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 | Software Copyright and Compliance Definitions
Definition of Risk Management Definition of Software Risk Management Definition of Continuous Risk Management Definition of Risk Management Audit Definition of Risk Exposure Definition of Software License Types Definition of Software License Management Definition of Open Software License Definition of Internal Audit Training Definition of Internal Auditor Definition of Outsourcing Internal Audit Definition of Internal Controls Auditing Definition of Audit Risk Definition of Asset Management Audit Definition of Asset Inventory Management Definition of Software Asset Tracking Definition of Infrastructure Asset Management
Internal Audit Internal Audit Training Internal Audit Consulting Asset Management Audit Asset Inventory Management Software Asset Tracking Risk Management Infrastructure Asset Management Software Risk Management License Risk Management Risk Management Consulting Risk Management Audit Corporate Risk Management Internal Software Audit Network Software Audit Proactive Software Audit Software Asset Management Software License Management Software License Agreement Risk Exposure Internal Audit Risk
Definition of Software Copyright Software, specifically the copyright in the intellectual property itself, is owned by the author or copyright holder (most often the software company that produces the software). When one purchases software, that entity is actually only purchasing a the right to USE the software application in compliance with the End User License Agreement that is included or associated with the software product.
Definition of Software Piracy The unauthorized copying, use, distribution or loading of software. As a rule, software applications are licensed for use on a single computer, or in some cases, a single geographic site (business, building, etc). The use of software is governed by a license, or contract, that is dictated and enforceable by the copyright owner (the software company). Piracy is defined as either the violation of the license, or the violation of the software company's federal copyright.
Sadien's Notes on Software Piracy: "Intent" has little to do with piracy, per se. "Unintentional" or "accidental" piracy is still piracy, and a cause of action in federal court. Further, not knowing about piracy within your organization or business offers absolutely no defense.
There are some who argue the semantics of "intent" with regard to copyright infringement. And, it is true that "intent" can definitively play a role in the prosecution of both civil and criminal actions regarding copyright. It is however, irrefutable that "intent" is not an absolute defense. Parallel examples of law would be "capital murder," the intentional act of homicide, versus "manslaughter," the accidental act of homicide. Both are crimes. Both are "bad." And, as with piracy, it is best to avoid the potential legal ramifications, all together.
An "apples to apples" example of copyright law and "intent" with regard to software piracy, is the comparison of software piracy to a car accident. If you cause a wreck, you are liable for the damages, even though you did not "intend" for the wreck to occur. If unauthorized software is loaded on your computer(s), you are liable under federal law.
Definition of Software Copyright Infringement
Definition of Gray Market Software Piracy The unauthorized copying, use, distribution or loading of software, that is contrary to it's purpose and/or license. Common examples of gray market software piracy are academic software used for non-academic purposes; OEM software distributed as retail software; and Not For Resale software sold as standard retail applications.
Definition of Corporate Software Piracy Commercial based theft of software via unauthorized copying, imaging, distribution or hard disk loading. Commerical Software Piracy can include "gray market software piracy."
Definition of Softlifting A term, playing on the word "shoplifting," used to describe software piracy.
Sadien's Notes on Softlifting: The term "Softlifting" is propagated by the software industry to draw attention and add gravity to the problems associated with software piracy. It is not a legal term.
Definition of Accidental Software Piracy or "Accidental Piracy" The erroneous notion that "not knowing" about piracy within your organization offers a defense to a claim brought against you for violations of copyright.
Definition of Business Software Alliance (BSA) (www.bsa.org) The Business Software Alliance is a Washington, DC based, nonprofit trade organization that represents software companies like Microsoft, Adobe, Symantec, Network Associates, Autodesk and Apple, as their advocate via contractual power of attorney.
Sadien's Notes on the Business Software Alliance (BSA): The BSA is primarily a "watchdog" group, that advocates in the best interests of software companies, exclusively. All of their revenue comes from the software companies they represent, and the money they derive from settlements and/or judgments against the companies they prosecute.
