Software theft is a serious issue and where a company has widespread software installs without any proofs of purchase or without significant evidence that proper licenses have been obtained (ex. a partial or total lack of a defensible position in regard to properly licensing software) the officers and directors of a company have to be aware of the potential civil and criminal liability ramifications. This blog will touch on some of the main legal areas that may be in play.
If our company has not purchased software licenses can it be a crime?
This is a question that pops up from time to time where we have a company that has NOTHING BUT unlicensed software. In other words, say a company has 2 offices and there are 20 computer all running pirated Microsoft windows software or using Microsoft Office without ANY licenses. This is a total lack of licensing. Most companies are aware this can lead to civil liability as the Business Software Alliance (BSA) notes on its website when it says:
“If the copyright owner brings a civil action against you, the owner can seek to stop you from using its software immediately and can also request monetary damages. The copyright owner may then choose between actual damages, which include the amount it has lost because of your infringement as well as any profits attributable to the infringement, or statutory damages, which can be as much as $150,000 for each program copied.”
However, criminal sanctions for software or copyright infringement are also possible
(a) Criminal Infringement.
(1) In general. Any person who willfully infringes a copyright shall be punished as provided under section 2319 of title 18, if the infringement was committed
(A) for purposes of commercial advantage or private financial gain;
(B) by the reproduction or distribution, including by electronic means, during any 180–day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a total retail value of more than $1,000;
or(C) by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution.
“The principal criminal statute protecting copyrighted works is 17 U.S.C. § 506(a), which provides that “[a]ny person who infringes a copyright willfully and for purposes of commercial advantage or private financial gain” shall be punished as provided in 18 U.S.C. § 2319. Section 2319 provides, in pertinent part, that a 5-year felony shall apply if the offense “consists of the reproduction or distribution, during any 180-day period, of at least 10 copies or phonorecords, of 1 or more copyrighted works, with a retail value of more than $2,500.” 18 U.S.C. § 2319(b)(1).
The “three levels of copyright infringement”
“There are three levels of civil copyright infringement: civil infringers may be “innocent”, “ordinary”, or “willful”. There is a range of penalties which can be imposed on criminal infringers depending on the egregiousness of the offense and in deference to prosecutorial discretion. Innocent infringers are those who are “not aware and had no reason to believe that his or her acts constituted infringement of copyright,” which implies that some degree of negligence or knowledge is required for ordinary civil infringement. Willful infringement, by extension, requires a higher degree of culpability. The degree of knowledge or “willfulness” required for civil liability for copyright infringement is rather low and undefined. No knowledge or intent is strictly necessary for a finding of civil infringement, insofar as it is a strict liability offense. While in certain cases there are indications that willful infringement in a civil suit requires some knowledge that the defendant knew that, “[h]is actions constituted copyright infringement or acted with a reckless disregard for the copyright holder’s rights,” this position is disputed and some Circuits merely require the infringement is “knowing” to warrant an aggravated penalty for the defendant.”
Federal prosecution manual for intellectual property crimes provides its definition of criminal copyright
“When Infringement Is Criminal Any instance of infringement will generally entitle a copyright owner to a civil remedy, such as damages or injunctive relief. But not every infringement is a criminal offense. Throughout the history of copyright in the United States, criminal copyright penalties have been the exception rather than the rule. Although criminal copyright law has greatly expanded the scope of the conduct it penalizes over the past century, criminal sanctions continue to apply only to certain types of infringement—generally when the infringer knows the infringement is wrong, and when the infringement is particularly serious or the type of case renders civil enforcement by individual copyright owners especially difficult. As described in more detail below, a willful violation of any exclusive right for commercial advantage or private financial gain is a misdemeanor, whereas only a violation of the rights to reproduction and distribution under certain circumstances constitutes felony infringement. Copyright infringement is a crime if the defendant infringed willfully and did so either:(1) for commercial advantage or private financial gain,(2) by reproducing or distributing one or more infringing copies of works with a total retail value of over $1,000 over a 180-day period,or(3) by distributing a “work being prepared for commercial distribution” by making it available on a publicly-accessible computer network. 17 U.S.C. § 506(a)(1). Criminal copyright infringement is punishable as a felony if the criminal conduct described above involved reproduction or distribution of at least ten copies of copyrighted works worth more than $2,500 in a 180-day period, or involved distribution of a “work being prepared for commercial distribution” over a publicly-accessible computer network. See id.; 18 U.S.C. § 2319.”
What must the government prove to obtain a criminal copyright conviction?
“There are four essential elements to a charge of criminal copyright infringement. In order to sustain a conviction under section 506(a), the government must demonstrate:(1) that a valid copyright;(2) was infringed by the defendant;(3) willfully;and(4) for purposes of commercial advantage or private financial gain. Attempts to infringe are prohibited to the same extent as the completed act. Conspiracies to violate the Act can be prosecuted under 18 U.S.C. § 371.
Wrongful and willful distribution of copyrighted material
(3) Definition.–In this subsection, the term “work being prepared for commercial distribution” means
(A) a computer program, a musical work, a motion picture or other audiovisual work, or a sound recording, if, at the time of unauthorized distribution;
(i) the copyright owner has a reasonable expectation of commercial distribution;
(ii) the copies or phonorecords of the work have not been commercially distributed;
(B) a motion picture, if, at the time of unauthorized distribution, the motion picture
(i) has been made available for viewing in a motion picture exhibition facility;
(ii) has not been made available in copies for sale to the general public in the United States in a format intended to permit viewing outside a motion picture exhibition facility
Overview of other federal copyright criminal laws
Here are a few other laws that may be implicated:
What to do if your company is accused of being a software pirate?
Here is the most important tip to keep in mind:
The most important thing you can do when you receive a software audit letter and you know your company is completely short and there is widespread licensing shortages, “Lawyer up.” Do not talk to anyone, even your close friends and advisors. Do not call the intellectual property lawyer on the letter and hope you can just “work it out.” Big money can be at stake and the software attorneys will most likely NOT be sympathetic to your story. Anyone you can speak with can be potentially called as witnesses against you. Contact us at (877) 276-5084.
Contact a federal copyright lawyer
If you are being charged with a federal copyright crime or facing a software audit, call us to discuss your case. We can partner with federal criminal lawyers and team up to fight your case and handle any civil litigation that may be associated. In addition, if you are concerned and facing a software licensing audit from the BSA, SIIA or other software publisher (ex. Adobe, Microsoft, Autodesk, Symantec, Oracle, IBM), call our firm to discuss your case. We have experience representing officers, directors, corporations and businesses in civil software licensing disputes and compliance matters. We offer low flat rate (predictable fees) for most cases and tenacious legal representation. Contact us at (877) 276-5084.
Latest posts by Vondran Legal - Business, Real Estate, Insurance, Technology & Civil Litigation Counsel (see all)
- U.S. Supreme Court Says Cheerleader Uniforms Copyrightable - March 22, 2017
- Can you copyright a signature yoga pose or choreographed dance move? - February 24, 2017
- Did your company receive an email about an “Autodesk Software Review” - February 20, 2017
- Malibu Media Lawsuit Updates – Defendant wins! - February 14, 2017
- “Back off buddy” – Intentional interference with prospective economic relations under California law explained - February 1, 2017