Scott Technology Attorneys

Software Audit Blog


Not If, But When

Software audits are on the rise. Recent reports by industry experts show that software audits by major publishers are reaching new heights. And to make matters worse, the complexity of software license arrangements are increasing at the same time.

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Know the Publisher’s Audit Rights: Notice

When companies receive an audit notice, many are surprised when they realize that the notice is so short. Companies want to know if they are receiving a reasonable notice based on the industry norms. That often prompts the question: How much notice is normal for audit matters?

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Don’t Wait For a Settlement Demand to Hire an Attorney for Copyright Infringement

Software publishers have increasingly identified software audits as potential revenue-generating exercises, which has led to a rise in the number of companies targeted.  Small, medium, and large companies all need to be aware that a software audit can result in extensive time and unbudgeted financial expenditures.

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Software Audit Risks – What Are the Chances Your Company will be Next?

There is a set of related questions our software-audit clients frequently ask us that boil down to variations on one or more of the following: Why am I being audited? What if anything did I do to cause this? How can I avoid it in the future?

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Know the Publisher’s Audit Rights: Cooperation

When a publisher sends an audit notice, many companies wonder why they have to cooperate with the audit. In almost all cases, if anyone in the company has installed the software, the company has granted the publisher audit rights that can’t simply be ignored. In fact, many license agreements expressly state that an end-user must cooperate with an audit. And, cooperation doesn’t just mean reports. Being cooperative may sometimes mean providing access to facilities, systems, and records. In most instances, the audited company has to actively participate in the audits.

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Know the Publisher’s Audit Rights: Frequency

When it comes to software license compliance, being compliant with the publisher’s licensing rules can be daunting enough. But compliance won’t stop a software audit.   When a company receives an audit notice, the first stop should be the end-user license agreement (EULA). There are some key themes to look for, and they may not always be so obvious – such as a specific Audits section. It’s important to find an answer to the question: How Often Can the Publisher Audit? 

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BSA/SIIA Audits and Software Publisher-Initiated Audits Differ in Important Ways

While the over-arching concept underlying a software audit initiated by a publisher like Microsoft or IBM is the same as that in an audit initiated by the BSA | The Software Alliance or the Software & Information Industry Association (SIIA) – a comparison of software entitlements to software deployments in an effort to identify any licensing gaps – the similarities between those two types of audit investigations mostly ends there. Here are three important differences:

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Unlimited License Agreements for Oracle Products

Technology departments are continuously looking for ways to reduce costs related to software. Many larger enterprises are considering licensing software products on an enterprise-wide basis. For Oracle products, an unlimited license agreement (“ULA”) approach can be beneficial in terms of license management, but the transition from a ULA back to limited licenses can present problems for some companies.

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Be Wary of Requests for Mystery Data

Software auditors such as KPMG, Deloitte and PriceWaterhouseCoopers like to have things their way. It’s an understandable impulse – with likely hundreds of audits pending at any one time, the natural inclination is to standardize the process around a single set of tools and processes with which the auditors are most familiar. However, those tools and processes often are a poor fit for an audited business for any number of reasons, some technical and some legal.

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Retaining and Recovering Software Licenses

When a consumer or a business purchase software, it is critical to retain the software license as proof of the rights conveyed as part of the license.  One of the issues that arises during a software audit is that a) companies are using software that is many years old; b) it is difficult for the company to find the physical copy of its licenses; and c) older licenses are not always readily available online.     

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Non-Traditional License Documentation – Save Everything!

Whenit comes to keeping records demonstrating how and when your company acquiredsoftware licenses, you can never have too much of a good thing. Businessestypically have good procedures in place to track things like invoices andlicense certificates, but those kinds of documents do not always tell the wholestory. Even if they did, having some backup can be helpful when purchases fallthrough the cracks.

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The Benefits of Software Self-Audit

Many companies faced with software compliance issues will choose to perform their own audit in advance of a formal audit by the publisher and/or include self-audit as a regular part of their risk management and internal control policies.  Some of the benefits to doing this are as follows.

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When an Audit is Not an Audit, Think Twice About Participating

In the software licensing world, all audits are not created equal. On one hand are the “true,” contractual audits. Here, the applicable license agreement gives the software publisher the right, usually upon notice and sometimes limited in frequency or scope, to demand access to the systems where its products are installed or a report of data demonstrating usage of those products. In many cases, a third party, like Deloitte or KPMG, is hired to review and validate the raw data. At the end, the audited business typically is required to purchase licenses to cover any unlicensed usage discovered as a result of the exercise. Penalties may be required as well.

