Violators Pay Software Alliance Fines

November 7, 2003
| By Katy Rent |
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GRAND RAPIDS — After paying a fine of $73,000, First Telecommunications Corp. is now able to carry on with business as usual, but it will do so with a little more attention to detail.

First Telecommunications was one of several companies this summer to get slapped with a fine from the Business Software Alliance (BSA) to settle claims relating to unlicensed software.

“This is a fairly typical example of a situation you see quite often,” said Bob Kruger, vice president of enforcement for the BSA. “This is a good, reputable, well-managed company having a problem because they have more copies of software than licenses.”

First Telecommunications had unlicensed copies of Adobe, Apple, Microsoft and Symantec software programs installed on company computers. It was required to pay a fee for every missing license.

“It costs so much more to have unlicensed software and get caught than it would to just purchase licenses for the software you have,” said Kruger.

“The fine these companies pay does not include the licenses they then have to buy to be compliant — or additional software programs they have to purchase to make sure this doesn’t happen again.”

In addition to paying the fine, First Telecommunications agreed to delete any unnecessary software, purchase additional licenses, purchase replacement software and strengthen its software management practices.

Kruger suggests all businesses that are trying to manage multiple computer systems loaded with multiple software packages should put in place a strong software management program.

“Companies get caught for a variety of reasons,” said Kruger. “It can be that they are lazy or aren’t paying attention or are just not aware of what is going on, on all of their computers.”

Having software that can manage all the software on every computer, as well as licenses for each copy, can more often than not save a company thousands of dollars. There are several different kinds of programs, including software audits and a free software manager, available on the BSA Web site: www.bsa.org.

In addition, Kruger said, it is more than a matter of having illegal software. There are five different types of piracy that the BSA categorizes: end-user piracy, client-server overuse, Internet piracy, hard-disk loading and software counterfeiting.

Counterfeit or pirated software that people may purchase from online auction sites is more likely to fail, rendering the computers and their information useless.

Pirated software doesn’t come with any warranties or technical support and in a time of failure, the company will be left to deal with the problem on its own.

Kruger said illegal software is also one of the prime sources of computer viruses that can destroy valuable data throughout the company.

End-user piracy occurs when a company employee reproduces copies of software without authorization, and it can take five different forms: Employees may use one licensed copy to install a program on multiple computers; may copy disks for installation and distribution; may take advantage of upgrade offers without having a legal copy of the version to be upgraded; may acquire academic or other restricted or non-retail software without a license for commercial use; or may swap disks inside or outside the workplace.

Client server overuse occurs when too many employees on a network are using a central copy of a program at the same time. If the company has a local area network (LAN) and installs programs on the server for several people to use, the license must entitle the company to do so. If there are more users than allowed by the license, that is overuse.

Internet piracy occurs when software is downloaded from the Internet. The same purchasing rules apply to online software purchases as for those bought in a traditional manner. Internet piracy can be pirate Web sites that make software available for free download or in exchange for uploaded programs, Internet auction sites that offer counterfeit, out-of-channel, infringing copyright software, and peer-to-peer networks that enable unauthorized transfer of copyrighted programs.

Hard-disk loading occurs when a business that sells new computers loads unlicensed software onto the hard disk to make the purchase of the machines more attractive. The same concerns and issues apply to Value Added Resellers (VAR) that sell or install new software onto computers in the workplace.

“We want businesses to know two things, and also, we are not announcing this to embarrass anyone but more to set an example and show that this can even happen to good and well managed businesses,” said Kruger.

“But we also want to remind businesses that it can be more expensive not to manage software properly than to get licenses in the end, and secondly, that software management belongs on a company’s legal checklist along with OSHA and EPA regulations and taxes. It is that important.”     

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