Software Piracy: Tips on How to Avoid Breaking the Law

By Frank Morgan, Esq.

Hodes, Ulman, Pessin & Katz, P.A.

 

The Intellectual Property Committee of the Business Section met on February 9, 2005, to hear a presentation by Philadelphia attorney, M. Kelly Tillery, Esq., of Leonard, Tillery & Sciolla, LLP, on the activities of his client, the Business Software Alliance (“BSA”), and other software company trade associations in enforcing copyright laws against software piracy. When a business “buys” software, what is really happening in almost every case is that the business is purchasing a license to use the software.

Ownership of the software remains with the company that created it. Software is the intellectual property of its owner and cannot be reproduced, distributed or used except according to the terms of the license which accompanies authorized copies of the software. Software piracy refers to the illegal use of software. For example, installing software on company computers that was purchased at a “too good to be true” price at a weekend flea market violates the copyright of the software’s creator if the “bargain” software is an unauthorized copy of the original. Even if software is acquired under a legitimate license, software piracy can occur if the terms of the license are violated; for example, by installing the same copy of a single-user program on several computers.

The Business Software Alliance (BSA) is one of several software trade associations whose goal is to enforce the copyright laws against businesses suspected of software piracy. In a typical scenario, an employee with a grudge will contact BSA and report that his former employer has made unauthorized copies and/or installed unlicensed software owned by one of BSA’s members. Attorneys for BSA will contact the accused business owner and request that he or she produce all software licenses and purchase documentation. If the company is unable to show that its software is properly licensed, BSA will demand that all illegal software be removed, require that the company enter into proper licenses, and seek compensation for unauthorized use as well as payment for BSA’s expenses and attorneys’ fees incurred in enforcing the law.

Software piracy, and unwelcome visits from organizations such as BSA and software manufacturers, can have serious consequences. Besides sending the wrong message to employees (“It’s okay to steal”), using pirated software can result in no upgrades being available, no assurance of quality or reliability, no technical support, manuals or documentation, and exposure of a company’s network to security breaches. In addition, there is significant legal exposure in the form of civil and/or criminal penalties, injunctions, monetary damages, and attorneys’ fees and costs.

The risk of being charged with software piracy can be reduced significantly by taking proactive measures to manage software assets. A company should have a stated policy of intolerance for software piracy. There should be procedures in place for acquiring and documenting the purchase of only legitimate licensed software and rules that prohibit employees from downloading software from the Internet. Software should not be installed on more computers than authorized by the software license. Regular self-audits of software usage and periodic examination of license and purchase documents can reduce the risk of unauthorized software being used on company computers.