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Software Audits: The Importance of Timely Completion of Post-Settlement Obligations

Software audits initiated by software publishers or representative entities, such as the Business Software Alliance (“BSA”) and Software & Information Industry Association (“SIIA”), are often resolved by an out-of-court settlement. The carefully crafted settlement agreements release an audited company from liability, contingent on the following obligations.

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Timing is Key for Software Audit Settlements

More than 90 percent of software audits initiated by software publishers or representative entities, such as the Business Software Alliance (“BSA”) and Software & Information Industry Association (“SIIA”), are settled out of court after negotiating a final settlement payment and terms. Although there are a number of factors that affect an ultimate resolution, timing of settlement is often important.

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Releases of Liability as Part of Licensing Deals – How Hard to Push?

Software publishers know that the vast majority of their customers are, to varying degrees, out of compliance with the terms of license agreements governing their use of the publishers’ software products. Especially in larger enterprises, managing and maintaining a company’s license position is a daunting and maybe even impractical task, especially given the increasingly complex architectures utilized in today’s IT environments and the correspondingly complex licensing metrics that go along with them. The choice often comes down to increased licensing exposure due to lax monitoring or the lost productivity that may arise from systems that are centrally managed by IT teams with insufficient resources.

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Software Audits: Proving Ownership of Software Licenses

Often the single most arduous and time-consuming task facing companies who are the subject of software audits is collecting entitlement information to prove ownership of licenses for software installed on its networks. Once a company receives an official audit letter from a software publisher, or one of its representative entities such as The Software Information & Industry Association (“SIIA”), or Business Software Alliance (“BSA”), the first step is to conduct an analysis of software installed on its network.

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Software Audits: Surviving Settlement

Software auditing entities, such as the Business Software Alliance (“BSA”) and Software & Information Industry Association (“SIIA”), initiate software audits of businesses that more often than not result in a settlement agreed to and negotiated by both parties. It is infrequent that a software publisher or auditor initiates against a company copyright infringement damages arising out of software compliance issues.

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Oracle ULAs Require Delicate Balancing

Many larger companies feel an understandable desire to move toward, centralized, enterprise-level software licensing agreements. Such frameworks often have the advantage of allowing licensees to spread their license spends more evenly over the term of the agreement and to focus somewhat less intensely on some software asset management (SAM) obligations.

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Trust, But Verify with Third-Party Software Vendors

Enterprise-level software solutions often are very complex products requiring a level of expertise that may be outside the experience or skill sets of generalist IT teams. Many businesses therefore rely on the services of independent software vendors and consultants to evaluate their needs for particular solutions, to procure the required licensing, and to deploy and configure the solutions on the businesses’ servers. Many of those vendors may even be recommended by the publishers of those software solutions, and their customers naturally feel as though they can rely on their advice and consultation regarding licensing requirements.

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Don’t Forget to Raise Equitable Arguments in Software Audits

Most software audits eventually reach a point after all the deployment and license data has been collected when the auditors – often employees of an accounting firm like Deloitte or KPMG, though sometimes the publishers’ own internal audit teams – present their draft audit findings to the audited business. At that stage, the auditors then usually give the business an opportunity to identify any errors in the draft findings before they are presented to the software publisher’s compliance team. However, if the audited company limits its review of the findings to factual errors, it may be missing critical opportunities to mitigate compliance exposure.

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Internal Software Audit Priorities – Where to Start?

Many business leaders who find themselves on the receiving end of software audits targeting their companies vow to never again be caught with significant exposure related to their licensing positions. However, knowing how to act on those resolutions sometimes can be challenging, especially when the company’s software estate is a large or diverse one. Here are some guiding principles to help businesses make decisions about where to start:

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Software Compliance: Finding Authorized Vendors for Hardware with OEM Licenses

Depending on the size of a business, management may choose to purchase company computers ad-hoc through retailers such as Best Buy or Office Depot. Larger companies may have open accounts through vendors like CDW or Dell Computers, while smaller companies sometimes use local vendors that sell hardware with pre-installed Windows operating systems. It may be difficult to prove ownership of these operating systems if faced with a software audit from a publisher or auditing entity, such as the Business Software Alliance (“BSA”) or Software & Information Industry Association (“SIIA”).

