Prevent Software Bounty Hunting

One day you receive a letter inquiring about the software on your business computers. It starts politely. The Business Software Alliance invites you to do an audit and report the results of the audit to BSA. The letter then gets less polite threatening that if the audit is not done, or is done inaccurately, the group will file a legal action for the full weight of damages and penalties a court can impose. The goal is to bring the dealership to the table to negotiate an expensive settlement.

The BSA was formed by software companies to police violations of intellectual property laws.  The BSA, like others formed to police IP laws, encourages reports of copyright violations. They know that companies sometimes have disgruntled employees out to “get” the company.  Those employees act as bounty hunters and are happy to report violations of copyright laws, particularly for rewards that can range from $5,000 to $1 million, according to the BSA website.

When you buy software, either individually or installed on a computer, it comes with a long, legal list of Do’s (and mostly Don’ts) called a EULA which stands for End User License Agreement.  Most dealers and employees do not read or keep the EULA, the license key or receipt. The EULA and related receipts explain that the dealer is purchasing only a license to use the software under the terms set by the software manufacturer and that if the licensees (dealer and its employees) violate that license, they can be charged with copyright infringement.

Federal law protects copyrights.

If a dealer copies the software or uses it in a way not covered by the EULA, that can be copyright infringement. A dealer cannot transfer the software from one computer to other devices without having multiple license fees paid to the licensor.

Violations of the copyright laws can lead to penalties up to $30,000 per violation, per infringement, per device, and per software. When a dealer makes copies on many computers and devices, the potential liability can add up quickly and heavily. If there is an allegation of intentional and/or willful copyright infringement, the penalty can be up to $150,000 per violation. The copyright holder is entitled to legal fees and the case can be filed in federal court. A defense to the claims can be difficult.

Dealers should protect themselves against software bounty hunters.
  1. Establish a Computer Code of Ethics to avoid intentional penalties and train IT personnel.
  2. Make sure that all software is properly purchased and loaded as required, and purchase volume licenses for multiple devices.
  3. Ensure that licenses are up to date and apply to business use.
  4. Ensure that the dealership maintains all license key numbers and receipts.
  5. When you purchase a new computer, keep the licensing documentation and the receipt.
  6. When you purchase a used computer, make sure each software license is transferable and for those that you cannot prove are transferable, buy a new license.
  7. Periodically do audits to be sure that your software is properly licensed.

These steps are especially critical if you are thinking of selling your business. A buyer will expect the seller to provide a representation and warranty that all software is properly licensed. A breach of that could lead to indemnification claims if a bounty hunter goes after the buyer for violations of the copyright laws.