AVOIDING THE "SOFTWARE POLICE"

Here are some of the scenarios we have recently seen which have led to significant damage settlements or awards:

A company purchases 10 licenses for a software program, and installs it on 10 office computers. Over the next couple of years, the company hires 5 more employees. The manager of the department in question is not privy to any software license restrictions, and innocently copies the program onto the new computers.

A company purchased 50 licenses for a specialized accounting program and installed in on 50 PC's. After a couple of years, the company decides to upgrade those computers, and purchases 50 new ones. Knowing that it has 50 licenses for the accounting program, it loads 50 copies onto the new computers, and transfers the old computers to another department, where they are used only for word processing. However, the company does not think to erase the accounting program - the program is never used on those programs, and "out of sight, out of mind" rules the day.

An employee purchases a game program for his own use. He brings it into the office, and allows 20 other employees to copy it onto their work computers. The employees use it to entertain themselves at lunch.

You have 50 computers that you intend to replace. The computers have word processing and spreadsheet programs on them. You hear that a local school (or church, or senior center) is looking for used computers, and you donate them. Before doing so, you erase all of the data from the programs, but you leave the programs on the computers - otherwise they would be worthless to the charitable institutions that are going to use them.

Each of these examples constitutes a serious violation of the copyright laws, and can lead to liability for substantial, statutorily-mandated damages and the obligation to pay the other side's counsel fees. You didn't do it on purpose? It was an innocent mistake? Employees who should have known better were responsible? It doesn't matter. The copyright law imposes strict liability - "fault" is not required. If you violate a copyright, you pay.

But how will anyone ever know?

The software industry has backed enforcement organizations that offer rewards to software whistle blowers, and the word is spreading. The culprits are usually disgruntled employees with a motive to make your life miserable, or technology consultants/vendors who have access to your hardware and see the prospect for some easy money.

The solution is education and training for employees at all levels, written notices that explain and prohibit copyright violations and that are distributed and posted in the workplace, and periodic software audits to match up your licenses with the software on your computers. Even if this does not solve the problem, the enforcement organizations (and courts) will generally go much easier on you if you can demonstrate that you truly used every reasonable effort to prevent a violation.

SUMMARY - There is no such thing as an innocent copyright violation. The ease with which software can be copied, and the frequent turnover of hardware, make workplace copyright violations commonplace, and the software industry has heightened its scrutiny and its willingness to make examples out of every violator.

Powell, Trachtman, Logan, Carrle & Lombardo, P.C. is a full service law firm with offices in suburban Philadelphia, PA, Harrisburg, PA and Cherry Hill, NJ. Powell Trachtman represents a variety of commercial enterprises, entrepreneurs and business executives in respect to their litigation, litigation avoidance planning, business formation, business transactions, estate and tax planning, and other needs. We are also approved defense counsel for numerous insurance carriers in matters pertaining to professional malpractice, products liability, employment practices, directors and officers liability, and many other fields. For more information, contact us at info@powelltrachtman.com and visit our website at www.powelltrachtman.com.

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