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Dangers of Submitting Incomplete or Inaccurate Software Audit Results

Although software compliance can sometimes fall low on a company’s priority list, a software audit typically brings prior software compliance efforts into sharp focus.  An audit, whether initiated by a software publisher, or by one of its representatives such as the Business Software Alliance (“BSA”) or Software & Information Industry Association (“SIIA”), is a complicated and lengthy process, with rules set by the auditor.

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Careful Recordkeeping Key to Software Compliance

Software audits are on the rise and often take the targeted company by surprise. Most audited companies are ill equipped to produce an accurate inventory and records for hardware and software purchases and lack the funding or resources to conduct an accurate analysis of its software compliance.

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Don't Take Your NDA for Granted During Software Audits

Many businesses expend far too little effort in securing appropriate non-disclosure agreements during software audits. Some businesses even wholly overlook NDAs during the audit process, believing that they have no leverage to demand reasonable protections for the information that the auditors will ask them to provide. This is a mistake that can cost a company millions.  

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Software Audits: Securing a Release of Liability with Settlement

Software auditing entities, such as the Business Software Alliance and Software & Information Industry Association, typically set forth a complex set of requirements for software audits that can be confusing, time-consuming, and expensive. Many businesses faced with software audits are eager to resolve these matters, and choose to pay to settle out of court. Often companies are so focused on the final settlement payment, that they do not spend as much energy on the non-monetary provisions in final settlement agreement.

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Control Software Audit Disclosures By Keeping an Eye on the Audited Entity

In many cases where we are retained to assist companies targeted for software audits after software-deployment data already has been submitted to the auditing entities, we have the regrettable obligation to let our clients know that they have disclosed too much. Over-disclosure can cost a company millions of dollars, and it is typically very difficult or impossible for us to “un-ring” the disclosure bell by convincing the auditing entity that it needs to disregard audit data previously provided by our client.

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Top Three Tips to Ensure Software Compliance

Companies facing copyright infringement claims from software publishers or their representatives have few options to navigate an audit and resolve the matter out of court. The costly nature of a software audit has prompted companies to take pre-emptive steps to avoid expensive audits by utilizing three key strategies.

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Know When to Say When in Response to Auditors’ Requests for Information

Software audits can be intensely frustrating ordeals for businesses to navigate. Many publishers will go to great lengths to cajole their customers with assurances of amicability and license-optimization opportunities, but most IT managers know that the reality of audits in almost all cases is anything but friendly and fraught with pitfalls. However, the first things that audited companies can do to mitigate their exposure is review the applicable software licenses and gain an understanding regarding just what the auditing entity is in a position to demand.

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Not All Software Audits Protected By Privilege

Companies faced with a demand for a software audit from a software publisher or an entity such as the Business Software Alliance or Software & Information Industry Association are increasingly turning to their own internal IT departments or hiring technology consultants to conduct software audits, the results of which may be discoverable in future litigation. The discovery risks associated with conducting an internal audit or hiring an outside IT firm to conduct a software audit may be mitigated by hiring legal counsel to conduct the audit and prepare a legal analysis.

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Adobe Audit Demands Can Be Burdensome

Businesses contacted by Adobe for software audits can be lulled into thinking that those investigations entail less exposure risk than audits by other publishers, like Microsoft or IBM. Adobe audits typically are conducted directly by Adobe representatives, rather than by a third-party auditor like Deloitte or KPMG, and the inventory data usually is provided by the audited business using its own toolsets. In addition, Adobe’s audit team is generally quite genial in its approach, at least at the outset of an engagement.            

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Impact of PC Administrator Access on Unlicensed Software Exposure

Operating system level security in the workplace has always been a double-edged sword. Everyone generally recognizes its importance, but internal customers need more, and IT departments are faced with increasing help desk requests while managing with a continuously shrinking number of resources.  In an effort to “resolve” many help desk requests before they come, IT administrators will often leave user accounts either with admin access during deployment or perhaps during some sort of resolution phase of an open trouble ticket.

