UK: Software Infringement – Naming And Shaming

Last Updated: 14 March 2003

The Business Software Alliance ("BSA") is dedicated to protecting the interests of its software house members. Understanding its methods, and good software housekeeping practices can prevent businesses from falling foul of its naming and shaming policy.

Last year you had the unpleasant task of making three employees redundant. Today you receive a letter from the BSA threatening legal action for software infringement. The two events are unconnected, right? Wrong! The BSA website offers a whistleblowing service open to all-comers. Anyone from disgruntled former employees to unscrupulous competitors can allege software infringement on a strictly no strings basis. They may even be able to claim a financial reward.

The letter demands an audit of all software used by the business and full details of all software products, the number of licences held and the number of copies in use. There is a deadline for compliance, coupled with a thinly veiled threat of legal action if there is no response.

The press periodically reports large "fines" by the BSA of well-known companies failing to comply with software licence terms. In fact, the BSA has no power to impose a fine and indeed no other independent powers. It has no legal status independent of its individual members. What it can do, however, is rigorously to promote on behalf of its members the rights and remedies that are available to them individually under the general law.

LEGAL REMEDIES

Unlicensed duplicates of software used by a business are infringing items. They give rise to a claim in damages and legal fees by the software owner. Copyright infringement can also constitute a criminal offence. However, backup copies necessary for the lawful use of software are permitted.

Many software licences contain provisions that permit the software owner to terminate all existing licences in the event of such a breach. This threat may pose a significant risk to businesses, both in terms of loss of use and also the cost of acquiring replacement licences. These are likely to be available only at higher than replacement cost. This threat is a substantial bargaining chip for the software owner.

Obviously, evidence is necessary for a software infringement claim to succeed. It may be possible to search premises where there is a real danger that evidence of software infringement is likely to be destroyed. Recent amendments to the Copyright Designs and Patents Act 1988 also make a search warrant available in connection with certain criminal offences. A successful high profile raid on a company’s premises would be good publicity for the anti-infringement cause. However, in both cases a court application is necessary, and the warrant is only exercisable by the police. The BSA has no intrinsic powers to enter premises and seize evidence.

AUDIT RIGHTS

This brings us back to the demand for a software audit.

The BSA cannot compel a business to carry out a software audit. The question whether their member has that right depends on whether the software licence for each individual product named expressly gives them such a right in respect of that particular product. If it does not, what better way to obtain evidence against a business than to write and ask them to carry out an audit and provide it themselves?

Many companies who admit they were at fault are still pursued by the BSA resulting in significant pay-outs in negotiated settlements with the BSA member. (This is not a "fine" though often euphemistically referred to as such.) To cap it all, they are named and shamed as an infringer – despite their willingness to co-operate.

In fact, from a negotiation point of view, it is generally difficult to see what further significant loss the software owner can have suffered to justify termination of the licence or a demand for further compensation where additional licences are purchased.

CONCLUSION

There is a risk of a claim if the licence terms under which software is supplied are not adhered to. Software piracy is a significant problem for software owners and businesses in breach cannot expect a sympathetic ear.

Prevention is the best cure! Carry out regular software and licence audits and regularise any issues uncovered as a result. Be careful to check not only the number of permitted copies, but also any other restrictions on the use of the software. Handle any approach by the BSA with circumspection and in particular be chary about passing over information that can be used to pursue compensation, and perhaps more importantly, lead to bad publicity.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

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