When to Buy vs. Uninstall in Software Audits

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One of the most common mistakes I encounter in software audits is what I call the post-effective date software buying spree. The buying spree occurs in response to a letter from a publisher or publisher's attorneys requesting a self audit. Many clients are discouraged to......

Why MSPS Need Their Own Data Processing Agreements

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Over the past ten years regulation of data privacy and security has proliferated at the international, federal and state levels. Several industry-based federal regulations have been developed such as HIPAA for healthcare and GLBA for financial services. Other geographica......

11 Secrets to Defending BSA | The Software Alliance Audits

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Don't be in the dark on how to prepare and respond to software audits. An increasing number of companies face software compliance audits initiated by software publishers and their trade associations, such as BSA | The Software Alliance and the Software & Informati......

Is It Time to Tear Up Your MSP Agreement?

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You offer your clients managed services that help them run and grow their business empires, but is it time for you to tear up your MSP agreement? In this moment in time when everything about business – and our lives – seems to be in flux, this is an important questio......

Managing Risks in the Software Audit Process

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It has been said that software is the new oil. It fuels the information revolution. And in this metaphor, software audits are the meters that measure the flow—and extract maximum revenue for software makers. The auditors arrive on your company doorstep to “true up”......

How to Recover Early Termination Fees For Managed Services

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IT service providers that include early termination fees in their contracts must decide if they want to seek reimbursement when a customer terminates a contract early. MSPs find themselves asking: Is anything owed? Can I collect? What is the cost? Here are key points to cons......

Master Services Agreement Templates for MSPs

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When an MSP begins a relationship with a new client, it is important they agree on certain terms and conditions by which business will be conducted. This is known as the Master Services Agreement (MSA). These are the foundational terms that all business will adhere to un......

License Ambiguities in Software Audits

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Without a contractual provision to the contrary, ambiguous terms in a software license will be construed against the software publisher. Provided that there are no other business factors that would make litigation unwise, an ambiguous license agreement is the situation m......

Termination Clauses in IT Managed Services Contracts

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Monthly recurring revenue and multi-year contracts have been the driving force behind managed services for years. They have been the basis for the tremendous growth in managed services over the years. The length of the term of a service agreement is very important as ......

Risk Balancing Provisions in in Managed Services Contracts

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The risks for Managed Service Providers are constantly evolving. New cyber threats and regulatory compliance requirements present significant challenges for MSPs. The most important way to mitigate privacy and security risks for Managed Service Providers is by including ......

Managing Risk in Managed Services

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This past week I had the opportunity to present on the topic of managing risk in managed services to the OTX Roundtable.  I want the thank the OTX Roundtable and Mark Jennings in particular for inviting me to speak.  What follows is Mark’s transcript of the meeting. ......

Do You Need a Microsoft Service Provider License (SPLA)?

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If your business model involves hosting applications, websites or data, chances are that Microsoft will require you to obtain and follow a SPLA. Businesses that use Microsoft software for internal use only, or where third-party access is anonymous or unauthenticated, do not ......

How to Find the Best Lawyer for Your BSA Audit Case

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I am a partner in Scott & Scott, LLP a firm that focuses on technology law matters in Southlake, Texas.  We represent companies accused of software piracy by industry trade groups such as the Business Software Alliance and Software Information and Industry Associati......

Preparing for the Inevitable SPLA Audit

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If your company uses a Microsoft Service Provider License Agreement (SPLA)—and it probably does if Microsoft considers you to be in the commercial hosting business—you will be audited at some point. Typically, Microsoft SPLA customers are audited once every three years......

The Art of Negotiating a Software Audit

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Almost every business today operates with the support of digital tools. One survey put the number of companies investing in digital technologies to transform their business at an astounding 97 percent. Conducting business in this digital age means licensing software from......

Effective Dates in Software Audits are Critically Important

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Businesses that receive software audit demand letters from auditing entities such as the BSA or SIIA, or from software companies like Autodesk or Microsoft, often contend they cleaned up their network after receipt of the letter and should be released from any further obli......

