Scott Technology Attorneys

BSA Audit Blog


What I Learned in the Last 10 Years Defending BSA -The Software Alliance Audits

I am an intellectual property attorney in Southlake, Texas who has handled more than 230 Business Software Alliance audit matters for small to medium-sized companies. For the last ten years, I have been representing end-user companies nationally in software audit matters initiated by major software publishers including Microsoft, Adobe, Autodesk, IBM and their trade groups including the BSA | The Software Alliance. Here is what I learned over the years.  

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Responding to an Audit from the BSA-The Software Alliance

 If your company has received a letter from the BSA | TheSoftware Alliance requesting a software audit, you are probably wondering whether you should cooperate or ignore the request. I have been handling BSA cases for almost a decade and advise my clients to cooperate but to do so in a manner that will not jeopardize their legal position in the event that cooperation does not result in an acceptable out-of-court settlement. After handling over 230 BSA cases I have learned that business clients almost universally seek a resolution that has the lowest total costs and the most predictability.

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First US IP Enforcement Coordinator Named to Head BSA

BSA | The Software Alliance recently announced that it had named Victoria Espinel, who served in the Obama Administration as the first US Intellectual Property Enforcement Coordinator as its new President and CEO. Ms. Espinel’s prior government experience included service during the Bush administration as Senior Counsel in the Office of the US Trade Representative and as the first Assistant US Trade Representative for Intellectual Property and Innovation. Prior to that, Ms. Espinel also practiced law with Covington & Burling, a firm that often represents Microsoft in litigated software-licensing disputes.

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Business Software Alliance (BSA) Adds Dell to its Member List

The Business Software Alliance (BSA) recently announced that Dell has joined the software-industry organization as a new member. It remains unclear at this stage whether the new relationship will have an impact on future BSA software audits. Many BSA members tend not to play very prominent roles in the organization’s license-enforcement efforts and instead work with the BSA mostly on efforts to promote the industry.

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New Opportunities for the Business Software Alliance

The Business Software Alliance (“BSA”) commented on a White House announcement indicating its intent to negotiate a new trade agreement with the European Union. The press release quoted former BSA CEO Robert Holleyman as saying “It is also encouraging that the goals include expanding access to government procurement markets and state-owned enterprises, and affirming the shared US-EU objective of high-level IPR protection and enforcement.”

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Is it Possible to Short-Circuit a Software Audit?

Companies react in different ways after receiving a letter from the Business Software Alliance (BSA) or the Software & Information Industry Association (SIIA) demanding a software audit. Some ignore the letter, assuming it to be some kind of spam or marketing ploy. This is not advisable. Audit demands from the BSA and SIIA generally are very serious matters, and they can result in federal court litigation if they are neglected or if the auditors determine that a company is not cooperating in good faith.

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BSA Adds IBM to its Member List

The Business Software Alliance (BSA) recently announced that IBM has joined the software-industry organization as a new member. It remains unclear at this stage whether the new relationship will have an impact on future BSA software audits. Many BSA members tend not to play very prominent roles in the organization’s license-enforcement efforts and instead work with the BSA mostly on efforts to promote the industry.

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BSA Adds Oracle to its Member List

BSA | The Software Alliance recently announced that Oracle had joined the software-industry organization as a new member. It remains unclear at this stage whether the new relationship will have an impact on future BSA software audits. Many BSA members tend not to play very prominent roles in the organization’s license-enforcement efforts and instead work with the BSA mostly on efforts to promote the industry.

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What is Really Driving the BSA’s “Record Period of Settlements”?

The Business Software Alliance recently issued a breathless press release touting what it characterizes as a “recent wave of high-value unlicensed software cases.” The release goes on to describe eight recent software-audit settlements ranging in amounts from $120,000 to $625,000, with some settling businesses identified by name and others identified only by industry (likely to avoid breaching confidentiality clauses in the corresponding settlement agreements). The implication of the release appears to be that the “significant uptick in high-value cases of unlicensed software” correlates to some increase in the actual incidence rate of “piracy.” 

