CANADIAN COMPANY TESTS COPYRIGHT LAW

In a seedy office in a rundown, second-floor walk-up here, the computer software business appears to be booming.

''We've got a backlog of at least four or five days right now to fill," a busy young man of college age tells a visitor as he directs the frantic traffic at the offices of Softsave Information Services Inc. Around him, groups of college students fill out shipping labels on worn sofas and write field orders at a long table lined with telephones.Unimpressive as these quarters may seem, in recent weeks they have been the scene of a well-publicized police raid, the subject of an unusual Canadian court hearing and the object of an international lawsuit with far-reaching implications.

Softsave is offering true bargains for computer users in the United States and Canada. Popular software programs that retail in the United States for $400 to $600 - including such best-sellers as the WordPerfect word processing program and the RBase 5000 data base program - are being sold for a mere $10 a disk.

But according to a half-dozen leading U.S. software publishers, Softsave's "steal" is just that. They charge that the company is illegally copying expensive software and violating copyright law by reselling it.

"It's one of the most blatant examples of computer piracy we've ever found," said Smith McKeithen, general counsel for Activision of Mountain View, Calif. Mr. McKeithen is head of the software copyright protection committee of the Software Publishers Association, the industry's trade group.

Late last month, seven U.S. software manufacturers banded together and sued Softsave in the Canadian courts, the first time such joint action has been initiated in a copyright infringement lawsuit. Companies participating in the suit included the three-largest U.S. software firms - Lotus Development Corp., Microsoft Corp. and Ashton Tate - and Broderbund Software Inc. of San Rafael, Calif.

As part of the proceedings, those companies cited a rarely used statute of British law to force Royal Canadian Mounted Police to raid the premises, arguing to a judge in an ex parte hearing that the company might destroy incriminating data if it were advised of the raid.

During the raid, about 300 computer disks were seized, along with credit- card orders and mailing labels.

Not only is Softsave openly selling pirated software at bargain-basement prices, industry officials complain, it has blanketed the United States with a direct-mail campaign to solicit customers.

In its brochures, Softsave calls itself a "preview club" that offers software, without documentation, for $10 a disk. Members are asked to erase the software before the end of a 21-day "rental period" but are advised they need not be "inconvenienced by having to return the software to the club."

Robert MacFarlane, the Toronto attorney for Softsave, acknowledged in a telephone interview that the company is copying the programs and admitted that ''morally, people might have problems with it."

But he said Canadian copyright law doesn't prohibit what Softsave and a group of other Canadian companies are doing.

As a result of the lawsuit, Softsave advises clients that it is no longer offering the products of those companies that have joined the lawsuit because ''certain manufacturers have requested that we not rent this software." But rentals of thousands of other programs continue apace.

At the heart of the dispute is copyright law. U.S. copyright law was amended by Congress in 1980 to protect computer software. In Canada, however, the copyright laws have never been amended, despite an ongoing parliamentary inquiry.

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