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Have You Violated Your Software License?

It is very likely that you are reading this e-mail through Microsoft Outlook or some other e-mail based software program.  These days, it is rare to go a day without utilizing some software program.  Most of us use a computer every day at our jobs.
 
However, we probably don’t realize that the software we use, whether it is for typing documents or formatting a spreadsheet, has been licensed to us.  Take Microsoft Office for example.  We don’t actually own our respective copies of Outlook or Word or Excel.  We simply have purchased a license from Microsoft to use the software for these programs.
 
The reason companies like Microsoft issue licenses is to protect their intellectual property.  There is value in the software.  If they gave away copies for free or sold the software to only one person, it would ruin Microsoft’s business.  That is why software companies require any organization—a corporation or a nonprofit—to purchase licenses for each one of their users, and register those users with the software company.
 
In the past, software companies enforced their licensing rights by requiring you to complete a paper application and to mail it back to the software company.  Although this created a record of your license for the software company, it was difficult to enforce.  For starters, the organization purchasing the software actually had to complete the paperwork and return it to the software company.  If the software company didn’t know you purchased a license, they couldn’t enforce it.  Additionally, even if you did register, it was unlikely that a software company would ever conduct an audit to determine whether you had more users than permitted licenses.
 
Things are different today. Now, most software companies require an online registration of the software and its license. Online registration makes it easier for software companies to track organizations’ usage. In turn, this is making it easier for software companies to penalize organizations that violate their limited number of licenses.

For software license violations, the penalties can be quite severe.  You are violating the Federal Copyright Act.  Under the Act, you can be assessed civil fines or criminal sanctions, including possible jail time.
 
To make sure that you aren’t at risk of violating your software licenses, keep track of how many people are licensed to use the software. If you have violated this number or are close to violating it, make sure to purchase additional licenses. If the software company detects your violations before you do, you may have to pay more than the cost of the license.
 
If you have questions regarding software licenses, contact a member of our Emerging Technologies Practice Group.  Our Group can assist with negotiating licensing terms to, hopefully, avoid the enforcement issues mentioned above.