The BSA is formidable. They hire top-notch staff attorneys, who are extremely knowledgeable in copyright and software. Through course, they have "set the bar" when it comes to devastating the businesses they target.
The best way to beat the BSA, is to simply not use unauthorized copies of software and be able to prove such, by performing your own audits. By proactively conducting internal audits within your organization, and implementing a software asset management system, you strip away all of the BSA's scope of authority and power.
The Business Software Alliance (BSA) only has as much authority, as you give them.
Definition of Software & Information Industry Association (SIIA) (www.siia.net) Like the Business Software Alliance (BSA), Software & Information Industry Association (SIIA) is a Washington, DC based, nonprofit trade organization that represents software companies like Microsoft, Adobe, Symantec, Network Associates, Autodesk and Apple, as their advocate via contractual power of attorney.
Sadien's Notes on the Software & Information Industry Association (SIIA). As with the BSA, best way to "beat" the SIIA, is to simply not use unauthorized copies of software and be able to prove such, by performing your own audits. By proactively conducting internal audits within your organization, and implementing a software asset management system, you strip away all of the BSA's scope of authority and power.
The Software & Information Industry Association (SIIA) only has as much authority, as you give them.
Sadien's Notes on Corporate Software Piracy: As with standard piracy, "intent" has little to do with corporate piracy, per se. "Unintentional" or "accidental" software piracy is still piracy, and a cause of action in federal court. Further, not knowing about piracy within your organization or business offers absolutely no defense.
Definition of Freeware Software that is fully functional for an unlimited amount of time with no cost, monetary or otherwise. Freeware licenses often impose restrictions on the type of use including personal use, individual use, non-profit use, non-commercial use, academic use, commercial use or any combination, thereof.
Sadien's Notes on Freeware Freeware is not "license-free software." Your business must keep licenses on file for all applications, regardless of cost.
Freeware is dangerous, for several reasons. The most prominent issue with freeware, is the fact that often the "free" aspect of the software is restricted to personal, non-commercial use. Thus, using this type of freeware in your business would be a violation of the agreement, and a form of piracy.
Definition of Shareware Software that is limited in functionality or run-time with no initial cost. However, the purpose of shareware (also known as trialware) is to establish use and end-user evaluation of the software, until such time that the user is forced to pay for a full license.
Sadien's Notes on Shareware Like freeware, shareware is not "license-free software." Your business must keep licenses on file for all applications, regardless of cost.
Shareware should NEVER be used in a production environment.
Definition of Trialware
Definition of Concurrent License A license that permits a specified number of users to access software installed on, or controlled by, a server. In some cases, a concurrent license is only contractual, such that the end-user can only run so many copies at one time, and the end-user is responsible for managing the process.
Definition of Bootlegging Willful and wanton software piracy that is enacted by illegally distrubting hard copies of software.
Definition of Hard Disk Loading Willful and wanton software piracy that is enacted by illegally loading software onto hardware devices for distribution (like a "white box" computer).
Definition of Counterfeiting Willful and wanton software piracy that is enacted by illegally packaging and selling copies of software, with the intent of "fooling" the purchaser.
Definition of Software Cracking (or Crackz) Willful and wanton software piracy that is enacted by illegally "cracking" or "breaking" the security protocols used to protect the copyright of a software manufacturer's product.
Definition of Public Domain Software Software comes into being when the copyright holder expressly relinquishes all rights to the software. Software that is truly "Public Domain" is very rare.
Definition of Warez Software piracy websites used to illegally distribute software applications. |
 | 10 Dangerous Misconceptions about Software Licensing
"Are we compliant???" If any answer to a question about your organization's software compliance contains the words "probably," "I think," "possibly," or "I don't know," you are facing catastrophic liability. If you and your organization cannot effectively respond to an adversarial third-party inquiry within 48 hours; which includes precise inventories, an effective response letter, detailed software load locations, user access tables and cross-referenced licensing documents... you are probably NOT compliant. The only way to know that you are compliant, is to conduct certified internal audits on a regular basis.
