of every computer running it without a licence. Seven years after the police search, the bill is steep \u2014 but it is also far lower than what was claimed.<\/em><\/p>\n

Dassault Systemes Solidworks Corporation c. Technologies Show Canada inc.<\/em>, 2025 QCCS 4429, rendered on 3 December 2025 by the Honourable Andres C. Garin of the Superior Court (district of Laval), is a case study in intellectual property for businesses. It will interest companies that buy software as much as those that sell it.<\/p>\n

It is also, in its way, a lesson in humility for plaintiffs: Dassault claimed $975,215.67 in compensatory damages and $9,670,911 in disgorged profits. It was awarded $412,087.39 and $1,470,387.<\/p>\n

The reporting device inside the software<\/h2>\n

SolidWorks is a 3D design program, a benchmark in computer-aided design. Its publisher, Dassault, earns revenue by selling licences. A licence has two components: the PLC<\/em> (Primary Licence Charge), paid once, granting a perpetual right to use the then-current version, and the ALC<\/em> (Annual Licence Charge), paid yearly, covering updates, technical support and online training. Stopping the ALC does not make the software illegal: the version you hold is simply “frozen” in time.<\/p>\n

To guard against piracy, Dassault embeds a device known as Phone Home Technology<\/em> (PHT). It stays dormant while the software is used normally. It activates as soon as it detects circumvention \u2014 for instance, the use of a false activation key. It then collects the date and time of use, the software version and any add-ons, the IP address, the machine’s MAC address and the false serial numbers used, and transmits all of it to the publisher’s servers.<\/p>\n

The IP address leads back to the network’s domain name. The MAC address identifies the machine. In other words: Dassault knows which company, on which computer, on which day.<\/p>\n

Alerts, ignored emails, a police search<\/h2>\n

Show Canada designs, builds and installs specialized stage and architectural elements, mostly abroad \u2014 Las Vegas, Macau. SolidWorks is, on the admission of one of its own executives, as essential a tool to the company as a hammer is to a labourer.<\/p>\n

The company had been buying licences since 2006. In 2013, Dassault detected a first instance of pirated versions; the situation was regularized. In 2015, Show Canada brought its portfolio to 22 licences, on which it paid maintenance through 2016.<\/p>\n

Then, in March 2018, the PHT device lit up. On 10 April 2018, Dassault emailed a legal notice to Show Canada’s president. No reply. On 20 April, a LinkedIn message. No reply. On 5 October, another email announcing a visit by representatives. On 9 October, four Dassault representatives arrived at the Laval offices: the president was absent, and a copy of the email was left at reception.<\/p>\n

The next day, 10 October 2018, Dassault filed a complaint with the Laval police service. On 21 November 2018, a search was executed and 35 computers were seized. On 19 September 2022, Show Canada pleaded guilty to an offence under the Copyright Act<\/em>: a $50,000 fine and a $50,000 restitution order in Dassault’s favour.<\/p>\n

Meanwhile, in February 2019, the company had regularized its position by purchasing 23 licences.<\/p>\n

What the law protects, and why it was clear<\/h2>\n

Under Canadian law, software is a “literary work.” Copyright includes the exclusive right to reproduce the work, and installing software on a computer constitutes reproduction. Without a licence, that is infringement.<\/p>\n

A second breach is added: the Copyright Act<\/em> prohibits circumventing a technological protection measure. Using a “crack” \u2014 a utility that generates false serial numbers to make the software believe it is activated \u2014 falls squarely within that prohibition.<\/p>\n

The evidence was overwhelming. The forensic computing expert retained by Dassault found, across the 35 seized computers: SolidWorks directories on 33 of them; 51 “crack” files from the hacker group Solid Squad on 28 machines, the oldest created on 4 January 2013; activation files on 30 computers; false serial numbers on 29. And some 46,481 3D drawing files on 28 machines, of which 15,169 had been modified between January 2017 and November 2018. The MAC addresses of 30 analyzed computers appeared in the PHT data, with 4,573 transmissions between May 2014 and October 2018.<\/p>\n

