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”).

Some software publishers provide a search tool on their web sites to assist customers with finding a local, authorized reseller for software. However, it is difficult to verify that a pre-installed operating system is original equipment manufacturing (“OEM”) software that is properly licensed. Some smaller vendors either re-sell hardware with pre-installed operating systems, or choose to build their own machines and load software for customers. Most customers assume that any pre-loaded software, which may range from Adobe products to Microsoft Office or Windows operating systems, is properly licensed by the vendor or company that sells the computer. However, some license agreements specifically restrict these sales and transfer of licenses without written authorization from the software publisher.

A company undergoing a software audit must be able to prove ownership of all copyrighted software within the scope of the audit, regardless of whether the software was pre-loaded and sold with the machine or loaded by the customer at a later time. Vendors are not always able to verify and provide proof of valid licenses for the pre-loaded software, and some vendors’ receipts fail to detail OEM software, leaving the audited company in a vulnerable position and potentially subject to copyright infringement penalties. In addition to vendor records, maintaining receipts from individual purchases can be tricky for companies who have no record retention policy. Certain computers manufacturers such as Dell Computers keep detailed records of its customers’ purchases, but only for a few years at a time. Dell service tags attached to each machine may also be used to generate a report of all software pre-loaded on the machine, making recordkeeping slightly easier to manage.

Companies who want to be audit ready should focus on two key issues when purchasing computer hardware and software for its business solutions: 1) identifying authorized, licensed vendors and 2) keeping diligent records of all purchases in order to avoid potential ownership and copyright infringement questions in the future.