Risk Manager
Avoiding Software Piracy Charges
Complying with the terms of a software license can be tricky. Even an honest mistake can leave you open to a stiff penalty.

BY JEFFREY D. WEINSTOCK, ESQ.RRD:

You may see yourself as an honest, law-abiding citizen, but your practice could be engaging in software piracy without even knowing it. And with software companies now making a concerted effort to catch violators of licensing agreements, ignorance of the law won't save you from paying a big fine or damages if you're caught.

This month, I'll tell you how to stay in compliance with the laws and agreements governing software use.

Software piracy is more common than many of us realize. Improper use, or piracy, can take several forms, including installing a program on too many computers, obtaining software that's only to be distributed with the purchase of a new computer, or using a program for longer than the license term.

LICENSES CAN BE COMPLEX

You can purchase software legitimately and still violate the terms of the license. While some licenses permit the installation of a software application on more than one computer, others require that the application be installed on only one computer. Some licenses even contain time restrictions for the use of the purchased software. Recent studies have concluded that as many as one in four software installations in the United States is illegal.

The practical effect of violating a software license is that you can be held liable for damages for improper use of software even if you make what to you is an innocent mistake.

You may find it unfair to be held to these standards, but the reality is that efforts to curb unlicensed use of software have increased dramatically in recent years.

LAWS ARE BEING ENFORCED

Software compliance organizations have implemented programs designed to target, identify and bring into compliance businesses that violate software licenses. Some of these compliance organizations even run advertisements encouraging employees to turn in their employers for illegal software use. Major software companies such as Microsoft have also gone public with efforts to curb violations of software licenses, using such investigative tools as anti-piracy hotlines. Although large businesses are usually targeted more often than small ones, some software companies actively go after small businesses.

In addition to penalties for installing "under-licensed" software, you're also at risk if you purchase illegal software. Illegal software can include software licensed to be distributed with only new PCs and illegally copied software (often identified by distribution in a jewel box rather than in retail packaging).

The best way to avoid problems is to follow the terms of the licenses for the software that your office purchases. Although these documents are often in small print and written in legalese, by installing and using the software, you've agreed to follow the license terms. You must determine how many computers may use each software application and for how long. Some licenses may allow several installations, or may be priced based on the number of users. Some "group licenses" permit multiple users. In those instances, purchasing a separate copy of an application for each computer would be a waste of money. Consultants who conduct software audits can help you to comply with license restrictions.

STAYING OUT OF TROUBLE

Pay strict attention to the terms of your software licenses and abide by them. Then, you'll be able to use the software effectively without overpaying. If you're cognizant of the risks and issues involved in this area, you won't unknowingly violate copyright law. 

Jeffrey D. Weinstock, Esq., is the Assistant General Counsel of Cyber-Care, Inc. Based in Boynton Beach, Fla., Cyber-Care is a technology-assisted health management company. Risk Manager provides a general summary of legal issues and should not be construed as personal legal advice. Application of these principles varies according to individual situations.