BSA Audits: The BSA Software Alliance Audit Process
BSA | The Software Alliance (BSA) is a trade group that advocates for the global software industry.
One of its services for the software organizations that are members of the alliance is to actively seek misuse of their software.
Once the BSA receives a report of software licensing infringement, it may request a self-audit from the company in question or, in extreme cases, file a lawsuit.
If you receive notice of an impending audit from a BSA attorney, it is possible that it started with a disgruntled employee reporting you – more about this below.
At this point, it’s a good idea to get in touch with a software and technology attorney who is familiar with BSA audit cases and can support and advise you during the process.
The lawyers at Scott & Scott LLP have represented and successfully defended many companies of all sizes in the U.S. and Canada accused of software piracy.
What is a BSA Audit?
A BSA audit needs to be treated seriously. Do not be tempted to ignore it as the BSA will initiate litigation against you.
While it is termed a “self-audit”, you can assume that the BSA is requesting it because of suspected piracy of software produced by one of its member organizations.
For the audit, you have three main options:
- Use internal staff
- Retain an outside IT vendor
- Use the services of an experienced law firm such as Scott & Scott
The purpose of the audit is to identify illegal use – whether intentional or not – and to set in motion the steps to correct the noncompliance.
Software licensing is complex. It is made even more complex by the ease of software download to multiple devices these days.
Even well-run IT departments can make mistakes with licensing paperwork and fail to comply with a software agreement.
You will be expected to run the audit software provided by BSA. This checks all the software in use in your organization for its member companies.
You will need to provide dated proofs of purchase from authorized resellers for each relevant software product installed on your computers. This can be a serious challenge for small businesses that are generally poor at record-keeping.
Purchases from E-bay, Amazon, or other Internet-based resellers (who may be unauthorized) are frequently rejected, as are purchase orders, end-user license agreements, certificates of authenticity, manuals, cd’s, and products keys.
Failure to provide valid proof of purchase will lead to claims of software piracy by the BSA against your organization.
Who are the members of BSA?
BSA is made up of many software giants that are household names. You may view a full list of members here. Just a few of the members include:
- Computer Associates
What type of businesses does BSA target?
A common criticism of BSA audits is that they target resource-strapped small and medium-sized businesses rather than larger organizations.
Few small businesses really understand the intricacies of a software audit and therefore may not respond appropriately without an attorney.
They are also more likely to feel intimidated by the BSA’s lawyers and by the types of penalties that are possible for noncompliance.
Businesses may receive a letter threatening penalties of “millions of dollars” for the alleged infringement. This is sufficient to send most small businesses bankrupt so it can be extremely intimidating to be targeted.
The majority of cases concern companies with fewer than 100 employees. However, with expert legal defense, the harshest penalties rarely materialize.
How are businesses reported to BSA?
One of the ways in which the BSA targets non-compliant businesses is by offering whistleblower payments for disgruntled employees to report software licensing breaches.
These can be significant sums of money and they are often claimed by ex-IT personnel whose role was partly to install the software and ensure license compliance!
The BSA offers these ex-employees anonymity so that they can file their report without fear of retribution from the company in question.
The BSA runs both radio ads and “no piracy” campaigns across social media, promising cash rewards for people prepared to report software licensing offenses via its telephone hotlines or online.
How are BSA audit penalties calculated?
If an audit identifies copyright infringement, the BSA is likely to enter into a settlement agreement with your organization.
Simply removing the software is not an option. You may be threatened with penalties of three times the value per license and then be asked to pay for the necessary seats on top of this penalty.
In the case of Microsoft, its Office suite product is unbundled into component parts. This increases the penalty amount.
Furthermore, the details of this agreement, including your company name and details of the infringement, may be made public by the BSA.
Unless there is a confidentiality agreement in place (which may come at a high price), this could result in a press release that damages the reputation of your company.
Experienced legal representation can help you negotiate a resolution that both reduces the financial penalty and keeps the details of the settlement confidential.
Read More → Avoid Overpaying for Software Settlements
How can we help with a BSA audit?
The BSA will use experienced lawyers to pursue your business aggressively through an audit.
You do not have to intentionally use the software in violation of the licensing agreement for the BSA to pursue you.
The excessively complex licensing agreements make it difficult for most business leaders and their IT personnel to understand.
Well-meaning businesses can, therefore, end up in considerable financial strife from an audit, not to mention the investment of time and resources and the stress it causes.
The lawyers at Scott & Scott understand the BSA audit process and can assist you. You will be protected by the attorney-work product and attorney-client privileges. The results are protected from disclosure and cannot be used against you or your company in court.
We have helped many organizations in the U.S. and Canada successfully challenge the claims made by BSA, and negotiate mutually beneficial settlements confidentially and without financial penalties.
Typically, we arrange settlements for between 40 and 60 percent of the BSA’s original demand.
Book a free 30-minute call to consider the best audit defense strategy for your organization.