Software Audit Defense Essentials – Negotiating the settlement agreement!
When you finally get to the point where you believe you have your BSA, SIIA or Autodesk software audit settled, you then come to the settlement agreement. Some people think the hard part is over (combatting the threats of filing a lawsuit for copyright infringement), but sometimes it has just begun. Some settlement agreements with the software companies and their intellectual property counsel can span to 15 or so pages. This means each term needs to be closely examined so you know what you are signing and know what you are committing your company to.
Sample “Software Code of Ethics” settlement clause
Here is typical language that you might find in a software settlement agreement. Sometimes these terms are negotiable and sometimes they are not. It depends on the nature and scope of the infringement. If a company looks like a “software pirate” (meaning they don't pay for much software) the software companies may insist on adoption of these terms as part of the settlement as a means of educating the workforce, owners officers and directors. In other cases where there is a high degree of paid software licensing, these terms may be negotiable. Having experienced counsel represent you in these matters is thus of the utmost important. Here is sample language you might encounter (give or take), using a fictional settling company.
Software Code of Ethics Compliance. As part of this settlement agreement Atlas Architect & Engineering company (“ATLAS”) agrees to hereby adopt the Software Code of Ethics attached as Exhibit “A” which is incorporated herein by reference. Failure to comply with this section shall be deemed a material breach of contract. Settling company hereby agrees that within forty-five (30) days of the Effective Date of this software licensing settlement agreement, the company shall deliver a copy of the attached Software Code of Ethics (signed by an officer or director) to each of their employees and independent contractors and deliver a copy of same to the BSA and its copyright lawyers. Further, settling company shall provide a copy of the Software Ethics Code to all new employees at the time they are hired and at the commencement of their employment. Finally, the settling company also agrees to reissue the notice annually, at its own cost.
My main objections to this common type of settlement term often found in a BSA or Autodesk software audit release:
Here is a sample of a couple of different ways this issue can be dealt with. This is only a sample response and may not work in all cases:
- We have settled this case and we are not going to be agreeing to any additional condescending terms.
- We are not sending things to any employees or contractors that make them think “wow, looks like someone got busted for software piracy.”
- Client will not agree to issue new documents (not recognized or approved by their Human Resources department) to all new employees which would add additional layers of legal complexities to the new employee process). This would have to be approved by a corporate resolution and there is simply no way this is going to be presented to the board for consideration if you are expecting this case to settle.
- “Shall reissue the code of ethics annually to employees” is absurd and creates additional cost issues that are simply not warranted by the facts of this case.
In conclusion, the software code of ethics requirements must be eliminated. This is not an ethical issue and not a case of willful copyright infringement. This was an oversight with missing Microsoft CAL licenses (exchange CAL'S and windows server CAL'S) which is a complex issue to begin with. Again, my Clients are not anywhere near “pirates” and should not have to incur additional costs (annual compliance notices) and layers of complexities (HR issues with new employees) in running their organization.
Again, these are items that need to be negotiated by experienced BSA defense counsel (or Autodesk or SIIA if you happen to be dealing with them).
What does the Software Code of Ethics say?
SOFTWARE CODE OF ETHICS
Unauthorized duplication of copyrighted computer software violates the law and is contrary to our organization's standards of conduct. We disapprove of such copying and recognize the following principles as a basis for preventing its occurrences:
We will neither engage in nor tolerate the making or using of unauthorized software copies under any circumstances.
- We will provide legally acquired software to meet the legitimate software needs in a timely fashion and in sufficient quantities for all our computers.
- We will comply with all license or purchase terms regulating the use of any software we acquire or use.
- We will enforce strong internal controls to prevent the making or using of unauthorized software copies, including effective measures to verify compliance with these standards and appropriate disciplinary measures for violation of these standards.
Architect & Engineering LLC (“Released Company”)
Authorized party: __________________
Job Title: _______________________
Contact a software licensing defense law firm
We have helped many companies, both large and small, both national and international, address software licensing audits and negotiate settlements that are warranted by the facts and to negotiate settlement agreements that the organization can live with. While the process may seem easy enough to try on your own, only a skilled copyright counsel can walk you through the complexities of the process. While other IP law firms may charge $10,000 to $20,000 to retain their services, in most cases we can do this for much less, and we can normally offer a flat rate legal fee. To discuss your case, please contact us at (877) 276-5084 or fill out the contact form below to have one of our attorneys or staff contact you to discuss. Please make sure to leave your phone number. We will contact you normally within the hour. No firm has more passion for solving your problems than we do.