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Warning: Business Software Alliance Reorganization May Affect You

The Business Software Alliance announced in a press release late last week that they are reorganizing the organization into two operating units: one focused on increasing its focus on software anti-piracy and the other on global advocacy around key emerging issues for the technology industry including privacy and security and intellectual property protection.

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BSA Secures Half-Million Dollar Settlement with Texas Software Firm

The Business Software Alliance (BSA) announced on February 6, 2012 that it has signed a settlement with PCS-CTS, a Houston-based company providing supply-chain software solutions. Under the settlement, PCS-CTS agreed to pay the BSA a total settlement of $500,000.00 to settle claims that the company had unlicensed copies of Adobe, Filemaker, Microsoft, and Symantec software installed on its computers. The BSA’s announcement indicates that the amount of the settlement is the largest ever reached with a Texas-based business.

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Business Software Alliance Runs Contest for Software Piracy Leads

The Business Software Alliance (BSA), the enforcement and lobbying arm of a private trade organization of approximately 100 members including Adobe, Autodesk, IBM, Microsoft, and Symantec, recently introduced the BSA Anti-Piracy Lead Generation Drawing offering a chance to win $1,000 cash for making anonymous reports of software piracy. As part of its new No Piracy Campaign, the BSA has established a web site Report Piracy Now that includes a recorded interview with an actual BSA informant—an IT consultant who reported a client’s alleged software piracy.

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Kaspersky Parts Ways With BSA For Supporting SOPA

Kaspersky Lab, a past member of theBusiness Software Alliance (“BSA”), which enforces copyrights on behalf ofsoftware publishers, announced recently that it has disassociated itself from theBSA in opposition of the BSA’s support for the controversial “Stop OnlinePiracy Act” (“SOPA”).

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BSA Advocates Revisions to SOPA

The Business Software Alliance ("BSA"), an organization that represents software publishers in efforts to combat software piracy and copyright infringement, voiced concerns in a November 21 blog entry regarding the current Stop Online Piracy Act ("SOPA") pending before a House of Representatives committee.

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Obtaining Payment Terms for BSA Settlement

Negotiating a settlement with the Business Software Alliance (“BSA”) to resolve a copyright infringement dispute over allegedly unlicensed software can be arduous and costly. The BSA typically demands a penalty based on some multiple of the MSRP of each product alleged to have been infringed, in addition to the BSA’s attorney’s fees and, usually, a premium for confidentiality if the targeted business wants to avoid unflattering press releases regarding the settlement.

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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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Life after a Software Audit: Keeping Settlement Confidential

The Business Software Alliance (BSA) is an organization that pursues copyright infringement claims on behalf of many software publishers against companies it accuses of violating its members’ software license agreements.  Because the cost of litigation in most cases outweighs the cost to settle out of court, the BSA often is able to force businesses to comply with an arduous and often arbitrary software audit process that typically culminates in a negotiated settlement entailing a significant settlement payment to the BSA.

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BSA-Supported Organization Adopts Troubling Position On Open-Source Software

Many businesses targeted for software audits initiated by the Business Software Alliance (BSA) often make the decision as a result of the audit process to forego the expense and risk associated with using BSA-member software and instead transition to open-source software (OSS) solutions. While OSS may entail some challenges related to hardware and software compatibility, in many cases, those products do not entail any licensing fees, are subject to much less stringent licensing requirements, and may be upgraded at will to the latest versions without the purchase of any support subscriptions or product upgrades. As a result, they present a tempting and cost-effective alternative to other solutions, especially in light of the fact that expensive BSA settlements typically do not include the acquisition of any software licenses that a business may require in order to achieve compliance. However, through the International Intellectual Property Alliance (IIPA) – an IP trade organization of which the BSA and other content-oriented groups like the Motion Picture Association of America and Recording Industry Association of America are members – the BSA appears to be subscribing to the position that the use and endorsement of OSS is the equivalent of software “piracy.”

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What is the BSA’s Definition of Software Piracy?

“Software piracy” is a favorite catch-phrase used by the Business Software Alliance (BSA) and the software companies it represents.  Most people understand software piracy to involve the intentional copying and, in many cases, distribution of copyrighted software to third parties without permission of the copyright owner.  Understandably, the term has extremely negative connotations, and most businesses will go to great lengths to avoid behavior that could reasonably be branded as “piracy.”

