How to survive an Autodesk Audit – Legal tips from the software licensing trenches!
Bonus Materials: Vondran Legal Hour Podcast revealing Autodesk Audit Tips!
July 2020 Update:
Note from Autodesk: Autodesk is switching multi-user subscriptions (network deployments) to “named user” subscriptions (single user standalone). During this transition, you can receive 2 standalone subscriptions at the same price for each network subscription. This becomes available on the 1st subscription renewal, whenever that occurs, on or after August 7, 2020. You can continue to renew the multi-user subscription for one more year, but in that case you will miss the opportunity to receive the 2 for 1 subscription offer; upon next renewal, you will be transitioned to a single user license at a 1:1 ratio. The 2 for 1 pricing discount will be in effect until 2028, with 5% increases every other year, but can only be obtained at your first renewal.
So you got the Autodesk Audit “love letter” from a law firm demanding that you submit to a “voluntary” software licensing audit (now, at times they are saying it is NOT VOLUNTARY, but rather a CONTRACTUAL AUDIT). What do you do? Do you call a copyright attorney? Do you just try to handle the problem on your own by writing a software dispute letter? Do you destroy your Autodesk software and hope the problem goes away? This blog provides a general legal overview of Autodesk software audits. We are not aware of any law firm in the United States that has handled more Autodesk audits than our boutique software licensing compliance defense firm. DO NOT PAY AN INEXPERIENCED FIRM, AND DO NOT PAY EXPENSIVE AND UNPREDICTABLE HOURLY FEES TO HIRE LEGAL COUNSEL. We offer low flat rate legal fees and we are the leader in this niche area of copyright infringement law. In this area of law, there is simply no substitute for experience.
July 2020 Trends and Outlook: we have seen a general slowdown in audits from our perspective. Copyright litigation in general seems to be down this year (thanks in part to Strike 3 Holdings filing less federal court lawsuits). But, we have also seen Autodesk moving toward "internal audits" where you may get a letter from the company (Autodesk) as opposed to their law firm (Donahue Fitzgerald, LLP being a main player). We advise our clients that now is a good time to make sure you are in compliance with your EULA's as "contractual audits" have also been coming up. This involves them many times insisting "this is NOT a voluntary" audit.
How did Autodesk find out about unlicensed CAD, REVIT, MAYA or INVENTOR software?
Here are some of the top ways that Autodesk learns about potential software piracy:
- An informant (current or former employee or student tips them off). For example, a student that did not get hired and became disgruntled and decided to inform either the BSA (Business Software Alliance), often seeking a monetary reward, or notifies Autodesk directly, sometimes with the intent to retaliate. In our experience, Autodesk nor the BSA meets these people or vets them for credibility, yet this is usually their “star witness” so to speak.
- TORRENTS and CRACK CODES – illegal downloading of software (see video below)
- Circumventing access control technology (a DMCA violation). For example, using password breaking tools to gain access to software programs.
- Your company name or project appears in a business journal discussing use of AutoCAD or Revit (and they look you up and see you have no licensing for these products). This triggers a “red flag” which may result in an audit demand letter or email being sent to company executives.
- Your linkedin profile discusses your experience in CAD, MAYA, or INVENTOR skills (and again, they check their customer license database and learn you have no license or do not have the proper number of licenses). Another possibility is someone (a friend or colleague) endorses you for Autocad just to try to help you out, but where you have no such experience. This could trigger a false audit, which at times can be resolved with a “Certificate of Compliance.”
- Crash reports that are sent back to the home office of Autodesk and reviewed. For example, the AutoCAD program freezes, and you send the crash report back to Autodesk triggering an audit license review when they learn you do not have a paid copy of said product. It is believed, in our opinion, this appears to be happening in some cases.
- 2018 UPDATE – You are discussing (or criticizing Autodesk - perhaps complaining about support online) on a facebook page, and someone ends up figuring you out. This is not confirmed, but we had a case where it appeared there was no other possible way the client at issue could have got on the radar so to speak.
- Autodesk Reporting Technology (see below) this may notify Autodesk of installation and usage. For example, say you are running Autocad 2015 and it reports to Autodesk that there are multiple installations and a check against the company license database shows there is not licensing to cover the deployments, this could trigger a demand letter from Donahue Fitzgerald, LLC and threats of copyright infringement penalties.
- A third party vendor could report you or an independent contractor who visits your office.
- An internal corporate officer or director is worried about officer and director liability (which exists in willful copyright infringement cases) and he or she blows this whistle. The old saying in white collar crime being "the first one to strike a deal with law enforcement gets the best deal).
- Business Software Alliance (“BSA”) – Autodesk is a member of the BSA and an audit could be triggered through a tip to this organization located in Washington, D.C. We handle many business software alliance cases as well. The problem with this, however, is that the BSA may seek to audit you for other products besides Autodesk, for example, Bentley software, Adobe, Microsoft, and others. This could lead to huge legal liability.
