BSA Fines Software Violators

June 30, 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 carry on with a little more attention to detail.

First Telecommunications was one of the most recent companies 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, for which 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 that all businesses managing 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 a software program that can manage all the software that is on every computer — as well as licenses for each copy — more often than not can 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,

Kruger said it’s about more than just having illegal software. He explained BSA categorizes five types of piracy:

  • End-user piracy — where an employee uses a licensed copy to install a program on multiple computers; copies disks for installation and distribution; uses offered programs upgrades without having a legal copy of the program; acquires academic or other restricted or non-retail software without a license for commercial use; or swaps disks in or outside the workplace.

  • Client-server overuse — when the number of employees on a network using a central copy of a program exceeds the number of users that the firm’s programs license permits.

  • Internet piracy —  when a person downloads software from the Internet. Purchasing rules apply equally to traditional and online forms of purchase. Internet piracy also embraces Web sites that make offer software for free or in exchange for program uploads; Internet auction sites offering counterfeit, out-of-channel, copyright-infringing software; and peer-to-peer networks that enable unauthorized transfer of copyrighted programs.

  • Hard-disk loading — occurs when a firm selling 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 that sell or install new software onto computers in the workplace.

  • Software counterfeiting — Counterfeit or pirated software often punishes its own purchasers because it is more likely to fail, potentially rendering a computer and its software useless. Kruger said that since pirated software comes with neither warranty nor technical support, failure can be catastrophic to a firm.

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

“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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