Attempts to Transfer Microsoft Licenses May be Ineffective

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Like most software publishers, Microsoft includes terms in its standard license agreements to restrict a licensee’s ability to resell or otherwise assign to another party the right to install or use software. Increasing the level of difficulty for IT groups trying to m......

Regulatory Compliance and Transparency in Artificial Intelligence

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The concept of transparency in artificial intelligence has been debated extensively.  Transparent AI allows humans to understand the conclusions being drawn from AI algorithms.  Black-Box AI lacks transparency in that the conclusions drawn from algorithms are not expla......

Limitations of Liability in Artificial Intelligence Contracts

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Limitation of liability provisions place limits on the amounts that the parties would otherwise be able to recover in court.  For example, it is common in technology contracts for both sides to agree to waive the right to recover indirect, consequential, and punitive da......

Article 22 of GDPR and Artificial Intelligence Contracts

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Europe’s General Data Protection Regulation “GDPR” can play a major role in artificial intelligence projects.  Article 22 of the GDPR provides that data subjects have the right not to be subject to a decision based solely on automated processing, including profili......

What is a Microsoft SPLA Verified Self-Audit?

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If you provide commercial hosting services using Microsoft’s Service Provider License Agreement (SPLA), you may become a target of an ever-increasing variety of license audits from Microsoft and its vendors.  The latest flavor of a Microsoft SPLA audit is the verified s......

GDPR Protection: Better to be Safe than Sorry

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So far this year alone, about 80 companies have been assessed hefty fines—one as high as $201 million—for violating the requirements of the European Union’s General Data Protection Regulation (GDPR) Act. While most were cited for “insufficient technical and organ......

Consult with Counsel for SPLA Audits

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Microsoft’s Services Provider License Agreement (“SPLA”) is a popular licensing framework for businesses delivering hosted or rented software solutions to their customers. However, as with many software license agreements pertaining to resale or other business chan......

Responding to the Dreaded Software Audit

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Modern financial history is chock full of embarrassing audit scandals, which caused executives and corporate brand names severe damage from intentional fabrication of revenues, or creating imaginary profits, or claiming assets that turn out to be a mirage. There’s a new......

Audits in the Cloud

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Traditionally, software audits were conducted by gaining access to software installations and reviewing entitlements. Theoretically, if a customer is using a cloud product accessed by login credentials, then audits wouldn’t be an issue because the software publisher wo......

Software Piracy

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Software piracy audits conducted by the BSA and the SIIA threaten small and medium sized businesses. As the economy tightens, software publishers such as Microsoft, Adobe, and Autodesk hide behind software piracy enforcement groups to pursue customers accused of installing m......

Customer Access Under Microsoft MSDN Developer Licenses

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Microsoft’s MSDN subscription licenses often create license compliance problems.  These problems arise because it is extremely easy to over deploy Microsoft software using MSDN media because it includes a vast array of Microsoft products with limited deployment controls.......

SPLA-Audit Exposure Difficult to Estimate

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One of the first steps we typically recommend to businesses facing software audits from any source is to try to estimate the financial exposure related to those audits. Doing so allows a company to allocate its resources more efficiently and to set aside reserves or make oth......

Microsoft SQL Server, Processor Licensing, and Virtual Servers

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Use terms of Microsoft server products can be complex and difficult to interpret.  Microsoft SQL Server licensing rules for use in virtual environments demonstrate that a careful review of the use terms is necessary to avoiding copyright or contract violations. The current ......

Microsoft SAM – A Software Audit by Another Name

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When I heard a Microsoft executive recently explain its new approach to software license compliance enforcement, I couldn’t believe my ears. Statements like, “Microsoft does not endorse audits,” and “Microsoft believes that most of its customers want to be in com......

IBM Initiates Expansive Compliance Audits

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IBM has begun a comprehensive program of compliance audits of its software clients. Scott & Scott’s clients have begun receiving letters from IBM Software Compliance demanding cooperation with a “routine assessment” of the client’s deployment of IBM software. Acc......

Responding to an Audit from the BSA-The Software Alliance

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If your company has received a letter from the BSA | The Software Alliance requesting a software audit, you are probably wondering whether you should cooperate or ignore the request. I have been handling BSA cases for almost a decade and advise my clients to cooperate but to......