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Software audit defense lawyer key insights to staying compliant

Posted by Steve Vondran | Dec 08, 2022

Attorney Steve® Software Compliance Roadmap - Facing an Audit?  Call us at (877) 276-5084.

software compliance audit


Having handled HUNDREDS of software audits over the years with some of the largest software companies in the world and their legal times, I sometimes get asked by my clients for some "help" in staying compliance with these companies to avoid future audits, litigation, and costly fines, fees, and penalties.  Thus, I decided to put together this general roadmap you can use to help stay compliant with the software your company (and its employees) are using.

Top Points

  1. Understanding Software Licensing Agreements: What Rights You Have and How to Stay Compliant

When you purchase software, you're not just buying a productyou're entering into a legal agreement. This agreement is known as a software licensing agreement, and it outlines the terms and conditions that govern the use of the software.   Generally, you do not “own” the software, but rather you are “leasing” the software.

Understanding software licensing agreements (EULA) is important if you want to ensure that your use of the software is compliant with the law. In this blog, we'll discuss what rights you have under a software licensing agreement and how to stay compliant.

When you purchase software, you'll be presented with a software license agreement. This agreement outlines the rights and obligations of both the purchaser and the software vendor. As the purchaser, you'll be granted certain rights to use the software. Depending on the type of license, these rights may include the right to install the software on multiple computers, the right to make backup copies of the software, and the right to transfer the license to another person or organization.

It's important to read and understand your software license agreement before you purchase the software. Different types of software licenses have different restrictions and limitations. For example, some licenses may prohibit you from transferring the license to another person or organization, while others may allow it. Additionally, some licenses may have geographical limits or other restrictions on use and installment.  Since the software publishers insist on these agreements, they are also pretty aggressive in making sure your usage is compliant, and if not, the “software cops” may come to audit you and hit you with serious fines. 

For example, the Business Software Alliance (“BSA”) enforces rights for companies like Microsoft, Adobe, Autodesk, and others; we have seen demand approaching ONE MILLION DOLLARS in a software audit case.  This is a “bet the farm” type of copyright defense case.  Let's try to provide a few tips that may keep you out of “software jail.”

  1. Four Tips to Help Ensure You Don't Accidentally Infringe Software Copyrights

Software copyrights are an important part of protecting the intellectual property of software developers. As a user of the software, it's important to be aware of the laws surrounding copyright infringement so that you don't inadvertently break the law. Here are five steps to help ensure that you don't accidentally infringe software copyrights:

  1. Understand Your Rights – Before you use any software, you should understand what rights you have as a user. Make sure that you read and understand any licensing agreements that come with the software. These agreements will outline what you can and cannot do with the software.

  2. Respect Copyright – Always respect the software copyright. Don't make copies of the software, and don't modify the software without permission from the copyright holder.

  3. Buy Licensed Software – If you're going to use software, make sure that you buy it from a legitimate source. Don't buy pirated software or software that's been illegally obtained. As the software lawyers I fight against state “if the price looks too good to be true, don't buy it; you will likely be identified as a company using pirated software.

  4. Don't Share Software – Don't share software with friends or colleagues. This is a violation of copyright laws and can lead to legal consequences. Handing the disc around for others to use or a thumb drive, can lead to infringement problems.

  5. Avoid reverse engineering. Reverse engineering software can be deemed a form of copyright infringement, so it's important to avoid it. Additionally, if you are using software that is licensed under open-source software, make sure you adhere to the terms of the open-source license agreement.

3.  Strategies for Avoiding Unauthorized Software Use in the Workplace

As technology advances and software becomes more integral to conducting business, it's important to ensure that all software use is authorized. Unauthorized software use can lead to legal, financial, and security risks for a business. Here are some strategies for avoiding unauthorized software use in the workplace.

1. Establish a Software Use Policy: Establish a clear and unambiguous software use policy that outlines acceptable software use and the consequences of unauthorized software use. This policy should include explicit restrictions on the types of software that can be used, who can use it, and how it can be used.  All software purchases should come through management, and all receipts should be saved in a safe place.

2. Educate Employees: Ensure all employees are aware of the software use policy and its consequences. Educate them on the risks of unauthorized software use and the importance of adhering to the policy.

3. Monitor Software Use: Monitor software use on company computers and other devices to ensure that employees adhere to the software use policy. Make sure to take action if unauthorized software is discovered.

4. Invest in Security Software: Invest in security software that can detect and prevent unauthorized software use. Make sure to update the software regularly to ensure that it is up to date and can detect the latest threats.

