One of the largest insurance companies in Guatemala has sued Microsoft over an unwarranted and extortion-like anti-piracy raid. With the help of local law enforcement Microsoft allegedly demanded an on the spot payment of $70,000 for the use of pirated software or the alternative of confiscating all of the company's computers. These types of raids are not isolated incidents in the software industry. Just last week the BSA and Microsoft lost a similar case in which the court described their raids as "deceptive."

Over the years Microsoft and the Business Software Alliance (BSA) have carried out numerous raids on companies large and small. Helped by law enforcement officials – some of them armed – they visit companies accused of using illegal software and demand compensation on the spot. The companies are given the choice of either paying up, or handing over their computers.

Guatemalan insurance company Seguros Universales had a similar visit and has now sued Microsoft accusing the company of extortion-like practices.

“Microsoft appeared with armed Guatemalan law enforcement officers and halted plaintiffs’ business operations. Microsoft then proceeded to extort Plaintiffs by demanding an on-the-spot agreement to pay $70,000 or Microsoft would remove all servers containing ALL data and operational software,” the company claims.

The company says the raid was unwarranted as it has payment receipts for 98% of the software licensing fees. It further accuses Microsoft of operating a racketeering scam in the country, wrongfully targeting many companies for allegedly using pirated software.

Microsoft denies all accusations, but it appears that the practices described in the complaint are not limited to Latin America.

In Belgium a long running lawsuit over a similar matter came to an end last week. In this case local printing company Deckers-Snoeck sued the BSA over an illegitimate raid where Microsoft was also listed as one of the complainants.

In common with the action against the insurance company, the raid came unannounced and the software group was assisted by local law enforcers and several policemen. The company was told that all its computers would be taken away for the alleged use of pirated software, unless it paid 30,000 euros ($40,000) in settlement fees.

“It was a robbery more than a check-up,” Deckers-Snoeck CEO Joris Deckers told De Tijd.

Not paying would mean that Deckers had to shut down the company, so he paid up. However, after the settlement fee was paid he found that not all software was illegitimate as the BSA had claimed. In fact, Microsoft knew that the company had valid licenses but failed to mention this to BSA’s attorney.

The raid on the printing company took place in 2003 and after a legal battle spanning over ten years the Brussels Appeal Court decided last week that BSA’s practices were “deceptive.” The printing company won the case and the Court ruled that it was not obliged to pay any damages to the software group.

According to Tom Heremans, the lawyer of the printing company, the judgment opens the door for other companies that have been pressured into entering similar settlements when not all software was unlicensed.

The BSA says it has since changed its policy and that companies get a warning first before they show up with the police, but apparently this does not yet apply to Latin America.