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Letter to the editor

The software scare

Busy small-business owners better pay attention to software agreements. Otherwise, they may pay.

WASHINGTON

Michael Gaertner worried he could lose his company. A group called the Business Software Alliance was claiming that his 10-person architectural firm was using unlicensed software.

The alliance demanded $67,000 - most of one year's profit.

"It just scared the hell out of me," Gaertner said.

An analysis by the Associated Press reveals that targeting small businesses is lucrative for the Business Software Alliance, the main copyright-enforcement watchdog for such companies as Microsoft Corp., Adobe Systems Inc. and Symantec Corp.

Of the $13-million that the BSA reaped in software-violation settlements with North American companies last year, almost 90 percent came from small businesses, the AP found.

BSA's leaders say they concentrate on small businesses because that's where illegitimate use of software is rampant.

But software experts say the picture has more shades of gray. Companies of all sizes inadvertently break licensing rules, partly because the industry has saddled its customers with complex licensing agreements.

In Gaertner's case, employees had been unable to open files with the firm's drafting software, so they worked around it by installing programs they found on their own, breaking company rules, he said. And receipts for legitimate software had been lost in the hubbub of running his company.

"It was basically just a lack of knowledge and sloppy record-keeping on my part," said Gaertner, who got a settlement that cost him $40,000.

Many BSA audits originate when a whistle-blower reports that a company is brazenly copying one program onto multiple PCs. But there are ways to get in trouble that do not begin with intentional cheating. For example, if a computer gets handed down from one person in an organization to another, software on the machine needs to be deleted unless the company has multiple licenses for it. The situation is further complicated because licenses vary. Some programs can be shared on multiple computers or used by the same person on a home and office computer.

Multiply such oversights by dozens of software programs, and suddenly a BSA audit can lead to a charge of big-time piracy.

"They call it something awful, but sometimes you grow so fast, you can't keep control of everything," said Mike Lozicki, president of MediaLab Ventures LLC of Tampa, which paid the BSA $125,000. Lozicki said 12 percent of MediaLab's software was deemed out of compliance. "It was some really obscure stuff."

How it works

The crime: Companies don't keep up with licensing agreements, perhaps passing a computer from one employee to another without buying new software. (Or worse, copying software onto multiple machines.) They might just lose track of receipts.

The catch: The Business Software Alliance asks unhappy employees to "nail" their bosses. It offers American whistle-blowers up to $1-million.

The punishment: Cases get costly because the BSA considers software pirated if a company can't produce a receipt for it, no matter how old it is. It typically demands at least twice the retail price of software deemed out of compliance, and charges the "unbundled" prices of software that generally comes together at a discount, like Microsoft Office.

[Last modified November 28, 2007, 01:00:17]