The Court concludes that Dassault proved a cracked version was installed on 44 of Show Canada’s computers<\/strong>.<\/p>\n

Part one: the damages claim is cut in half<\/h2>\n

Dassault quantified its damages as the value of the licences Show Canada ought to have purchased. That methodology is recognized in the case law. But the devil is in the parameters, and this is where the Court recalibrates.<\/p>\n

Retail price or reseller price?<\/strong> Dassault claimed the Customer RRP<\/em>, the higher price it receives on a direct sale. But under Qu\u00e9bec civil law, damages compensate the loss sustained and the profit of which a party is deprived \u2014 no more. Show Canada had never bought directly: it always went through a reseller. The probable lost profit is therefore the VAR<\/em> price, what Dassault collects from the reseller. The gap is substantial: for a SolidWorks Premium licence, US$7,995 versus US$4,397.<\/p>\n

Dassault argued that paying only the VAR price lets the infringer pocket the reseller’s margin and profit from its own misconduct. The Court answers that the concern is real, but belongs to a different remedy: the disgorgement of profits.<\/p>\n

Which edition?<\/strong> Dassault systematically claimed the Premium price, the most expensive. Its own expert contradicted it: screen captures of the computers rebooted virtually show that for the 2013 version, Premium was invariably installed \u2014 but that for the 2017 version, only 36% of the machines launched it in Premium, the rest in Professional. Show Canada had in fact bought mostly Professional licences when it regularized. The Court therefore fixes Premium usage for the other versions at 36%.<\/p>\n

Prescription.<\/strong> Claims under the Copyright Act<\/em> are subject to a three-year limitation period. Since the action was filed on 21 June 2019, claims based on reports predating 21 June 2016 are in principle prescribed. The Court adds a nuance: where the unlawful use continued<\/em> after that date, it is continuing conduct and nothing is prescribed for the recent portion. Result: six computers prescribed, three partially.<\/p>\n

A technical point that will interest litigators: Dassault argued that prescription had to be pleaded in writing, relying on the English word “pleads.” The Court rejects the argument after comparing both language versions and recalls that in Qu\u00e9bec law prescription may be raised at any stage of the proceedings, even on appeal.<\/p>\n

Mitigation.<\/strong> Show Canada faulted Dassault for not acting as early as March 2018, for instance by seeking an Anton Piller order. The Court declines: the duty to mitigate is an obligation of means, and Dassault’s conduct \u2014 formal notice, follow-ups, a site visit, then a complaint \u2014 is exactly that of a reasonable person seeking a solution before going to court.<\/p>\n

After conversion at the rate of 1.43 retained by the Court, compensatory damages are set at $412,087.39<\/strong>.<\/p>\n

Part two: the battle of the forensic accountants<\/h2>\n

Here the case gets genuinely interesting. Beyond damages, the Copyright Act<\/em> allows a plaintiff to claim the profits the infringer earned. The plaintiff must prove the revenues; the defendant must prove every element of cost.<\/p>\n

Two reports clashed over 2018. Deloitte, for Dassault, put the profits at $9,670,911. Richter, for Show Canada, concluded there had been a loss<\/em> of $120,153. A gap of nearly ten million dollars on the same financial statements.<\/p>\n

The explanation lies in one methodological choice: should the SolidWorks projects be allocated a share of the company’s fixed and semi-variable costs \u2014 rent, administration, selling expenses \u2014 or only the costs directly attributable to those projects?<\/p>\n

The Court rejects Deloitte’s approach, and its reasoning is blunt. First, the expert changed her explanation between her report and her testimony, which affects her credibility. Second, her conclusion “is surprising,” since Show Canada’s audited financial statements for 2018 show pre-tax earnings of only $3,403,258: one would therefore have to believe that the company’s other projects, representing 15% of revenue, generated a loss of roughly $6.3 million. The Court calls that assessment “devoid of any relationship with the economic reality of the business.”<\/p>\n

Since 85.2% of Show Canada’s revenue came from SolidWorks projects, the company is essentially a “SolidWorks business,” and it is appropriate to allocate it 85.2% of the costs not directly attributable. The calculation gives:<\/p>\n