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Software Audit Associations in Other Countries

With expanding international economies, it is no surprise that companies outside the United States are facing software compliance challenges. This is true for companies existing solely in the foreign country, or US based companies with subsidiaries or operations outside the US.  Further, it is no surprise that there are audit associations operating in larger foreign countries.Our firm was recently asked how to respond to an inquiry by a South American audit association, Software Legal Argentina, regarding software located at its South American operations. Because of this situation our firm took pause to consider the differences in responding to a “typical” software publisher audit letter in the US and one received in a country outside the US.

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Whose Job Is It To Manage Software Licensing?

Over the past few years, there has been a large increase in the number of publisher-initiated software audits.  The authority for these audits is often a provision in the end user license agreement which entitles the publisher to audit companies’ installations of the software.  Audited companies often spend tens of thousands of dollars responding to the audits. With such costly (and often un-accrued for) liabilities a distinct possibility, the question that is begged to be asked is where does it make sense to apportion this responsibility. In other words, whose job is it to manage audit risk?

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Be Wary of All Factors Affecting Potential Exposure in Software Audits

Most businesses that try to plan for software audits and to estimate the potential exposure they could incur in the event of those audits know that the primary cost components of that exposure typically are the prices associated with any licenses they may have failed to acquire. For example, if a company determines it has ten installations of Adobe Acrobat Professional for which it does not own licenses, then the exposure associated with those installations may be estimated as the price of ten licenses for Adobe Acrobat Professional.

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ISVs Must Attend to Customer Agreements

Independent software vendors and other companies that distribute third-party software products as part of their proprietary solutions often are predictably good at capturing core business terms in their customer agreements, carefully defining the products and scope of services to be delivered. Unfortunately, far fewer are as reliable about including required, third-party license terms in those agreements, which can make an audit particularly uncomfortable if one of those third parties wants to know about software deployed on end users’ computers. And far fewer still include adequate terms in those agreements to address what happens if an auditor finds licensing discrepancies affecting end-user installations.

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Beware the Convenient “Intent” of Software Publishers

Most software license agreements used by major publishers like Microsoft and IBM are in many ways vague with respect to license restrictions and metrics. This leaves licensees in the position of having to interpret the agreements based on whatever guidance may be available from the publisher or, often, simply based on the licensees’ own experience and understanding. Unfortunately, that often lands companies in trouble in the context of an audit.

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Don’t Buy Software Twice—Ensure Licenses Come from Authorized Resellers

For many small to medium-sized businesses, software license procurement may involve little more than an Internet search for the lowest price. Budgeting constraints often demand it, and especially in the wake of costly software audits by organizations like the Business Software Alliance (BSA) or the Software & Information Industry Association (SIIA), companies may be bordering on desperate to find the best deal available. Unfortunately, that impulse can lead to trouble if the company ends up giving its money to a vendor that is not authorized to resell valid licenses.

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Be Wary of Audit Tools Promoted by Software Auditors

Most companies with more than a handful of computers in their IT environments rely on the results of network-inventory tools to gather the deployment data needed for accurate software audits. Without the tools, a business would be required to assign valuable resources to manually looking at the titles installed on each machine. Therefore, it should not be surprising when a vendor requesting an audit suggests or even requires the use of an automated tool to assist with the discovery process

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Software-Audit Compliance Demands Often Include “Fuzzy Math”

In defending against software audits initiated by publishers such as Microsoft or IBM, many businesses make the mistake of assuming that those publishers or their designated auditors know what they are talking about when it comes to determining what licenses need to be purchased in order to achieve compliance. After all, the companies that wrote the license rules certainly know how and intend to apply them fairly, right?

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Effective Audit-Response Policies Can Be Vital in Responding to Software Audits

Businesses often have close relationshipswith software vendors, and that close-ness usually is in direct proportion tothe extent and importance of those vendors’ software products in thebusinesses’ network environments. However, despite their best marketingefforts, software vendors’ interests always will remain aligned primarily withtheir own bottom line, and that often means that information shared with themcan and will be used against licensees in future transactions or, worse, in thecontext of an audit.

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Compliance Documentation After BSA and SIIA Settlements – Three Top Tips

In a previous post, I introduced the concept of post-settlement compliance following the settlement of audits initiated by the Business Software Alliance (BSA) and the Software & Information Industry Association (SIIA). As noted before, the first step to completing the compliance review process is setting a baseline to determine what software is installed compared to what licenses are owned by the business.

