ITC vs Gstarsoft

 Issue #860

One of the things that will place the IntelliCAD Technical Consortium in the history book of CAD is how the organization helped launch dozens of AutoCAD workalikes. They use the IntelliCAD code provided by the ITC. Some of the strongest members, however, flew the coop by rewriting their code to remove all traces of material copywritten by the ITC. Suzhou Gstarsoft Co. Ltd of China was a member of ITC, using IntelliCAD as the base for its GstarCAD software. But then in 2013, the company launched GstarCAD8, a new CAD platform based on "hundreds of engineers and three years of development." (It's not an '8', it's the infinity symbol; see Cyrena Respini-Irwin's report from China at http://www.cadalyst.com/cad/other-2d-cad/gstarsoft-launches-new-cad-platform-seeks-expand-global-reach-16292.) This is not new. Bricsys was the first to do this, transitioning away from IntelliCAD with BricsCAD 8 and 9. More recently, ZWSOFT did the same, their rewrite resulting in ZWCAD+. Both Bricsys and ZWSOFT say their releases have no copied IntelliCAD code. It appears, however, that the ITC is not convinced that Gstarsoft's new platform is entirely free of IntelliCAD code. The organization this month launched a law suit against the software company. (See press release.) To learn more about the situation, I interviewed both sides: Shawn Lindsay, legal counsel for the ITC, and Meiyu Huang, vice president of Suzhou Gstarsoft. ...article continues following this advertisement.