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BSA Pursues Software Audits Despite Questionable Information from Informants

The Business Software Alliance (BSA) regularly targets small-to-medium sized businesses for expensive software audits to determine whether those businesses are in compliance with their BSA-member software licenses. In furtherance of that effort, the BSA offers cash rewards to disgruntled current or former employees who provide information about allegedly unlicensed software installed on their employers’ computers.

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When to Seek Help for a BSA Audit

Many companies choose to pursue an internal audit of software systems after receiving a request from the Business Software Alliance (BSA). When it comes to deciding how to proceed with an audit, there are multiple considerations, including, but not limited to, the size of the company, amount of computers, type of software at issue, IT support, and accuracy of a company’s records.

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Tracking Down Proofs of Purchase for Software Licenses

When a company receives a letter from the Business Software Alliance (BSA) questioning the authenticity of software licensing status and demanding an in-house audit, it is very important to have proofs of purchase for the licenses in question. Absent sufficient proof of purchase, the BSA will assume that the associated software installations are unlicensed and will demand that the company pay a penalty to resolve claims of alleged copyright infringement. It is also important to note that the BSA requires specific types of proof of purchase in its evaluation of a company’s compliance status.  For example, a serial number, installation CD, or an empty box in which software was sold likely will not be acceptable to the BSA to establish proof of license.

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Audit Inspections: How to Proceed with Inspecting Computers for Software Installations

The Business Software Alliance (BSA) is an organization that represents software companies and prosecutes alleged unlicensed use of those member companies’ software products.  The BSA generally initially sends a company a letter indicating the company may be out of compliance with applicable software license agreements and demanding that the company investigate and inspect each computer for BSA-member software installations. 

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The Cost of Confidentiality in a BSA Settlement

Part of negotiating a settlement for alleged software licensing violations with the Business Software Alliance (BSA) involves certain provisions that have far-reaching implications.  A key to understanding those provisions involves carefully reading and dissecting each subsection.   

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Resolution of Liability in BSA Settlement Agreements

The Business Software Alliance (BSA) hunts down and audits companies when it receives information that those companies may have software products that are not properly licensed. If a company audited by the BSA is found to have more installations of software products than is reflected in its licensing documentation, it is generally more cost effective to settle than to bring the fight to court. Scott & Scott, LLP represents hundreds of companies and assists in defense against these audits. 

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What You Need to Know if You Receive a Letter from the Business Software Alliance (BSA)

The Business Software Alliance’s primary enforcement tool is to send a threatening letter indicating that an investigation has commenced and offering to forego litigation if the target company provides a self-audit.

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Client Access Issues in BSA-Initiated Software Audits

Businesses targeted for software audits by the Business Software Alliance (BSA) often learn that the BSA typically extends the scope of its audit requests to more than just software products and often requests information regarding client access to server products. Before disclosing this information to the BSA, it is important for a targeted business to understand the effect that such a disclosure can have on the resolution of the audit matter.

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Most U.S. Businesses Should Co-Operate With BSA Audit Demands…To A Point

A recent article published by a U.K. business journal suggested that U.K. businesses should refuse to co-operate with demands by the Business Software Alliance (BSA) for information regarding BSA-member software installations and licenses. A copy of that article is available here.

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BSA Member List Changes

Vigilant monitoring of the BSA’s member list can help you protect your business from unneeded expense associated with a BSA-initiated software audit. The BSA member list changes as software publishers are added to and removed from the BSA’s publicly available list of member software publishers.

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BSA Audit Procedures

Most BSA Audits begin with a report from a disgruntled employee or former employee. The Business Software Alliance maintains telephone hotlines and a web site to encourage disgruntled employees and vendors to make anonymous reports against companies of all sizes. The BSA dedicates a substantial portion of its revenue marketing on radio stations and the internet to these "rats," promising them confidentiality and the ability to make an anonymous complaint.