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Software Compliance After BSA and SIIA Settlements

Your business has just finished spending the last year of its corporate life responding to a software audit demanded by the Business Software Alliance (BSA) or the Software &Information Industry Association (SIIA). It has devoted substantial time and internal resources in an effort to gather an accurate inventory of software installations, together with all available documentation of license purchases. It also has incurred legal fees in order to obtain counsel regarding the audit process and to protect its rights during settlement negotiations. Management understandably is ready to move on.

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Your Adobe Software May Be Phoning Home Without Your Knowledge

Increasingly, software publishers are looking for new tools and processes to assist them in their license-enforcement programs. While such efforts are understandable to a degree, they sometimes can include methods that are somewhat dubious at least from a customer-relations perspective, if not from a legal perspective. One provision from Adobe’s most recent end-user license terms provides a good example. (The full EULA is available here

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Accurate Inventory Information Crucial to Audit Outcome

Obvious though it may sound, in almost every software audit the most crucial element contributing to a positive outcome is an accurate inventory of what software is deployed. Unfortunately, far too many businesses faced with an audit end up receiving grossly overinflated compliance-purchase demands, because the inventory data received by the auditors and used to calculate a license position is faulty. Here are three top tips for taming the inventory beast:

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Software Audits Increase in 2012: What To Do

The number of software audits requested by software publishers and their trade groups including the Business Software Association (BSA) and Software & Information Industry Association (SIIA) will increase dramatically in 2012.

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Can a Laches Defense Help in Defense of Software-Copyright Claims?

Copyright remedies can hurt. A copyright owner can force an infringer to pay damages equal to lost licensing fees and profits derived from infringing activities, or it can opt for an award of statutory damages up to $150,000 per copyrighted work, if the infringement is found to be willful. For many businesses, though, much worse than any of that is the threat of an injunction barring use of a software product, or, outside the context of litigation, simply the loss of a license for software deployed for business-critical purposes. If, for example, your business depends on IBM operating systems, middleware (like WebSphere) and database software (like DB2 or Informix) to deliver your products and services to customers, your loss of licensing for that software can cause a severe disruption to your business, if not the end of your business altogether. IBM in particular knows this, and it will not hesitate to use this fact as leverage in the event of an audit.

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Supreme Court Allows Pro-Autodesk Decision to Remain Intact in Ninth Circuit

On October 3, 2011, the U.S. Supreme Court declined a request to grant certiorari in the case of Vernor v. Autodesk, in which the Ninth Circuit found that Autodesk could use copyright law to prevent an eBay user from re-selling its software products via the popular auction site. The Supreme Court’s refusal to hear the case means that, at least in the Ninth Circuit, software publishers like Autodesk may continue to seek injunctions and other remedies against those who attempt to distribute copies of a copyrighted software product without a license.

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Online Software Purchases – The Good, The Bad and The Ugly

Businesses understandably want to reduce both the time spent shopping for software licenses and the amount to be paid to acquire those licenses. However, efforts to minimize license spends online can have negative unintended consequences. If you are shopping at a software publisher’s own online marketplace (such as Adobe’s or Autodesk’s stores), then you usually can rest assured that you at least have the tools available to purchase the correct kind and quantity of genuine licenses. However, the pricing available at those stores often is higher than the pricing available through third-party resellers.

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Who Gets Sued for Software Compliance Violations?

A recent Northern District of Idaho case should shed some light on how to apportion legal liability for copyright infringement damages related to business software usage. In Brasher’s vs. The Software & Information Industry Association, Adobe, Corel, McAfee, Symantec, Idaho Auto Auction, ADP, and Robert Gillespie, plaintiff Brasher’s, the target of an SIIA software audit, filed suit asking the court to determine who is legally responsible for unlicensed software found on its computers during the audit.

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Responding to a License Review Request from Oracle License Management Services

As with many software publishers, Oracle seems to be making a push to audit their customer base in search of revenue streams arising from licensing deficiencies. However, Oracle usually does not like to use the word “audit” and instead tends to ask its customers to engage in a “license review,” courtesy of the Oracle License Management Services (LMS) division.  LMS generally requests that a customer fill out a Server Worksheet, which is essentially an overview of the company’s Oracle deployments.

