SMBs Being Unfairly Targeted for Violating Software Licensing Agreements?

Ann All

Are small businesses unfairly targeted by the Business Software Alliance (BSA), the group responsible for enforcing copyrights on software produced by companies like Microsoft, Symantec and Adobe Systems?


According to an Associated Press story in the Seattle Post-Intelligencer, nearly 90 percent of the $13 million that BSA collected from North American companies in violation of software licensing agreements last year came from SMBs.


The BSA says it focuses on SMBs because that is where much of software license abuse occurs. But IT managers and tech consultants say that SMBs simply lack the technological, organizational and legal resources of their larger brethren, which tend to be better equipped to decipher and manage complex licensing agreements.


Interestingly, a study from research firm Vanson Bourne published this past summer found that 62 percent of IT decision makers didn't know how many software licenses were in use at their companies -- and the problem appeared to grow with the size of the business.


One CEO interviewed in the AP story, who paid $40,000 to settle claims against his 10-person architectural firm, attributes his problems to "a lack of knowledge and sloppy record-keeping on my part."


"... Sometimes you grow so fast, you can't keep control of everything," says the president of another company, which paid the BSA $125,000 after 12 percent of its software -- much of it unused -- was deemed out of compliance with licensing agreements. The BSA found "some really obscure stuff," he says.


BSA critics point out that trying to make examples of such SMBs does little good, since most SMB owners have no idea they are violating copyrights. "If they were going after actual pirates, that would be a different story, but they're going after hardworking companies," says Barbara Rembiesa, head of the International Association of Information Technology Asset Managers. The group was formed to help educate SMBs about managing their software licenses -- something that Rembiesa says the industry has largely neglected to do.


Federation Against Software Theft, a British organization similar to the BSA, has a sister division that educates companies, for a fee, on how to stay compliant, notes the story. The BSA has some software-management tools and advice on the Web, and it recently partnered with the federal Small Business Administration to develop and publish educational materials about software compliance. But its critics contend these steps fall short of giving SMBs the help they need.


The U.S. software piracy rate has remained at 21 percent since 2004 -- which BSA critics say indicates that new approaches to encourage compliance may be required.


One option for SMBs is open source software, says IT Business Edge blogger Lora Bentley. Though SMBs have sometimes found open source choices confusing, major distributors like Red Hat are launching educational initiatives that may help, Bentley notes. Indeed, a company cited in the AP story that paid $90,000 to settle the BSA's claims against it ended up switching from Microsoft to open source software.


Of course, it's important to remember that using open source software doesn't mean that SMBs won't have to worry about licensing issues at all.

Add Comment      Leave a comment on this blog post
Nov 26, 2007 5:00 AM Kim Garlitz Kim Garlitz  says:
As the article indicates, the BSA is aggressively targeting small businesses accusing them of copyright infringement. If your business has been targeted by the BSA the following information may be helpful to protect your business. 1. Consult an Experienced Attorney - an experienced attorney can assist you with developing and implementing your strategy. 2. Don't Rush Out to Purchase Software - purchases made after the date on the letter will not help your case.3. Protect Confidentiality - make sure audit materials and communications will be protected by attorney-client and attorney-work product privileges.4. Cooperate Carefully - if you choose to cooperate, do so without jeopardizing your legal rights.5. Calculate Exposure - carefully consider your financial exposure before producing audit results to BSA. 6. Negotiate Aggressively - all aspects of BSA audits are negotiable including monetary and non-monetary terms.7. Avoid Over purchasing - carefully consider all options before purchasing software licenses. For additional information please visit Rob ScottScott & Scott, Reply
Nov 28, 2007 8:07 AM Shekhar Joglekar Shekhar Joglekar  says:
The other alternative for SMBs is to go with SaaS (Software As A Service) model. Not only does this option eliminate the risk associated with illegal software, but it also eliminates the entire IT cost of hardware, people, purchansing and up-keeping of the enterprise s/w. Further, monthly pay-as-you-go payment model means there are no large capital outlays at any time. Finally, the vendor has to be committed to serve better all the time as vendor can make money only if customer is happy.Shekhar JoglekarRamco Reply

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