When Outside Counsel Is Worth the Cost: Software Copyright Infringement

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Companies are sometimes fielding multiple software audit demands from multiple software vendors simultaneously, which can significantly impact in-house counsel.

Software audits may be initiated by publishers or through outside entities such as BSA | The Software Alliance. Audits initiated directly from a software publisher are sometimes presented as a sales offer from the compliance team, or opportunity to upgrade or replace existing software. During the course of these “business transactions”, the publisher requests installation data from the customer. If the publisher decides that the number of installations exceeds the number of licenses owned, the software publisher may demand a penalty for any license deficiencies based on the Copyright Act.

Not only may the publisher seek penalties for current alleged non-compliance, it may also demand payment for a look-back period of up to three years for unlicensed software. The potential damages can be overwhelming.

It is important for a company to obtain legal counsel with experience in software copyright infringement at the outset of the audit to advise on the following areas, among others:

  1. Ensuring the audit data is accurate and complete
  2. Conducting a secondary review for accuracy
  3. Obtaining and proving ownership of software licenses
  4. Obtaining a confidentiality agreement
  5. Negotiating terms of settlement
  6. Protecting the company’s interests by acquiring a release of liability

In-house counsel may have some experience in dealing with software audits, but when faced with complex audits involving a deep understanding of software license, hiring outside counsel could save tens of thousands of dollars. When in doubt, consult Scott & Scott, LLP.