  1. What to Know About Open Source Software Licensing and How to Respect It

Open-source software has become increasingly popular in recent years, and its licensing is often overlooked by developers. Understanding open-source software licensing is important for developers to ensure they are respecting the rights of the authors and other contributors and to avoid any legal issues that could arise from not adhering to the license

What Is Open Source Software Licensing? Open-source software licensing is a type of license that grants users certain rights to use, modify, and share software. It is different from traditional proprietary software licenses in that it allows users to access the source code of the software and modify it as they see fit. Open-source licenses are designed to protect both the authors and the users of the software.

They allow authors to maintain control over their work while ensuring that users can use and modify the software in a legal and ethical manner. Respecting open-source software licensing is essential for developers who want to use open-source software in their projects.

  1. The Consequences of Software Piracy: How to Avoid the Legal Penalties

Software piracy is a serious issue that comes with serious consequences. From hefty fines to potential jail time, downloading illegally-obtained software can have a serious impact on your life. Software piracy is the unauthorized use or distribution of copyrighted software. This includes downloading, sharing, or selling software without the proper licensing or copyright permissions.

It's not only illegal, but it can also be harmful to both the software developers and the users. For developers, software piracy can mean a massive loss of revenue, as those who illegally download their software aren't paying for it. This can lead to decreased profits and fewer resources available for the development of new software. For users, software piracy can mean a host of legal and financial penalties.

Depending. on the country, users can face hefty fines, jail time, and even have their computers and other devices confiscated. In the United States, copyright infringement can result in civil penalties of up to $150,000 per violation. Fortunately, avoiding software piracy is fairly simple. The best way to ensure you're using software legally is to purchase it from legitimate sources, paying legitimate fees, and use the software within the scope of the terms of the end-user license agreement (EULA).

  1. How to Recognize Legitimate Software Resources and Stay Away from Illegal Downloads

When it comes to downloading software, there's a lot to consider. Not only do you need to make sure you're downloading a legitimate version of the software, but you also need to be aware of the potential risks of downloading software from illegal sources.

First, let's talk about how to identify legitimate software resources. Generally, the safest and most reliable way to download software is through official sources like the developer's website or a reputable online store.

These sources will usually provide the most up-to-date version of the software and give you the assurance that the software is legitimate. You should also be wary of websites that offer free software downloads, as these may contain malware or be outdated versions of the software. Downloading software through “BitTorrent” sites is also a bad idea and may come with “phone home technology” that starts to scan your networks to build a piracy case against your organization.  Solidworks (Dassaultes) is one company that can track your usage and pursue an infringement case against you.

Now that we've talked about legitimate software resources let's discuss why it's important to stay away from illegal downloadsIllegal downloads are often associated with pirated software, which means that the software has been illegally obtained and is not legitimate. Not only is pirated software illegal, but it's also risky to use due to the potential for malicious code.  Simply put, it is not worth pursuing and can lead to a host of legal problems.

  1. Common Software Infringement Misconceptions and How to Avoid Them

Software infringement is a serious issue that can cost businesses and individuals a lot of money. Unfortunately, many people have misconceptions about software infringement that can lead to costly problems. To help protect yourself and your business, it's important to be aware of these common misconceptions and how to avoid them.

Misconception #1: “I can use the software for personal use without any problem.” This is a common misconception and one of the most dangerous. Many people think that if they're using a software program for personal use, it's okay to install it on multiple computers or share it with friends and family. However, this is not the case. Most software licenses state that the software can only be used on a single computer and should not be shared or copied.   We have handled many cases where clients are using software products like Solidworks, or AutoCAD, or Revit for “hobby” uses or “educational” uses (non-commercial).  Yet, in these tough times, software companies may wish to use infringement as a “profit center,” and even though these minimal types of uses may seem innocent in nature, they can still attract legal problems, including settlements.

How to Avoid: The best way to avoid violating a software license is to read the license agreement carefully before installing the software. Make sure you understand the terms and conditions of the license and follow them to the letter.

Misconception #2: “I can download a pirated version of the software.” Another common misconception is that it's okay to download and install pirated versions of software products and use unlicensed products like Ansys software, IBM, Oracle, Siemens, or other products.

How to Avoid:  Buy straight from the source (i.e., the company website) is the best way to ensure you have a legitimately licensed copy.  Authorized resellers would be the second best, but make sure they are truly authorized by the software publisher and not just a scam website.