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BSA Settlement a Reminder of Licensing Requirements for Hosting and Development

The Business Software Alliance (BSA) announced on March 28 that it had reached a $100,000 settlement with an advertising agency in Melbourne, Australia, based on the firm’s allegedly unlicensed use of BSA-member software products. However, unlike the majority of BSA settlements, which typically involve claims that a business has more installations of a particular product than its documented licenses permit, this case apparently included allegations that the company “was insufficiently licensed for its development environment and not properly licensed to provide hosting services for its customers.”

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Attachmate Customers Should Prepare for Audit Demands

Businesses deploying software published by Attachmate Corporation should strongly consider making an effort now to review their license-compliance status. Attachmate is a major player in markets for various IT-infrastructure software solutions, and it has demonstrated its willingness to pursue litigation in support of its copyright-enforcement interests. For example, in April 2008, Attachmate pursued and reached a $1.1 million settlement with the State of Montana after an audit revealed unlicensed software use on state-owned computers.

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Unauthorized Software: Costly to Your Bottom Line

The Business Software Alliance (“BSA”) and Software & Information Industry Association (“SIIA”) pursue copyright infringement claims against companies accused of installing unauthorized copies of software.  Typically, the BSA and SIIA send letters to businesses and request audits of their computer systems.

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Adopting Software Use Policies to Protect Against Copyright Infringement Claims

The Business Software Alliance (“BSA”), and the Software & Information Industry Association (“SIIA”) pursue copyright infringement claims on behalf of software publishers, such as Microsoft, Adobe, and Autodesk, among many others.  Typically the BSA and SIIA send audit letters to companies believed to be using unauthorized copies of software products.  In their letters, they demand that the target companies conduct an internal audit of all computers they own to determine whether the auditing entities’ members’ software products are properly licensed.

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Effective Dates in Software Audits are Critically Important

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 obligation to conduct an audit or communicate with the auditor.  Audited business should keep in mind, however, that the auditing entities typically are focused only on the targeted businesses’ software license-compliance status as of the audit effective date – the date on the first letter those entities send to a targeted business.  The auditing entities usually will seek confirmation that the businesses were compliant on the effective date, and on no other date.

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Businesses Turn to Open Source Software After Software Audits

The Software & Information Industry Association (SIIA) and the Business Software Alliance (BSA) routinely sends letters to businesses on behalf of many software publishers, including Microsoft, to investigate potential copyright infringement claims based on allegedly unlicensed software.  The software audit process can be long and expensive, in part due to the fact that the SIIA and BSA typically require a targeted company to produce dated proofs of purchase for licenses for every software product installed on its computers as of the effective date of the audit, regardless of how many years have passed since the license purchase.  Although the IRS generally requires businesses to maintain records for only seven years, the SIIA and BSA allow no such limitation in demanding invoices or receipts for all software license purchases.  Businesses often are unable to find the documentation for the purchase of each product, which typically results in a higher payment demanded by the SIIA or BSA to settle the matter.

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Consult with Counsel for SPLA Audits

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 channel partnership programs, the SPLA typically includes audit rights language giving Microsoft the ability to review a SPLA partner’s records regarding software deployments and entitlements and to demand compensation – usually at a mark-up over standard reseller pricing levels – for any deployments found to be excess of the business’ past monthly SPLA reporting.

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Judge Rejects Copyright Damages Compilation Components

In Nature’s Enterprises, Inc. v. Pearson (2010), the U.S. District Court for the Southern District of New York rejected Nature’s Enterprises (“NEI’s”) request for damages for each component part of a compilation.  NEI had alleged that Pearson infringed ten of NEI’s copyrighted DVD movies, of which two comprised compilations of films copyrighted by NEI.   NEI requested $10,000 for each of the 10 DVDs and $750 for each of the 45 clips contained in the two compilation DVDs.

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Costly Software Audit Mistakes

The Business Software Alliance (“BSA”) and the Software & Information Industry Association (“SIIA”) are organizations that represent software publishers seeking to enforce the copyrights in the products they publish.  In furtherance of this goal, these entities routinely send letters to businesses they believe may be infringing their members’ copyrights by failing to satisfy the requirements of applicable software license agreements.  In the letter, the BSA and SIIA request audits of all member software products installed on all computers and servers owned by the targeted businesses.

