Federal Copyrighted Software Licensing Audits

Insights into a software license compliance audit

I just got off a call today with one of the lawyers for the BSA (Business Software Alliance).  Here is an overview of our conversation (I am paraphrasing the attorney's responses):

Me:  Respectfully, why are you auditing my client and disrupting their business requesting that they perform a “voluntary software licensing audit?”

BSA attorney:  We have “information” that leads us to believe your client is using Microsoft software (and other members of the BSA who have “opted in” to this audit without proper software licenses which raises federal copyright infringement questions.

Me:  Do you mind if I ask what type of proof do you have that my client is using your software?

BSA attorney:  We don't have PROOF, we have “information.”

Me:  Do you mind if I ask whether your information is from a disgruntled ex-employee seeking a financial reward through the BSA?

BSA attorney: I cannot divulge that information, it is confidential.

Me:  Well how do I know you are not sending out a 1,000 letters to small businesses across America demanding they audit their internal software hoping you find some licenses that are not being paid for, and getting settlement from companies who do not want to be bothered?

BSA attorney: You can take my word for it, I would never send a letter if I did not have evidence of federal copyright infringement.

Me:  When I file a complaint or a demand letter, I usually have my evidence attached as Exhibit “A” why won't you tell me what you have so we can review your evidence and address your concerns?

BSA attorney: Sorry, we cannot do that.  Keep in mind this is only voluntary, you don't have to do it.

Me:  What if I advise my client not to do it?

BSA attorney: Your client could get sued for copyright infringement.

Me:  Based upon what?

BSA attorney: Evidence that we have.

Me:  What is your evidence?

BSA attorney:  I told you we cannot tell you that.

Me:  Can you at least tell me which software company has an issue with my client's use of software?

BSA attorney: No.  It is just all the companies listed in the letter, they all “opted in” to my demand letter, you should audit all your client computers for each of those company software installs (ex. Rosetta Stone, Symantec, Adobe, Bentley, Autodesk, etc.). The audit should be complete using the excel spreadsheet we sent you.

Me:  What proof do you have that my client used Rosetta Stone software, that is software that teaches you how to learn a foreign language, my clients are not in college or anything like that.

BSA attorney: You would be surprised, lots of employees will download Rosetta Stone software to learn a foreign language on their employer's dime while they get ready to change jobs.

Me:  Is this what happened in this case, or what your client(s) believe might have happened?

BSA attorney: I can't say.

Me:  Can you produce any software licensing agreements that indicate my client agreed to audit their own internal software systems upon request?

BSA attorney: I cannot tell you that, again, this is a voluntary audit.

Me:  And what happens if they don't audit, then you would file a federal copyright lawsuit?

BSA attorney: We could, but that would be up to the member companies.

Me:  are you illegally accessing my client's computer network in violation of the Federal Consumer Fraud and Abuse Act?

BSA attorney: No, we are not accessing or intruding into their networks at least as far as I am aware.

Me:  Alot of my clients have been small business owners, are you targeting small businesses?

BSA attorney: No, we are not targeting.

Here is an article about the software cops targeting small businesses.

I think you get the idea.  The firms and their attorneys can vary, and some will produce what I call “probable cause” evidence.  Sometimes the identity of the information will also be known in advance.  This is just a sample exchange of how the conversation might go with a BSA software lawyer.  They will basically continue to urge that it is a “voluntary audit” but will also continually suggest that a federal copyright lawsuit is right around the corner.

We will keep you updated on this case as it unfolds.  While we agree that software companies should have a right to enforce their federal copyrights, we also believe that if you have evidence of wrongdoing you should send it over, as an attachment, so we can see what you are talking about.  If not, there is no way to determine whether or not this is a shakedown scheme similar to the Trevor Law Group.

In the meantime, we will continue to fight for your legal rights.

Top 5 frequently asked questions for software license audits

1.  Can I just ignore the audit demand letter?

You can, but then you always risk a federal copyright lawsuit will be filed which, if willful copyright infringement is shown the damages could be hefty.  Even non-willful infringement (for example installing just a few copies of unlicensed software on your computer networks) could result in legal exposure that is more than your company can handle, and could force a small business owner into bankruptcy.

2.  When is the best time to hire a copyright software lawyer?

Most large businesses hire lawyers at the first sign of trouble.  While you don't need to hire a lawyer per se, most smart business owners hire intellectual property counsel at the first instance or hint of legal liability or exposure.

3.  Will the software companies settle these cases without going to federal court?

I have found the BSA software lawyers to be open to settlement.  This not to guarantee it, but like many civil disputes, they can be settled without a costly or public trial that could be harmful to your brand.

4.  Isn't this just extortion and a violation of Civil RICO statutes to send 1,000's of letters without probable cause that companies are violating federal copyright law?

Every case must be looked at on its own merits.  We have discussed civil RICO lawsuits in other blog posts.

5.  What are the typical damages in a software compliance audit where there are software license shortages?

A general rule of thumb (every case is different and this is no guarantee in your case) for calculating damages in a BSA software audit case is:

SOFTWARE LICENSE CALCULATOR

NUMBER OF LICENSES MISSING x MSRP FOR THE SOFTWARE LICENSE + STATUTORY LICENSE PENALTY + REASONABLE ATTORNEY FEES.

You can do the math.  This will depend on how fast the case can settle, how many licenses you are missing, (you will need proof of purchase for each software license) and how willing the software companies and its lawyers are willing to settle.

How to contact a Software Copyright BSA law firm

Our federal copyright hotline can be reached at (877) 276-5084.  Our intellectual property lawyers are ready to serve you and fight to save your company from the software police.  Please also feel free to fill out the form below and a representative will contact you shortly.  We offer low flexible fees, including flat rate fees in most cases.