- You post a job ad looking for someone with “Autodesk Maya or Inventor” skills, (for example ON INDEED), and yet you have no licensing.
VIDEO: Click on the image above to find out ONE WAY which we BELIEVE (based on comments with past clients) that Autodesk learns about unlicensed software at a design, architect or engineering firm. Make sure to Click on the RED “V” to subscribe to our legal channel.
How is software piracy reported?
As you can see here, Autodesk makes it very easy to report software piracy or unlicensed use. Typically, whistleblower reports to Autodesk do not allow the informant to seek a reward. However, as noted above Autodesk is a member of the BSA and they DO provide rewards. Here is the BSA piracy reporting page. As they note, they would like reporting on the following:
- Organizations using or installing more software than they have licenses for (ex. using one product and installing it on multiple computers, for example Microsoft Office, Windows, or Visio.
- Hacked/Cracked software
- A computer repair shop installing unlicensed software
Here is more information about their piracy reporting rewards.
To learn more about Can you sue the software informant?
Autodesk Reporting Technology (as noted above)
In some cases, it may be possible that Autodesk learns of your infringement via reporting technology. According to their website:
11. Access To And Use Of Offerings
11.1 General Access and Use Conditions
“Depending on the Offering, You may be required to log into Your account to activate, access or use (or to continue accessing or using) the Offering. Only You, including Your Authorized Users, may access or use an Offering. Access to and use of all Offerings is contingent on (among other things) Your timely payment of all applicable amounts, including any taxes and other fees, with respect to the Offerings and compliance with these Terms.
Some Offerings may cause Your Electronic Devices to automatically connect to the internet (intermittently or on a regular basis)—for example, to validate Your subscription, provide You with access to services (including third-party services) or download and install Updates or Upgrades, all without further notice to You. You agree to such connection and to validation of Your subscription and to the automatic downloading and installation of Updates and Upgrades. For some Offerings, You may be able to adjust Your Update or Upgrade settings (this is not available for other Offerings, including those for which automatic Updates or Upgrades are required for operation or security of the Offering).”
Attorney Steve's top 5 tips to surviving an Autodesk Audit
Here are a few of my observations and tips, (having handled over 250 or so of these software licensing audits), when you receive a demand letter or email to audit your internal networks for software installations and licensing position:
1. Contact a lawyer when you get the audit demand letter. Some people will say “does this make me look guilty.” I say when your company and business is on the line you need to get legal protection. The attorneys on the other side (representing the software companies) have no concern whether or not they force your company out of business or into bankruptcy. If your case goes converts to a lawsuit, you will be in a federal court most likely facing accusations that your business has “willfully, intentionally and maliciously” infringed the copyrights of Autodesk, Adobe or Corel. These are just a few of the companies that might join in a federal copyright lawsuit against your organization. So to NOT lawyer up could only add to the mistakes, and get you into an argument with the intellectual property attorneys that represent the software companies.
2. Do not destroy software that you have installed on your servers or race to pay for license(s) to use the software. Destroying software or racing to purchase a software license are not recommended. In fact, destroying evidence when you might be potentially involved in a copyright infringement lawsuit, could lead to presumptions that will work against you if you wind up in federal court.
3. Try to dig up all your software licenses and see what you have purchased. One of the first things I would do is to see how many receipts you can dig up to show you have paid for the software you are using. In many cases, we have found clients who do not retain receipts, or who may have lost receipts (we know of no law that requires you to keep all your receipts, and business owners, IT professionals, and CIO's may not have all the receipts saved. But it is helpful to know what you have and do not have.
4. Compare your license installs with your receipts (did you have proof of purchase for all license installs on your networks)? This is basically the audit that the BSA or other software company or their IP lawyers will want you to investigate. In other words, CAN YOU PROVE YOU HAVE PAID FOR ALL THE SOFTWARE AND UPGRADES THAT YOUR COMPANY IS USING? This helps us get a handle on your potential legal exposure
5. Take a close look at who the potential “informant” may be. Most software licensing cases I have dealt with, if not all, involve the use of a so-called “informant” who is either currently working for (or more likely, used to work for) the company being audited. But a few things have to be asked about the informant – who normally wishes never to be identified, and instead is basically seeking a financial reward for turning you in.
a. Is the former employee in breach of a termination, non-disclsoure (NDA) or confidentiality agreement? If so, we can examine your contract and determine if the ex-employee is subject to being sued for breach of contract.
b. Check-out the former employee's computer, (a good IT guy, or computer forensic analyst) can check the hard-drive of the informant. The informant is always kept confidential by the law firms that represent the software companies. Yet, this is their KEY WITNESS. We have often found ex-employee informants to be disgruntled, and motivated by malice to go against their ex-employers and try to turn them in for alleged software licensing shortages. Yet, these same employees have been found to have been surfing pornography sites on company time (in violation of company policies and procedures manual) and have been found to have engaged in other damaging and nefarious activities against the company being audited.