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Another Court Ruling Against Autodesk in Software Dispute

 Many businesses that use software published by Autodesk are familiar with the company’s vigorous copyright enforcement program. Autodesk is one of the most active software publishers when it comes to threatening litigation over allegedly unlicensed use of its well-known computer-aided design products, such as AutoCAD, and it regularly targets businesses of all sizes demanding costly and distracting audits and settlements, often based solely on the word of unidentified informants.

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Responding to an Autodesk Audit

The BSA and SIIA are not the only organizations pursuing business for software copyright infringement.  Though it is a member of both the BSA and SIIA, Autodesk, which manufactures the popular design software AutoCAD, often pursues audit targets on its own. 

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Types of Audits in Software License Disputes

A variety of resolution frameworks are available to businesses involved in a software license dispute. An audit is the most common such framework and entails an analysis of the organization’s network for software installations compared against its licenses. The types of audits initiated by software publishers and trade associations include self audits, independent audits, software asset management (“SAM”) engagements, and publisher-staffed audits.

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Software Piracy Penalties

Software Piracy penalties are sums collected by software publishers and their trade groups such as the BSA and SIIA in connection with software piracy audit activity.  

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Software Piracy

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 more software on corporate computers than they have purchased licenses for.  

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Business Software Alliance Report by ABC News

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Mitigating Negative Publicity from Software Audits

The Business Software Alliance (BSA) recently announced that it entered into a settlement agreement with a small-to-medium-sized motor sports dealer and equipment supplier in Greenville, South Carolina, regarding the dealer’s alleged use of unlicensed, Adobe and Microsoft software. The BSA said that under the settlement, the targeted dealer, which apparently owns only 40 to 50 computers, was required to make a settlement payment of slightly more than $72,000.00 and also to agree “to delete all unlicensed copies of software installed on its computers, acquire any necessary replacement licenses and commit to implementing stronger software license management practices.”  

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What Constitutes a “Copy” of Software Under Copyright Law?

Software auditors almost always try to find ways to maximize the number of allegedly infringing software “copies” at issue in an audit engagement. It is typical for the Business Software Alliance (BSA), the Software & Information Industry Association (SIIA), and other software publishers to demand that their small-to-medium-sized business targets disclose all installations of relevant software products on all of the computers owned by the target, which number the auditors then use in determining how much money they are going to demand in settlement to keep the matter from going to court. 

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BSA Ramping Up Piracy Campaign

The Business Software Alliance (“BSA”), a trade association representing a number of software publishers, is launching a new campaign to attract would-be informants to its reward program. The BSA’s new Know it / Report it / Reward it campaign will attempt to attract a larger number of informants through a coordinated effort involving online advertisements, radio advertisements, research reports, and other tools.

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Responding to Autodesk Audits

 The BSA and SIIA are not the only organizations pursuing business for software copyright infringement. Though it is a member of both the BSA and SIIA, Autodesk, which manufactures the popular design software AutoCAD, often pursues audit targets on its own.

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Autodesk Audit: The Importance of Serial Numbers

 In many software audits, the auditing entity like the Business Software Alliance or the Software & Information Industry Association requires a dated proof of purchase to demonstrate when a license for a software product was acquired. However, in audits initiated by Autodesk, the serial number can play a crucial role in demonstrating ownership.

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When to Buy vs. Uninstall in Software Audits

 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 learn that software purchases made after the date of the initial letter have no impact in a software audit matter. For this reason, I advise my clients against scrambling to acquire software in response to a software audit.

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Unbundling Software Suites in Software Audits

 One of the most controversial tactics the software policing agencies use when calculating its settlement demands is its practice of unbundling software suites such as Microsoft Office and Adobe Creative Suite. Unbundling occurs when the target of an agency audit is unable to provide acceptable proof of purchase for one or more installation of a software suite.

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Software Audit Time Line

 One of the top ten questions asked by my clients is “How long does the self-audit process take from start to finish?” Of course I give the standard lawyer answer: it depends. Here are the steps to a typical software audit.

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Common Mistakes in Software Audits

 The most common mistake we encounter in software audits is the failure to compile and produce accurate installation information. Like all technology projects, collecting the information to produce in response to a request for an audit can be very complicated and time consuming.

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Eight Software Asset Management Predictions For 2008

 2007 was an exciting and dynamic year for the software asset management industry. As we enter a new year, the software industry will continue to evolve. Here are my predictions for what will happen in 2008.

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License Ambiguities in Software Audits

 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 most likely to lead to litigation.

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