The dangers of pirated software - part II

November 2013

The dangers of pirated software - part II

bouton-vers-francaisFrançois Marchand
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514.878.3228

Stéphanie Thurber
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514.878.3247

Steps taken by the Business Software Alliance (BSA)

Following a report from an informant, BSA will send the company a letter of notice. This letter states that BSA and its members are in possession of information concerning the illegal use of its members’ software and calls on the recipient to undertake an internal computer audit, provide BSA with the results and instructing the company not to modify or attempt to conceal the situation by erasing the software used without an appropriate license. It informs the company that the purchase of the missing licenses will not allow the company to avoid its responsibilities regarding past illegal uses. BSA also informs the company that it is liable for damages or serious penalties in accordance with the Act. However, BSA states in this letter that it would like to offer the company the chance to cooperate and to discuss the possibility of resolving the situation without having to resort to the courts.

A company has two options when it receives a letter of notice from BSA: ignore the letter or cooperate throughout the process and attempt to resolve the matter amicably to avoid costly litigation before the courts. The risk of not cooperating with an audit request from BSA includes the chance that the company will have to defend itself in complicated proceedings. This could include an injunction to halt all illegal software use by the company and, potentially, a court order authorizing BSA or its members to carry out the equivalent of a search on the company’s premises and computers to find and preserve the evidence of infringement of its members’ rights. If granted, such orders can cause a temporary interruption and severely interfere with a company’s day-to-day operations. Who would to take such a risk?

A letter of notice from BSA must therefore be dealt with in a serious and rapid manner, and we strongly recommend to companies receiving a message of this type from BSA to contact one of our lawyers specialized in this field of law without delay so that the appropriate steps and communication with BSA may be undertaken quickly and effectively.

The intellectual property  and litigation team at De Grandpré Chait has handled several cases of this kind and successfully conducted several negotiations with BSA. The agreements negotiated allowed clients to significantly decrease the amount they faced in terms of penalties sought and the costs relating to court proceedings.

In several cases we, together with the company, have carried out the internal computer audits required by BSA. The advantage of having the assistance of your lawyers during an internal audit required by BSA is that the audit results are protected by professional secrecy. This protection allows for an agreement with BSA that the shared audit results shall remain confidential and cannot be used as evidence by BSA in the event of  possible  proceedings against the company if an out-of-court settlement cannot be reached.

In  cases of settlements, BSA requires in particular that an infringing company commit to purchasing all the software and licenses required for its operations, establish guidelines for the installation and use of software, and allow BSA or its representatives to carry out computer audits two times per year for three years in order to ensure that commitments made are respected and that all software is used legally.

Beyond these commitments, it is BSA’s practice to demand that a company consent to BSA publicizing the settlement through a press release and on its website’s news page. The goal of this publicity is obviously to spread awareness of BSA’s determination to take the necessary legal measures to protect its members’ rights with the aim of dissuading all other infringing companies. Our team has been able to obtain the withdrawal of such publication demands, saving clients the inconvenience of negative publicity.

Be Considerate and Proactive - The advantage of preventative measures

In order to avoid these worries and bad press, as well as the risk associated with these sorts of proceedings, do not wait to receive a letter of notice before carrying out a computer audit. The good management of your company depends on it.

It goes without saying that this exercise involves more than asking your information technology staff if everything is above board. It includes listing stock of IT assets that could be subject to intellectual property rights and must include having a specialist collect and examine the associated licenses to ensure that the company is in compliance. This exercise will be followed by the establishment of guidelines on the use, management, and installation of software and other materials that will be shared with company staff. These guidelines will clearly set out the responsibilities of the IT team and the applicable penalties if they are disregarded.

It is appropriate to repeat these exercises regularly to ensure equipment compliance, and to effectively manage costs, the budget, and technological assets. This exercise may conclude with a review of the company’s contracts with its computer technology and advertising subcontractors. This review will allow you to understand your intellectual property rights and the applicable terms and conditions for the use of deliverables. Several of our clients have had the misfortune to learn, too late, that the intellectual property rights associated with custom software as well as their websites do not belong to them. A consultation with an intellectual property expert beforehand can save you a lot of disappointment.

Similarly, we would like to offer a reminder that the use of images and photos taken from the Internet or from photo banks (stock photography) is also subject to user license agreements and that non-compliance with these licenses constitutes a copyright infringement resulting in consequences similar to the illegal use of software. Stock photography companies now have powerful technological tools that allow them to monitor the Internet and remotely detect the non-compliant use of photos or images on any website. The legal consequences are the same as those previously mentioned. It is therefore advisable to obtain guarantees that the associated rights have been acquired and paid for, either from the subcontractors responsible for your advertising campaigns or your website.

In short, in law as in medicine, an ounce of prevention is worth a pound of cure. Please do not hesitate to call upon one of our team members if you have questions or wish to discuss specific situations or concerns.

 

 

 

This bulletin provides general comments on recent developments in the law. It does not constitute and should not be viewed as legal advice. No legal action should be taken on the basis of the information contained herein.

 

DE GRANDPRÉ CHAIT LLP

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