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Software rental business goes bust after NAFTA

In 1994, a Winnipeg business owner found out his software-renting operation was no longer legal under new copyright rules.

Shop owner found out his operation would become illegal a week before it happened

A Winnipeg business owner finds out his operation is no longer legal under new copyright rules. 2:23

It's one job category that was definitely killed by NAFTA: software rental.

Reporter Diana Swain reports from a business that was made suddenly illegal for renting out software and audio CDs. (Saturday Report/CBC Archives)

Twenty-five years ago, CBC News reported on a Winnipeg business owner who was about to be out of business thanks to a change in copyright law effected by NAFTA.

"I heard officially for the first time through the press, not through the government of Canada," Mel Orecklin​ told reporter Diana Swain.

His small business let clients test software like WordPerfect before deciding whether it was right for their needs and committing to a purchase. 

A week's notice

"They made my store illegal and they didn't bother telling me."

A government news release announced the change a week before NAFTA came into effect on Jan. 1, 1994. A week after that, Orecklin​ was still struggling to grasp how his livelihood could come to an end at the stroke of a pen.

"I personally purchase more software because I've been able to rent it and test it," said software user Stan Gript. (Saturday Report/CBC Archives)

"[NAFTA] makes Canadian copyright law conform to the American law, and it makes renting computer software, even CDs, illegal without the permission of the copyright holder," explained Swain.     

Michael Eisen, who represented several large computer companies, had pushed for the change in a bid to clamp down on the duplication of illegal copies.

"Piracy results in massive lost revenues," he said.

So far, no one had been taken to court. Copyright holders said they were allowing time for rental companies to adjust to the law.

Consumers said they would inevitably buy less software if they couldn't try it out first.

'Out of business'

A Toronto software renter had a lot of inventory to clear out when NAFTA made that part of the business illegal. (Saturday Report/CBC Archives)

In Toronto, a company called Video Flicks was stuck with thousands of dollars' worth of software. But they were prepared to roll with the change because they could count on other revenues from video rentals, which were not affected.

"We're not 100 per cent renter," said manager Scott Walker. "We sell, and use the rentals as a way to sell more software. But there's people who are 100 per cent renters, and they're out of business."

Back in Winnipeg, Orecklin was still shellshocked.

"I really expected this would be a business that would carry me through until I retire," said Orecklin​. "I don't know what I'm going to do tomorrow."

"Though it's barely been alive one week," summed up Swain, "NAFTA has already cost him his job."