Software licences

Software licensing – finding a balance


The issue of software licences is an increasing complex issue for many businesses. With an expanding amount of legislation aimed at preventing unlicensed uses and the active role taken by the industry group the Federation Against Software Theft (‘FAST’), keeping track of the usage of software and its licensing terms within a company is now an important part of business practice.

Businesses may experience a tendency to take more licences than they actually need to protect themselves against any possible action.

This is never more so since the introduction of the Copyright and Trade Marks Offences and Enforcement Act 2002 (‘CTMOEA’).

The first section of this Act amends amongst others s107(4)(b) of the Copyright, Designs and Patents Act 1988 (‘CDPA’) by extending the penalty for conviction on indictment for certain stated acts from two years to ten years. The stated acts are:

* making for sale or hire, * importing into the UK other than for private and domestic use, * distributing in the course of business or * distributing other than in the course of business to such an extent as to affect prejudicially the rightholder,

an article which he knows or has reason to believe is an infringing copy of a copyright work.

The CDPA also makes provision that a person commits an offence if he possessed in the course of business, with a view to committing any act infringing the copyright, an article which he knows or has reason to believe is an infringing copy. This carries with it a lesser penalty on summary conviction of six months imprisonment or a fine not exceeding level 5.

However the CTMOEA also amends s109 of the CDPA in respect of search warrants and this section does not differentiate between any of the above acts. Consequently s109 now allows that a search warrant can be issued if there is a reasonable belief that any of acts listed in s107(1), (2) and (2A) have been committed or are about to be committed and there is evidence of involvement of those premises.

In the general course of the majority of businesses, in terms of the criminal offence provisions, they are more likely to fall foul of the latter of the above two provisions, if at all, but nevertheless a criminal conviction of any sort is likely to damage the reputation of a company and with it a commodity valuable to most businesses –consumer confidence.

It is therefore understandable that many businesses may have a tendency to take more licences than they actually need to protect themselves against any possible action.

However there is of course a cost associated with each licence and so keeping what are effectively just reserve licences that are infrequently if ever used can be an unnecessary drain on a companies resources.

Audits of software compliance, in terms of avoiding unlicensed uses of software, are already a part of common business practice. It should not therefore be too big a step to turn this into a two sided process to check that over-licensing is not similarly a problem, thus gaining an acceptable balance, which is beneficial to the business as a whole.

A first step to achieving this is to analyse usage of the different types of specialist software used by the different departments of a company. For example a common accounts package is Sage, but even within the accounts department not all the staff will necessarily require access to it at the same time. It may even be possible to make savings in terms of relatively common software. For example, Microsoft programs such as, Word, Outlook, PowerPoint and Excel are generally treated as an overall package, due to the fact that they are all commonly bought together as part of Microsoft Office. However while most people will probably require access to the first two of the above programs, they will not necessarily use PowerPoint or Excel as frequently if at all. Therefore in these instances savings can be made by acquiring licences for the separate programs rather than the suite as a whole.

This of course will be an ongoing process as software needs are likely to change over time. This may seem to place an excessive burden on IT Departments but in today’s business market balance is an important element as no firm is truly in the position where cost effectiveness is not an issue.

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