The $150,000 Small Business Mistake: Unlicensed Software

professional profile

February 11, 2020

by a professional from Temple University in New York, NY, USA

Unlicensed Software fines impact businesses of all sizes but can be especially devastating for small businesses. This can be an issue for the ETA / SearchFund community post deal acquisition.

So how does it work?? We're going to focus on one trade group in particular called The BSA: Software Alliance - they're a leading advocate for the global software industry. Founded in 1988 by Microsoft. Members also include Microsoft, Oracle, Adobe, Splunk, ServiceNow, IBM, Intel, Atlassian, Salesforce, and many others.

The BSA receives around 2,500 potential violations a year through its website or toll-free number.: https://reporting.bsa.org/r/report/add.aspx?src=us&ln=en-us

The million-dollar question is who is contacting them? Ironically, in some cases the whistle blowers are former employees that installed or benefited from the unlicensed software. It is important to the note that the BSA offers financial incentives to whistle blowers.

Insider awarded $10,000 bounty for reporting enterprise software piracy: https://www.zdnet.com/article/insider-awarded###-###-#### bounty-for-reporting-enterprise-software-piracy

Once an investigation is kicked off, a letter from the BSA is issued threatening millions in fines. A self-audit is then requested by the BSA in order to avoid litigation. Afterwards the lawyers get involved to work out a settlement and confidentiality agreements if applicable.

Below are quick tips of avoiding these fines: 1. Proactive Self Audit – understand the state of your IT Assets at all times 2. Purchase Licenses – if unlicensed software if found, either purchase or uninstall 3. Find Receipts - Ensure all software has associated receipts. 4. Establish a Hardware and Software Policies 5. Educate your employees 6. Contact Your Attorney - If you receive correspondence from the BSA

We are here to support the SearchFund/ETA community with technology related issues. For assistance shoot us an email at redacted let's set up a meeting and talk through it.

Informational Links: LinkedIn Video: http://www.linkedin.com/posts/nnamdiosuagwu_eta-searchfund-strategicgeneration-activity-6627564685187170304-4Yvu/

BSA settles $347,000 in damages against Australian firms that used unlicensed software: https://itbrief.com.au/story/bsa-settles###-###-#### damages-against-australian-firms-used-unlicensed-software

#StrategicGeneration #SearchFundCTO

2
9
210
Replies
9
commentor profile
Reply by a searcher
in Seattle, WA, USA
The correct answer to a BSA audit request is "No". Or, rather, no response at all. They have no legal standing and will generally just go away.

Now, that said, you should absolutely do a self-audit at that point because if they have detailed info from the whistle-blower showing a large enough dollar amount then they may bother to get a court order. In the rare case that they actually decide to go that far you've at least had plenty of notice and time to get things squared away.
commentor profile
Reply by an intermediary
from Naval Postgraduate School in Apollo Beach, Florida, USA
Great point that you bring up for all of your fellow searchers. We experienced this a few years ago when we sold a machine shop. During our management interview we asked about the software, but never thought to ask the seller if he actually owned the software. He didn't - had a bootleg copy of the software for his CNC machines. We looked pretty foolish when this came up during the due diligence when the buyer made this discovery.
commentor profile
+7 more replies.
Join the discussion