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.
Software audits may be initiated by publishers or through organizations such as the Business Software Alliance “BSA” or Software & Information Industry Association (“SIIA”). Audits initiated directly from a software publisher are sometimes presented as a sales offer, or opportunity to upgrade or replace existing software. During the course of these business transactions, the publisher may request installation data from the customer. If the number of installations exceeds the number of licenses owned, the software publisher may demand a penalty for any license deficiencies based on the Copyright Act.
Often a customer may exchange audit data in the absence of a confidentiality agreement, subjecting the company to significant financial exposure. Once a company receives a settlement demand after it has submitted audit data, the company’s options for responding are limited.
It is important for a company to obtain legal counsel with expertise in software copyright infringement at the outset of the audit to advise on the following areas, among others:
- Ensuring the audit data is accurate and complete
- Conducting a secondary review for accuracy
- Obtaining and proving ownership of software licenses
- Obtaining a confidentiality agreement
- Negotiating terms of settlement
- Protecting the company’s interests by acquiring a release of liability.