If a federal copyright lawsuit ensues, the name and veracity of the informant will be sought to be ascertained through discovery, and this informant can potentially be brought into the lawsuit in a cross-complaint. Again, this is determined on a case by case basis and may not always apply. But where the information is a bad actor, and has unclean hands, and has committed acts that have injured the company, this might be the time to bring the informant (who wishes to remain confidential status – hiding in the shadows and making accusations) into the lawsuit to seek recovery of damages caused by the informant.
If you are engaged in a software licensing audit, it is important to have legal counsel doing everything possible to examine these key issues and determine what defenses and remedies might be available to your business.
What software products does Autodesk have?
As far as we have been able to ascertain (this is a non-exclusive list), here are some of the various Autodesk products that could result in an audit to determine whether the licenses have been properly paid for (versions from 2008, 2009, 2011, 2012, 2013, and 2014 to the present). Formerly they sold "perpetual licenses" nowadays most everything is moving to the web (software as a subscription service)
1. Autodesk 3ds Max
2. AutoCAD LT
3. Architecture 2012 software
4. Mechanical 2012 software
5. Buzzsaw 2011 software
6. Factory Design Suite 2012 software
7. Maya 2014 software
8. Autodesk Mudbox
9. Raster Design 2013 software
10. Autodesk Showcase 2013 software
11. SketchBook Designer 2013
12. Autodesk SketchBook Pro software
NOTE: Many products are now offered in the “cloud” as web based software working off a subscription model with basic support.
Be careful using illegal crack codes – this could lead to BIG problems both civil and criminal
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The Autodesk Internal License Review Audit
PODCAST: Click on the picture to listen to Attorney Steve® the Software Audit Lawyer explains the apparent recent trend of companies receiving internal audit review demand letters or emails.
Does Autodesk actually file lawsuits against software copyright infringers?
Yes. You can search the pacer court docket (shows all federal court lawsuits filed) to see they have filed lawsuits against alleged copyright infringers who are alleged to have software that infringes their copyrights, usually by not paying for the proper number of licenses for software.
The law firm that you might see filing lawsuits on behalf of Autodesk is Donahue Fitzgerald, LLP. This is a very well known and established law firm we dealt with in the past. We have proof that they have filed lawsuits for LESS THAN 10 alleged infringed copies. So you have to assume it is possible even as a small business. Many "moms and pops" and small startups can get audited. Clients will ask me "do they really go after the small fish." Yes, all the small fish add up when you get them on subscription model.
What types of Claims may be raised in a Copyright infringement lawsuit involving Adobe or Autodesk?
Some of the types of claims you may see filed (if you cannot get your audit resolved informally) are:
2. Willful, intentional, or malicious circumvention of access controlled technology – 17 U.S.C. 1201(a)
This legal concept is discussed further here.
If my company is sued for software infringement what types of damages or remedies can the software companies seek?
In general, you always want to try to avoid getting sued for copyright infringement. You do this by making a good case for settlement, or where other defenses exist, to make the argument that there is no sufficient grounds to file the federal lawsuit under either F.R.C.P. Rule 11. These require having software lawyers who are strong negotiators who can advocate on your behalf and try to get the case resolved, confidentially, for the minimum amount possible.
1. Statutory damages – (for each infringed title):
a. Federal copyright infringement – 17 U.S.C. 504
b. Circumvention of access controlled technology – 17 U.S.C 1203(c)
2. Actual economic damages – Which could include Defendants profits derived from the illegal software use, past due licensing fees, etc.
3. Attorney fees awards – See 17 U.S.C. 505 and 17 U.S.C. 1203(b) (if the case goes to court, and they prevail, you could end up paying not only your copyright defense attorney infringement fees, but also the Plaintiff lawyers attorney fees (many times they will put multiple lawyers on the case). Having handled over 175 federal court cases, we know this firsthand.
Click here for more information about remedies a Plaintiff can seek in a Copyright infringement lawsuit.
In addition to being strong negotiators, we are skilled litigators who can defend your business against claims of copyright infringement to the fullest extent possible, using all available defenses, counterclaims, and cross-suits that might be available in your case.
How much does it cost to defend a BSA or Autodesk audit
While some Autodesk or BSA defense law firms might charge $10,000 or even $20,000 retainer fees (and bill hourly which can get quite expensive), we are able to quote you a low flat rate fee to handle the audit. While there are other software copyright law firms that charge an arm and a leg to be retained, we believe we provide superior services at a reduced and fair FIXED/PREDICTABLE price. With us, you will not get a big legal bill at the end of the case. We make having an experienced software technology lawyer on your side AFFORDABLE.
Contact a federal copyright lawyer to handle your Autodesk licensing audit
To discuss your case in confidence, contact us at (877) 276-5084. We are responsive, battle-tested, and we listen to your concerns. We seek to resolve your case in the shortest amount of time, and to explain your case in terms you can understand. You may also email us through our contact form and we will get back to you as soon as we can. Free consultations are provided for those who received a letter, or email demanding an audit.
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