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How the BSA Got Your Name

Targeted by the BSA? Almost all of my clients wonder how the Business Software Alliance got their name. Have you heard the BSA’s radio campaign offering rewards of up $1,000,000 dollars to disgruntled employees? The BSA entices disgruntled employees to rat on their employers in exchange for the promise of reward money. If you have been contacted by the BSA, a former or current disgruntled employee likely heard the Business Software Alliance’s Blow the Whistle campaign on the radio. 

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Business Software Alliance Report by ABC News

The Business Software Alliance is aggressively targeting businesses accusing them of software piracy. Businesses around the world are facing off with the BSA as the media continues to raise questions about its questionable enforcement tactics such offering up to one million dollars in reward money. 

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Business Software Alliance Member List Grows

The Business Software Alliance (“BSA”), a trade association representing a number of software manufacturers, routinely updates its published member list list of members on its website. Staying current on the BSA's list of active members is important because the list indicates which software publishers may be included in a BSA-initiated software audit. 

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Software Industry Supports New Cyber-Crime Legislation

 The Business Software Alliance (BSA) recently lent its support to legislation pending in the U.S. Congress that would expand the scope and power of federal criminal law pertaining to IT security matters. Under the “Cyber-Security Enhancement Act of 2007” (CSEA), section 1030 of the federal criminal code would be amended to include new offenses of extortion based on threats to gain unauthorized access to a computer and of conspiracy to commit any of the IT-related crimes defined in section 1030.

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Unpleasant Surprises in BSA & SIIA Software Audits

Many companies who comply with a demand by a software publisher or industry association (such as the BSA or the SIIA) for an internal software audit end up facing significant settlement demands after forwarding their audit materials to the other side. One of the reasons the settlement demands often are so high is the fact that the auditing entities frequently base their demands, in part, on the “unbundled” price of software suites. 

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Suing the Informant in BSA Audits

The targets of BSA audits frequently believe that they know who reported them to the Business Software Alliance. Justifiably angry, they want to know what legal recourse they have against the informant.  

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Cooperation or Litigation: BSA Audit Strategy

 If your company has received a letter from the BSA requesting a software audit, you are probably wondering whether you should cooperate or tell the BSA to pound sand. I advise my clients to cooperate but to do so in a manner that will not jeopardize their legal position in the event that cooperation does not result in an acceptable out-of-court settlement. This advice is predicated on the fact that business clients almost universally seek a resolution that has the lowest total costs and the most predictability. In BSA audits, these costs are software licensing fees, fines payable to the BSA, attorney’s fees, organizational impact, and the potential damage to brand associated with negative publicity. In my experience, a properly handled BSA audit can always be resolved for a lower total cost through cooperation than through litigation.

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The Importance of the “Audit Effective Date” in BSA Audits

 One of the first things I ask a prospective client is: What is the date on the initial letter you received from the BSA? The date on the initial in a BSA letter is often referred to as the Audit Effective Date. This date is important for many reasons. I like to tell my clients that a BSA audit measures a snap-shot in time – what BSA member software was installed on the company’s computers as of the Audit Effective Date. Once you have an accurate inventory of what was installed on the Audit Effective Date the next step is to determine what proofs of purchase are available to establish purchases prior to the Audit Effective Date.

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BSA Audit Timeline

One of the top ten questions asked by my clients is “How long does the BSA 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 BSA audit.

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Unbundling Software Suites in BSA Audits

 One of the most controversial tactics the BSA uses 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 a BSA audit is unable to provide acceptable proof of purchase for one or more installation of a software suite.

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A New Definition of Software Piracy

What is software piracy? Like many politically charged phrases, the definition of software piracy is influenced by your financial interests and your viewpoint. The Business Software Alliance defines software piracy as:

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When to Buy vs. Uninstall in BSA Audits

 One of the most common mistakes I encounter in BSA audits is what I call the post-effective date software buying spree. The buying spree occurs in response to a letter from the BSA’s attorney’s requesting a self audit. Many clients are discouraged to learn that software purchases made after the date of the BSA’s initial letter have no impact in a BSA audit matter. For this reason, I advise my clients against scrambling to acquire software in response to a BSA audit.

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