Software Audit Essentials – Proving you have a valid license for software your organization is using. If not, expect penalties, fines and audits.
The game – you are an infringer when you install software on your computer according to business software alliance attorneys. You must PROVE your license (its an affirmative defense as they say). I know this sounds a bit strange, but they claim if you do not have a receipt for your Windows (even though many times this software comes pre-installed on laptops and computers) they claim you are a software pirate if you do not have, and KEEP the receipt and be ready to show it whenever they choose to knock on your door (which is something they do whenever they have “secret information” that your company is engaged in unlicensed software usage. They will not tell you what the information is, so assuming you take them at their word, they have information that your business has unlicensed software and if you cannot prove otherwise, according to them you could be held liable for up to $150,000 per willfully infringed software title. Now I know you are thinking that this sounds nuts, and it is in my opinion, but this is what we deal with in the software licensing trenches. So you have to be cognizant about implementing SAM (software asset management) practices in your organization, because someday the BSA may come calling and if you cannot produce receipts, expect harassment.
What with all these licensing agreements?
Its a good thing other products you buy (whoops, should I say “license”) don't come with End User License Agreements (“EULA”) that demand that you keep all your receipts, and if you lose them, even 10 years later, you can be treated like a criminal and win up paying thousands upon thousands of dollars paying BSA software settlement fees. For example, image if you could not “BUY” a desk and chair for your office, instead, you could only “lease it.” And let's say the terms of the lease said (in fine print, which is likely confusing to read and understand which is why very few people ever attempt to do so):
“you are obligated to keep the proof of purchase for this desk and chair, and if you do not, and if we come and audit you, which you give us the right to audit you buy purchasing this desk set, and if you do not have the receipts you will be deemed a desk and chair thief and you will be required to pay us whatever we demand or end up in court.”
You would not seriously buy, or should I say lease the desk and chair under these conditions would you?
What constitutes proof of “ownership”?
You can really only prove proof of ownership of a valid license. In most cases, the software never coneys to your business, you just get to use it, or lease it, much like leasing a car. At any rate, if you are subject to a “voluntary audit” with the software alliance, Microsoft, SIIA, CNC Mastercam, Vero Software, Siemens, Autodesk or other software publisher, typically here is what they are looking for as far as valid proof of purchases are concerned:
- Invoices that show your company purchased the software at issue (ex. Autocad, Revit, Inventor, Maya, Office, Windows, Adobe products, etc.)
- These invoices should be dated and should contain a detailed description as to what was purchased
- The price paid should also be shown (note: the vendors I deal with only want you paying a valid price for the software, if it seems you got a “too good to be true deal” this may be evidence of piracy
- The sales invoice, or email confirmation should have the name of the reseller, and again, this should be only from a valid reseller, and not a counterfeit or knock-off bootleg type of company.
- You should have similar receipts for all your products, no matter if it was twenty years ago (note: although the statute of limitations for software infringement is three years, this is from the date the software vendor SHOULD HAVE DISCOVERED the unlicensed software. Thus, this defense may not always be available).
- If you purchased OEM software (ex. you buy a computer with MICROSOFT WINDOWS 7 pre-installed) you can pull up the proof of purchase from the vendor, which should clearly identify that the computer or laptop came pre-loaded with windows operating system. Again, realize, the BSA and their intellectual property lawyers such as The Venable, Weir Johnson, Troutman Sanders and others will be looking very closely and scrutinizing these receipts with a fine tooth comb so making sure you have all your ducks in order is very important. If you are dealing with Autodesk, you likely received a letter from their go to firm, Donahue Fitzgerald, LLP up in the San Francisco bay area.
If this entitlement information cannot be shown, expect to be treated like a software criminal, and dust off the corporate checkbook because the BSA is going to want serious penalties for “infringement.” This, after all, is a HUGE business for them punishing small and large business owners across the United States. Some of my Clients have referred to them as “the software nannies” who troll around looking for unlicensed software, much like a parking attendant looks for meters that have run.
Resources to find OEM software license proof of purchase
For some vendors, you may be able to go to their website to see if you can locate proofs of purchase for prior purchases made:
Contact a Software License Defense Lawyer for Microsoft and Autodesk Audits
If your business received an audit letter, we can help. We have helped many large and smaller companies throughout the United States defend against licensing compliance issues with major software vendors who may be disputing or challenging your company software licensing position. In this area of law, experience matters and we gladly accept referrals from inside or outside corporate counsel that want to get an experienced firm on board to handle the audit and negotiation process, and handling the negotiation of the final settlement agreement, which can be tricky for new attorneys not skilled in this area of law. Call us at (877) 276-5084. We offer low flat rate fees so there will be no shocking legal bill once your case is settled.