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Q&A with ITC Following my interview with the ITC, I asked Gstarsoft to respond to the same questions. Ralph Grabowski: Beyond the items listed in the press release, what are the sorts of things you feel Gstarsoft failed to do?  Shawn Lindsay: The press release pretty much outlines what Gstarsoft has done or failed to do:  Nonpayment of membership fees Refusal to allow the ITC to conduct an audit of the programming code Failing to comply with the membership rules We expect to conduct an audit [of the software code] and, depending on what we find there, it could be that we add to our claims. Meiyu Huang: We withheld the membership fee for 2015 as a direct consequence of this dispute. Until this year, we always paid, and paid on time. In fact, we paid membership fees even though we were no longer using the IntelliCAD code in our software.  We are not refusing an audit, we just want the process to be clear. The word 'audit' is very bad in the Chinese market, where people could ask, "Why is Gstarsoft being audited before another Chinese member who also developed their own CAD platform, earlier than Gstarsoft?" We require a fair auditing process to avoid unnecessary damage in the Chinese domestic market. It is natural for us to have such a concern.  Also, we worry about our IP [intellectual property] being released to a third party. Grabowski: Gstarsoft is located in China. How do you expect to access them legally in that country?  Lindsay: In the commercial membership agreement, the parties agree to US law and US venue, specifically, Portland Oregon. Thus we brought suit here in the US. Assuming we obtain a judgment against Gstarsoft, we will be able to register that judgment in China and enforce it there. Further, with a judgment we will be able to execute on any of Gstarsoft’s US assets or contracts and block their sales in the US and in other countries where the ITC might bring its judgment or independent suits. Huang: No comment for now; we are speaking with our lawyer. We take the right to take relevant action against ITC. Grabowski: Does this mean Gstarsoft is having financial problems, or did they have a different motive for not going along with the ITC's requirements?  Lindsay: We have no knowledge of their financial situation or their motives. Huang: We have no financial problems and we are not ignoring ITC requirements. Instead, the ITC is not giving us a safe way to do the audits, even after an exchange of ten emails and meetings; they are ignoring our reasonable requests.  Grabowski: The ITC is looking for damages in excess $250,000. Why such a large amount?   Lindsay: $54,500 for unpaid dues. $200,000 for prior penalties assessed for their noncompliance with and violations of the membership rules. Huang: We question the $200,000-amount. We would like ITC to show the evidence for such large amount. We have not violated any rules as a commercial member. They have not clarified the violation to us.   Q&A with GStarsoft I then gave Gstarsoft the opportunity to defend itself against the ITC's claims. Ralph Grabowski: How do you respond to the ITC's charges?   Meiyu Huang: Gstarsoft developed the new platform from scratch in three years at Xi’an Gstarsoft Ltd, a wholly-owned subsidiary of Suzhou Gstarsoft Co. Ltd. We launched the new platform, because ITC changed its requirements in that all members' CAD programs must switch from using IntelliCAD 6 to IntelliCAD 7 [which is a different code base]. (ITC later withdrew this requirement.) But if we had to change platforms anyhow, we felt we should write our own, because we did not like the new IntelliCAD 7 platform. What’s  more, Gstarsoft was not the first ITC member to release a platform independent of IntelliCAD. Grabowski: What instead do you think the ITC should do ?  Huang: Gstarsoft takes an open attitude on the audit and believes the audit will be a great chance to prove that GstarCAD8 was developed completely independently. We feel that ITC should conduct the audit in a reasonable order: members who developed the new platform first should be audited first, especially in the sensitive market like China. ITC did not respond to this point, just telling us that they have the absolute right to decide, despite the fact that no ITC rule gives such a right. Grabowski: How did you communicate your wishes to the ITC?  Huang: We sent an email last October to the ITC with a proposal for how the audit could be organized: Send notices of audit to Gstarsoft and the other Chinese member that also developed a new platform. Perform the audit in China. This makes it easy to do the audit at the same place and in the same time frame, which saves travel time and money.  ITC is free to determine the timing of the audits, preferably performing them within 2-3 days of each other, so that they cannot be politicized. ITC keeps the timing and the results confidential. No ITC commercial member has the right to see the details of these audits; only the ITC board can review the results. Grabowski: What happened as a result of your email?  Huang: We had a Web meeting with ITC officers in February and had the impression they understood our position that an audit only for Gstarsoft could benefit our competitors. But in April, we received the email that we were in violation of ITC rules. In May, they launched the law suit. Grabowski: Why did you keep paying fees to the ITC, even though you no longer used IntelliCAD technology? Huang: We continued to pay the annual fee in 2013 and 2014, because we wanted to support the ITC. Continuing to support the ITC financially is like a sign of respect, because in the past GstarCAD was based on IntelliCAD. This is like a mother-child dispute, when the child wants to become independent. Grabowski: Why did the ITC keep accepting your fees, even though you no longer used their technology? Huang: You can be a member, even if you do not use the technology. Grabowski: What will happen next? Huang: Gstarsoft informed ITC that it is quitting at the end of April, and so we asked them to please provide the relevant procedure. Instead, the ITC terminated Gstarsoft’s membership and began the law suit. We think cooperation is over, because we are afraid the mutual trust between ITC and Gstarsoft does not exist any more.   What Ralph Grabowski Thinks For the ITC, the core issue is this: it needs to be seen as serious at enforcing its membership contract For Gstarsoft, the core issue is this: it feels that the actions of the ITC will place it at a competitive disadvantage from its most serious rival.  Following some off-the-record conversations with both parties, there are additional mitigating circumstances that I cannot reveal, unfortunately. No matter. Lawsuits always are sad events.  (I should slip in here a mention of Autodesk's ongoing law suit against ZWSOFT over the same issue: them wanting an audit to see if ZWCAD contains AutoCAD code. The status at this point is much legal maneuvering.) I am puzzled that the ITC would publicize this action, because it seems to me it could be a potential turn-off for potential recruits. Could not-yet members now be thinking, "Is the benefit of using this pre-written CAD system worth the trouble I might get into later?"  Ultimately, this case hinges on cultural misunderstandings:  Perhaps the American-based ITC does not understand Chinese culture sufficiently to handle this with appropriate delicacy?  Perhaps Chinese software firms fail to understand the American cultural obsession over IP protection?

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Comments

[Shawn Lindsay]

Jose, I'm legal counsel for The IntelliCAD Technology Consortium (the ITC). The ITC was awarded the money judgment it asked for by a United States Federal Court. The audit still needs to be conducted so, yes, the legal dispute remains active.

[Jose]

Hello Ralph
Is this legal suit still active today or have they reached some kind of settlement or judicial closure?
Any idea where to find current information?
Regards
Jose

[Jerome]

Thanks for proving me a link to the interview. But it seams the interview was indicating that the ITC was at fault and Gstar has done nothing wrong. After reading the replies I can see no reason to trust either company.