Pub. 3 2013 Issue 2

16 AUTOMOBILE DEALER NEWS ILLINOIS www.illinoisdealers.com T here are several trade associations representing software publishers in the business of developing and marketing a variety of computer software products (“Trade Associa- tions”) whose mission is in large part policing the use of computer software products in the business community. These rade Associations, represented by law firms which have depart- ments dedicated to enforcement of Trade Association members’ legal rights (i.e., under federal law, the Copyright Act), rely on informants to identify potential violators and their usage of unli- censed software products. These informants may be disgruntled employees or individuals who have “inside knowledge” and wish to trade their knowledge for cash as part of a bounty system cre- ated by certain Trade Associations. In short, once a Trade Association becomes aware of a prob- able violation, a Trade Association lawyer will initiate a series of threatening letters to the business owner demanding that, in lieu of litigation, a software audit be conducted to identify all sus- pected software products in use for which licenses may not exist. The threats are backed by statutory damage provisions which, under the Copyright Act, allow for recovery of up to $30,000 per infringement (if the infringement is found to be “nonwillfull”) and up to $150,000 per infringement (if willfulness is found). Once the audit results are made known, the Trade Associa- tion will most often enter into settlement negotiations wherein the Trade Association will demand that the business owner pay the retail costs of each unlicensed software product found to exist at the business plus a multiplier of 2x, 3x or 4x these costs in lieu of being subjected to the statutory damage provisions (yes, it does sound like extortion) plus attorneys’ fees and costs incurred by the Trade Association in any settlement. So for example, if the While it may be tempting to load computer software on multiple computers serving your dealership, it may be costly to find out that the software license “agreement” which accompanied the actual software may not permit multiple usage. Unauthorized Reproduction of Computer Software Products BY GORDON D. SCHOLTE , FERRUZZO & FERUZZO, LLP