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IBM software license audits overview

Posted by Steve Vondran | Jul 08, 2015 | 0 Comments

Federal Copyright Litigation – IBM Software License Compliance Cases!


Towns, Cities and businesses run on software and IBM software is a leading brand many companies trust and rely on to handle a wide variety of functions such as:

  • Application infrastructure
  • Business analytics
  • City management
  • eCommerce (B2B / B2C)
  • Continuous engineering
  • Databases
  • Data warehousing
  • Enterprise content management
  • Marketing

These are some important mission critical functions that IBM helps companies perform.  In using their software, companies must be sure to comply with the terms of the applicable software licensing agreement.  If not, and if there is a violation of the license, IBM may initiate a software audit, either on its own, or through a third party accounting firm such as Deloitte & Touche.  When this happens, your business needs to decide how it wants to respond, and what defenses might be available.  We can help you “quarterback” your response strategy and seek to minimize your legal exposure.

IBM International Passport Advantage Agreement

One of the main licenses that IBM will look to when evaluating the compliance of a business is the “Passport Advantage Agreement” (PAA).  Here is a piece pulled from their website that discusses this:

“Client will assign a person in Client's organization with authority to manage and promptly resolve questions on Audit Reports or inconsistencies between report contents, license entitlement, or ILMT configuration; and promptly place an order with IBM or Client's IBM reseller if reports reflect EP use over Client's authorized level. IBM Software Subscription and Support and Selected Support coverage will be charged as of the date Client exceeded Client's authorized level.”

The terms of every software licensing agreement needs to be closely reviewed and analyzed so each company knows what its rights, limits, and obligations are in using and deploying software across the enterprise.  We can help with software law issues.  If you receive a legal demand letter, the FIRST THING to do is to contact our firm to discuss BEFORE you say anything to anyone.  Before paying exorbitant legal fees to another firm looking to “bill your hourly” on these cases, it is best if you give one of our IP lawyers a call to see if we can quote you with a flat rate fee that says you money, while still providing excellent legal service.

What are the possible defenses to software licensing shortage?

Here is a blog we wrote on affirmative defenses in a BSA or SIIA software audit.  When you are dealing with informants, (both internal and possible outside consultants) who might be wanting to seek retribution or sabotage your business, you need to make sure all possible defenses are explored BEFORE you initiate conversations with opposing counsel.  The information you provide and statements you give can, and probably will be used against you if a lawsuit is required.   Do the smart thing and “lawyer up” when you get a voluntary self-audit  / software infringement letter.

Do these cases audit cases settle?

Yes.  Many software audit cases will settle without your company having to be dragged into federal court to answer a copyright infringement lawsuit.   For architects, engineers, and other small business owners, taking time to handle your own case is problematic, and settling these cases as fast as possible becomes a top business priority.  We can help settle your case with as least amount of time on your end, and in a manner that is favorable to you.  One thing to consider in every case, regardless of which organization is auditing you is to make sure you negotiate a confidential settlement agreement.  Our skilled copyright attorneys can fight for the best terms possible.

What are possible terms of settlement?

Sometimes software companies will use a software licensing shortage calculation (some call it an “infringement calculator”) that involves a penalty of two or three times the MSRP of each piece of infringed software (i.e. licenses short) plus pursuit fees, and costs of annual maintenance and support.  The goal is to minimize any argument that there was “willful copyright infringement” which is often an issue that gets pushed in these negotiations, and negate any personal liability to the officers and directors of the company, who may also be personally called out in any given case, triggering potential liability.

Does IBM ever file lawsuits for Copyright infringement?

Yes.  Sometimes Client's believe that settling a case is just a game of chicken, and that IBM may not be willing to file a federal copyright lawsuit.  I don't think taking that approach is sound at all.  Here is one case that dealt with IBM and a lawsuit against Fujitsu over alleged infringement of software copyrights.  So while it might seem tempting to avoid the demand letter seeking to audit your company, ignoring a software giant like IBM could have devastating results to your business, including a possible public charge of being a “software pirate!”

Can I handle a software audit without the need for a law firm?

Sure.  And you can do your own taxes and you can represent yourself in a state or federal court of law.  Keep in mind, as the old saying goes – “a person that represents themselves has a fool for a Client.”  BSA and SIIA software audit cases (or those directly from software manufacturers like Autodesk who use prestigious law firms like Donahue Fitzgerald to assist them) can be challenging.  You will be put through a rigorous defense posture and have to be able to negotiate a fair deal with their attorneys who are among the finest intellectual property lawyers we have run across.  Yes, you can “do it yourself” but we think when you add up the time and skill needed to successfully negotiate a deal, and review all the terms of settlement, and negotiate the settlement agreement, ensuring the confidentiality of communications under FRE RULE 408 to the extent possible, having an intellectual property law firm represent you make good sense.  With our flat rate fee representation (available in most, but not all cases), frankly we believe we have made it a “no-brainer.”  Contact us at the number above or fill out the contact form below (making sure to leave your phone number) to discuss your case in confidence.

Other software audits we handle

We can help you if you are facing an IBM, Adobe, Microsoft, Autodesk, Oracle, Rosetta Stone, Attachmate, BSA or SIIA software audit.  We have experience dealing with settling software audit cases and helping companies avoid federal copyright litigation, which is usually a threat in every case.  If you need help, contact our office to speak with one of our intellectual property lawyers by calling (877) 276-5084.  Or, you may also fill out the contact form below, to have a member of our firm, or one of our copyright lawyers call you back, normally within the hour. 

About the Author

Steve Vondran

Thank you for viewing our blogs, videos and podcasts. As noted, all information on this website is Attorney Advertising. Decisions to hire an attorney should never be based on advertising alone. Any past results discussed herein do not guarantee or predict any future results. All blogs are written by Steve Vondran, Esq. unless otherwise indicated. Our firm handles a wide variety of intellectual property and entertainment law cases from music and video law, Youtube disputes, DMCA litigation, copyright infringement cases involving software licensing disputes (ex. BSA, SIIA, Siemens, Autodesk, Vero, CNC, VB Conversion and others), torrent internet file-sharing (Strike 3 and Malibu Media), California right of publicity, TV Signal Piracy, and many other types of IP, piracy, technology, and social media disputes. Call us at (877) 276-5084. AZ Bar Lic. #025911 CA. Bar Lic. #232337


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