"What are the odds we'll ever be audited?" Very high. The odds of being audited, fined, sued or bound by injunction increase exponentially with every employee you have on staff. Exiting employees are the leading catalyst for all adversarial third-party audits. Disgruntled, terminated and/or insubordinate employees can "get even" by anonymously calling toll-free numbers and reporting piracy. That agency will, in most cases, immediately follow-up with an inquiry via certified mail. In several states, the employee making the claim stands to profit greatly from various "whistle blower" laws and reward offerings. (The BSA currently offers a 1 million dollar reward for piracy information on their website, www.bsa.org)
"How would anyone know or prove we have unlicensed software?" It is your burden to prove compliancy. The adversarial third-party need only show that you PROBABLY have their software loaded within your organization. Testimony from a disgruntled employee, client, customer or student is all they need to levy a powerful argument and seek an injunction against your operation, asking that all business operations utilizing / infringing the owner's copyright be ceased until such time that the owner is satisfied.
"We may have a few unlicensed copies of software, but we're not pirating anything." Wrong. Under federal law, utilizing software without the copyright owner's permission is piracy, for which the copyright owner may sue you for up to $150,000, per violation, per computer. In theory, a single computer could cost you hundreds of thousands of dollars. And there is no consideration for whether the load is intentional, known, “accidental” or otherwise. If the software is on your computer, and it's not licensed, you're liable.
"If we're ever audited, we'll just purchase the licenses we need." Yes you will, along with paying the fines, fees and legal costs associated with defending any legal actions that will follow. Adversarial third-party auditors profit from ALL of your mistakes, oversights, “accidents” and violations. They are not on your side. They will exploit EVERY and unlicensed piece of software you control. In most cases, the adversarial auditors keep 100% of the fines allocated against you.
"Our software is freeware, OEM, and/or came bundled with our computers." "Free" software does not mean that it is "license free" software. You must be able to prove that the software is free. Additionally, most "freeware" is only "free" for non-commercial operations, or may only be "free" for a limited scope of time as a trial or demonstration copy. It is your organization's burden to prove, in writing, that the software is free for commercial use.
"I am sure we are 100% compliant." Unlikely. There is no set definition of "software compliance," therefore claiming that your organization is "100% compliant" is dangerously naive. The best course of action is to be proactive and protect your organization by maintaining best-practices, policies, internal audits and protocols that secure your ability to effectively respond to a formal inquiry within 48 hours of receiving notice from the copyright owner. In short, do not look at a future audit as "if." Be prepared to respond WHEN it happens.
"If licensing is such a big deal, why do software companies make it so easy to copy?" Because “obscure” licensing works to the copyright owner's best interests. Once your organization's operation becomes reliant on the use of their software, they are in a very powerful position to force you to pay. Federal law is entirely on their side. If you use, or have used their software, the copyright owner can make you pay, or force you to remove the software.
"Why don't software companies make their licenses easier to manage and maintain?" Making licensing difficult for you, is profitable for them. If you use their software, it is entirely your burden to produce documentation that proves you have the right to do so. In the event you are audited, and cannot produce the appropriate documentation, you will likely be forced to purchase the software again. Hence, the software company gets paid twice.
"Software compliance isn't at the top of our list... in our budget... a major issue for us... etc.." Mindsets like this are a catalyst for bankruptcy, forfeiture of your business and possibly prison. -- Cost to defend and win a copyright lawsuit: $500,000 (avg) -- Cost to defend and lose a copyright lawsuit: $500,000 (avg) + up to $150,000 (statutory), or more -- Cost to defend and settle a copyright action: $8,000 to $15,000 (avg), per violation, per computer + negative press release about case -- Criminal penalties that can be imposed by the government: Up to 5 years in prison and $250,000 fine (first offense) |
| Misconceptions About Software Piracy |
 | 10 Dangerous Misconceptions about Software Piracy
"Am I really pirating software???" If any answer to a question about your software license(s) contains the words "I don’t care," "I think," "I don’t know," or "They’ll never catch me," you are likely facing catastrophic liability. If you and you cannot effectively respond to an adversarial third-party inquiry within 48 hours; including precise inventories, an effective response letter, detailed software load locations, user access tables and cross-referenced licensing documents... you are probably NOT compliant. If you have ever intentionally cracked software, distributed software illegally, informed other on how to pirate software or used network protocol to illegally copy software... you are likely comitting a felony, and facing 5 years in prison, and a $250,000 fine. The only way to know that you are compliant, is to audit yourself on a regular basis.