Misconception #3: Pirated Software is Free. One of the biggest misconceptions about software infringement is that pirated software is free, but this is far from the truth. In reality, pirated software can be costly, both in terms of money and in terms of legal action. Pirated software can be loaded with malicious viruses, malware, and other cyber-security risks (causing internal issues and potential for loss of data, which may include confidential information and trade secrets.  Furthermore, using pirated software can result in hefty fines and in some cases, even jail time (in rare cases).

How to Avoid:  Again, buy straight from the source (i.e., the company website).

Misconception #4: I Can Use Someone Else's Software Another common misconception is that it's okay to use someone else's software without their permission. This is not only illegal, but it can also lead to legal action if the software owner finds out. Software is usually assigned to a single user, and many times “simultaneous” use of the same software can lead to the detection of infringement.

How to Avoid:  Make sure each user in your organization has their own paid-for license.  Do not over-assign software (another legal issue) that exceeds the rights you have from the EULA.

Misconception #5: It's OK to use someone else's software as long as I don't make any money off of it. This is one of the most common misconceptions when it comes to software infringement. Just because you are not using software for commercial purposes (ex. running your business), and even if you are using software for your own private use (ex., 3D printing), this can still lead to a costly legal settlement if detected.

How to Avoid: The best way to avoid this type of infringement is to make sure you have the proper licenses and permissions for any software you use. If you don't, then you should seek out a legal license or alternative solution that will allow you to use the software legally.

Misconception #6: Using pirated software is a victimless crime. This is another misconception since using free software deprives the software publishers of the valid revenues they would be entitled to.  It is not a victimless crime.

How to Avoid:  Get properly licensed.

  1. Know Your Rights: What You Can and Cannot Do with Software You Acquire

When you purchase software, it's important to know your rights as a consumer. Understanding the terms and conditions of the license agreement can help you avoid legal trouble and protect your investment.

First and foremost, you need to know that most software is subject to copyright laws.

This means that the copyright holder (usually the software developer or publisher) has exclusive rights to distribute, reproduce, and modify the software. As such, you may not be able to make copies of the software or alter its code without their permission. In addition, you may only install the software on the number of computers specified in the license agreement. For example, if you purchase a single-user license, you may only install the software on one computer. If you purchase a multi-user license, you may install the software on multiple machines.

You may also be restricted from renting, leasing, or selling the software. Many license agreements also prohibit you from reverse-engineering the software or creating derivative works from the code. When you acquire software, you may also be subject to certain responsibilities. For instance, you may be required to keep the software updated with a maintenance program.

  1. How to Educate Your Employees on Software Infringement and How to Avoid It

Software infringement is a serious issue that can lead to costly legal action and reputational damage. As a business, it's important to take steps to educate your employees on the risks of software infringement and the importance of avoiding it.

Here are a few general tips.

1. Make Your Software Use and Installation Policy Clear: The first step towards educating your employees on software infringement is to make your policy on the matter crystal clear. Draft a detailed policy outlining what constitutes software infringement and the potential consequences for violating the policy. Make sure to include specific examples of software infringement, so employees have a clear understanding of what is and isn't allowed.

2. Provide Training: Once you have a policy in place, it's important to provide training to ensure your employees understand the policy and are aware of the risks associated with software infringement. This training should include examples of software infringement and how to avoid it. You may also want to include information on the legal consequences of software infringement and how to report any suspected violations. I have a great video on potential damages for copyright infringement.

3. Monitor Usage: It's also important to monitor employees' software usage. This can help you identify any potential violations and take steps to address them quickly.

4.  Save all of your purchase receipts: This way, if you ever get audited, you can make it as painless as possible.

5.  If you are merging with another company or purchasing their assets, this does not mean you automatically have a right to use all of THEIR software for YOUR business. Make sure you are conducting due diligence to ensure all of THEIR software is licensed and to TRANSFER these licenses to YOUR organization.

These are just a few tips.  Hope this has provided you with some general insights.

Contact a Software Audit Defense Law Firm

Since 2004 our firm has handled a wide variety of business and intellectual property disputes. has identified Vondran Legal® as the #1 Copyright Infringement Defense Law Firm in the United States in terms of the number of litigation cases handled.

We have vast experience handling audits and compliance issues with the following entities:

We handle audits, litigation, and mediation and help companies settle their cases (usually out-of-court).  For many cases, we are able to affix a “flat rate fee” that provides a clear amount of what the case will cost you to defend, which avoids ongoing billing and a surprise bill at the end of your case. 

Call us for more information at (877) 276-5084 or email us through our contact form.

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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