The BSA & Piracy Fines: Protecting Your Business

Robert, The Computer Guy/ November 2, 2015/ Alert

tl;dr: Own a license for EVERY copy of software on EVERY computer at your company, and keep your receipts! Violators can be fined, and CEOs can be held liable.

compactdiskWhen you are looking at what software is needed for your applications at work, regardless whether your business is large or small, you often have a strict budget to which you must adhere. This can make it tempting to use software inappropriately – either by using “someone’s copy” to put it on all your business computers, by purchasing a single copy and installing it on several computers, or even by finding a “free” copy someone has put up for download (that is called pirating).

It is very important to resist these temptations. The Business Software Alliance (BSA) makes it a point to ferret out and penalize those who choose to use these methods – all of which are a form of stealing. While the BSA is not a law enforcement agency, it is given power of attorney by the software companies it represents, which includes such companies as Microsoft, Symantec, Adobe, McAfee, Autodesk, and Intuit, among others.

Every time you install a piece of software, you are required to agree to the End-User License Agreement (EULA), which includes information about how many computers on which you may install the software. It is common for people to click “agree” without actually reading the text, but whether or not you read it, you are still responsible for the information contained therein.

Abuse of software licenses can result in financial penalties and legal
costs. Additionally, company executives can be held individually liable,
both criminally and civilly, for any copyright infringement that occurs
within the organization. –Licensing and Compliance Guide

In order to prove that you legally own the license for the software you have purchased, you must keep the receipt. If you do not have a valid, dated proof of purchase, the software is treated as an illegal copy by the BSA, and is included in the proposed fines (which are paid in settlement to avoid litigation).

Each copy of the software is estimated separately – and this includes each individual item in a bundled suite. For example, Microsoft Office would not result in one fine for the Office suite, but rather in 5-7 (depending on the version) – Word, Excel, PowerPoint, Access, etc. The proposed fine takes the retail price of the software and multiplies it by three. Also included will be up to $5,000 for BSA’s attorney fees. To get an idea of what you might be fined, BSA has a fine calculator on their Resources page.

Small businesses are not immune to this organization. In fact, the BSA has been known to intentionally target small businesses. Almost 90% of the $13,000,000 the BSA collected last year in North America was from small businesses. Unfortunately, most of their income is gotten because of confusing license agreements, headstrong employees, or lost receipts for valid copies of software.

Barbara Rembiesa founded a company named International Association of Information Technology Asset Managers (IAITAM) whose aim is to teach businesses to properly manage software. She feels that the rules are not well known or understood, and fines for noncompliance are improper, stating, “If you were driving down the street and you got a speeding ticket, and there was no speed limit sign, it probably would be thrown out of court.” Microsoft does, however, offer a Licensing and Compliance Guide on their website.

One of the rules that may not be realized is that when a newer computer is purchased for a technical purpose, and the old computer is going to another user, any software copied to the newer computer should be deleted from the old one. Even if the software is never used by the user to whom it is ‘handed down,’ the fact that the software is still installed on the computer – if the company has only one license for it – is a violation. For example, Mike Lozicki of MediaLab Ventures LLC in Tampa, Florida, was contacted by the BSA, who found about 12 percent of their software not in compliance, even though most of it was not being used.

If you purchase a used computer for your business, you will want to wipe out any existing software and start fresh, as each program on the computer for which you have no receipt is liable for a fine.

According to copyright law, each infringement could be fined $150,000 – that would include each piece of software, on each computer that is deemed in violation – or $30,000 if it was unintentional. BSA’s legal affairs head, Neil MacBride, says that by using smaller fines, violators are given a break.

However, BSA encourages disgruntled employees to report companies for alleged software violations. Before 2005, it was just encouragement; however, in 2005 the BSA began offering a reward of up to $50,000, which was raised to $200,000 in 2014 and $1,000,000 in 2015. The actual reward given is a percentage of the amount collected by BSA, however, and the one-million figure would only actually become a reality if the informant’s lead gained the BSA $15 million. The most the BSA has ever collected from one company to date is $3.5 million. Still, offering a reward at all is viewed by some as unethical.

Client Access Licenses (CALs):
1. Are your company’s workstations networked?
2. If so, is your company using any of the following Microsoft Server products?

  • BackOffice® Server
  • BizTalk™ Server
  • Commerce Server
  • Content Management Server
  • Exchange Server
  • Host Integration Server
  • Internet Security and Acceleration Server
  • Mobile Information Server

If you answered YES to the above questions or for more information on each
of these products and the corresponding CAL and per-processor licensing
obligations and options, please see:
http://www.microsoft.com/piracy/samguide/tools/cal_guide/default.asp
Licensing and Compliance Guide

Regardless, in order to protect your business, it is very important to make sure that:

  1. You own a license for EVERY copy of EVERY commercial software item installed on EVERY computer in your business, and
  2. You have the dated receipt that proves that ownership.

Anything less could make you a target for the aggressive BSA, resulting in large fines, at best, or even jail time or loss of your business.