"What are the odds I'll ever be audited?" High. Does anyone know about your “free” downloads? Have you ever posted anyting about software on a public website, like MySpace, Facebook or YouTube? Do any ex-boyfriends, ex-girlfriends or people you don’t trust know about your software loads? Do you know that Comcast, Charter and AT&T now monitor your downloaded files? Did you know that the BSA (www.bsa.org) offers a 1 million dollar reward for turning you in?
"How would anyone know or prove I have unlicensed software?" It is your burden to prove compliancy. The adversarial third-party need only show that you PROBABLY have their software loaded on your computer. Testimony from a disgruntled ex, client, classmate or enemy is all they need to levy a powerful argument and sue you.
"I may have a few unlicensed copies of software, but I’m not pirating anything." Wrong. Under federal law, utilizing software without the copyright owner's permission is piracy, for which the copyright owner may sue you for up to $150,000, WITHOUT PROOF THAT YOU PIRATED ANYTHING. In theory, a single computer could cost you hundreds of thousands of dollars. And there is no consideration for whether the load is intentional, known, “accidental” or otherwise. If the software is on your computer, and it's not licensed, you're liable.
"If I’m ever audited, I'll just purchase the licenses I need." Yes you will, along with paying the fines, fees and legal costs associated with defending any legal actions that will follow. Adversarial third-party auditors profit from ALL of your mistakes, oversights, “accidents” and violations. They are not on your side. They will exploit EVERY and unlicensed piece of software you control. In most cases, the adversarial auditors keep 100% of the fines allocated against you.
"My software is freeware, OEM, and/or came bundled with our computers." "Free" software does not mean that it is "license free" software. You must be able to prove that the software is free. Additionally, most "freeware" is only "free" for non-commercial operations, or may only be "free" for a limited scope of time as a trial or demonstration copy. It is your burden to prove, in writing, that the software is free for commercial use.
"I am sure we are 100% compliant." Unlikely. There is no set definition of "software compliancy," therefore claiming that you are "100% compliant" is dangerously naive. The best course of action is to be proactive and protect yourself by legally aquiring software while maintaining best-practices, policies, self-audits and protocols that secure your ability to effectively respond to a formal inquiry within 48 hours of receiving notice from the copyright owner. In short, do not look at a future audit as "if." Be prepared to respond WHEN it happens.
"If licensing is such a big deal, why do software companies make it so easy to copy?" Because “obscure” licensing works to the copyright owner's best interests. Once you become reliant on the use of their software, they are in a very powerful position to force you to pay. Federal law is entirely on their side. If you use, or have used their software, the copyright owner can make you pay, or force you to remove the software. Since the law is ENTIRELY on their side... why WOULDN’T they make it easy to copy.
"Why don't software companies make their licenses easier to manage and maintain?" Making licensing difficult for you, is profitable for them. If you use their software, it is entirely your burden to produce documentation that proves you have the right to do so. In the event you are audited, and cannot produce the appropriate documentation, you will likely be forced to purchase the software again. Hence, the software company gets paid twice.
"Software compliance isn't at the top of my list... in my budget... a major issue for me... etc.." Mindsets like this are a catalyst for bankruptcy, forfeiture of your home, and possibly prison. -- Cost to defend and win a copyright lawsuit: $500,000 (avg) -- Cost to defend and lose a copyright lawsuit: $500,000 (avg) + up to $150,000 (statutory), or more -- Cost to defend and settle a copyright action: $8,000 to $15,000 (avg), per violation, per computer + negative press release about case -- Criminal penalties that can be imposed by the government: Up to 5 years in prison and $250,000 fine (first offence) |
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