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Microsoft Demands $1.5 Million from Texas Prison System for Software Violations

Microsoft Corporation, the computer software giant based in Redmond, Washington, has demanded a $1.5 million payment for software "licensing shortfalls." The demand was made on the Texas Department of Criminal Justice (TDCJ), the agency that operates the state's massive prison and parole system.

In 2001, the TDCJ audited its more than 11,000 personal computers to count the Microsoft programs in use and determine how many had proper licenses. At the same time, Microsoft checked its internal records to determine how many licensed programs the prison system had. Thereafter, Microsoft sent the Texas prison system a bill for $1.5 million to bring about 6,000 computers into compliance.

"We didn't feel like we owed that much," said TDCJ spokesman Larry Todd. "We didn't think we had that many PCs out of compliance. We thought we had, maybe, 1,000 PCs that may, and I say may, have needed to be upgraded and brought into compliance. We don't believe any employee willfully or intentionally used a program for any sinister or illegal purposes," Todd added.

Microsoft disagreed. On February 19, 2002, Microsoft sent a demand letter to Art Mosley, Deputy Executive Director of the TDCJ, informing him that 2,082 licenses were needed to cover the unlicensed, Microsoft copyrighted computer programs used by the prison system.

Using unlicensed software is a violation of federal copyright laws. Kathy Walt, press secretary for Texas governor Rick Perry, said the governor "expects all state agencies to abide by copyright laws as well as other laws." Other states officials said they believe the prison system is the only state agency facing the copyright issue.

Larry Todd, without admitting culpability, said the TDCJ offered Microsoft about $300,000 to settle the claims. Microsoft attorney Mary Jo Schrade said in response, "Despite the fact that the audit was completed and the shortfalls were identified, no effort has been made by the TDCJ to resolve these shortfalls."

Noting that negotiations had gone nowhere and telephone calls to the prison system's top computer official had gone unanswered, Schrade suggested that Microsoft might send in its own auditors.

"We certainly do not want to have to enforce our contractual audit right to send in external auditors to review TDCJ's licensing and deployment but, so far, everything short of that has met with no action on the part of TDCJ," said Schrade.

Todd said the prison system was awaiting a response to its $300,000 settlement offer.

Source: Austin American Statesman

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