How to protect your company from an unlicensed-software crackdown

How to protect your company from an unlicensed-software crackdown

Using software without a proper license constitutes copyright infringement and can result in costly penalties.

Published on 25th September 2017

It all begins with the receipt of a simple letter from the Business Software Alliance. The BSA is a trade group representing software giants like Apple, Adobe, Cisco Systems, Hewlett Packard, IBM, Microsoft, Oracle and Salesforce.

In the letter, the BSA accuses the company of illegal duplication and use of unlicensed software, demands that the company perform a “software self-audit,” threatens legal action, and warns the recipient of potentially owing millions of dollars in statutory damages.

You may think this is an unlikely scenario for your business, but it happens daily to businesses of all sizes.

Using software without a proper license constitutes copyright infringement and can result in costly penalties. Under U.S. law, if the BSA proves that your company has willfully infringed software copyrights, damages can rise to $150,000 for each copyrighted product infringed, plus the BSA’s attorney fees.

How does the BSA find out that a company is using unlicensed software? Sometimes the BSA targets companies within a particular metropolitan area or industry sector. Most often, the BSA is “tipped off” about a company’s use of unlicensed software by one of the company’s disgruntled or former employees. The BSA sponsors both a toll-free hotline and a website — convenient ways to receive reports of a company’s use of unlicensed software.

There are a few important protective steps that a company can take both prior to coming under investigation by the BSA and once a BSA investigation is underway.

1. Conduct a software self-audit

Make sure your self-audit includes all workstations, laptops, PDAs and other software-dependent equipment that may be owned or leased by the company. The BSA estimates that one in every three software programs currently in use is unlicensed.

2. If you are not currently under investigation by the BSA, immediately purchase all license shortfalls

Once a BSA investigation is underway, you will not be able to purchase software programs from the software companies the BSA represents. If your software self-audit reveals a license shortfall, immediately purchase all licenses necessary to have adequate licenses in place for software used by the company.

3. Adopt a hardware and software use policy

Adopt a formal written policy stating that no software is to be installed on any company owned or leased hardware, including servers, desktops, laptops and smartphones, without the express written permission of management and written confirmation that such software has been properly licensed. The policy should also contain disciplinary consequences for employees who fail to comply.

4. Educate your employees

Educate your employees about software piracy and its potentially costly implications. Hold employees accountable for their own behavior with regard to software piracy.

5. Save your receipts

You need receipts or another form of evidence to satisfy the BSA that your company actually owns its software. Make certain that all receipts for computer workstations and servers specifically list corresponding hardware serial numbers, factory-installed software and software warranty information for each program.

6. If you receive correspondence from the BSA, contact a qualified attorney

Consider any communication from the BSA or any of its attorneys as a credible threat of formal legal action. Remember that communications between you and your attorney are generally protected by attorney-client privilege, and you will want your attorney to review all results of a mandatory software self-audit and all other information before turning it over to the BSA’s attorney.

Generally, companies who are represented by counsel can negotiate a favorable settlement that is much less costly than the maximum statutory damages for infringement initially sought by the BSA. Do not ignore the letter or file it in the trash can. Avoiding this problem will not make it go away, and licensing additional software prior to responding to the BSA is extremely unlikely to help resolve the situation and will not limit your liability for prior use of unlicensed software.


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