United States: What You Need To Know If You Receive A Letter From BSA | The Software Alliance

Preparing the BSA Audit Materials

BSA | The Software Alliance's primary enforcement tool is to send a threatening letter indicating that an investigation has commenced and offering to forego litigation if the target company provides a self-audit. A self-audit consists of a listing of all BSA member software running on a company's computer networks, appropriate indicia of ownership for the software comprised of dated proofs of purchase for each title. It is important to note that companies are usually under no legal obligation to cooperate withThe Software Alliance. In most instances, however, cooperation will yield the most cost effective resolution. But, that is not necessarily always the case.

Cooperating Carefully with BSA

I usually advise my clients to cooperate with the BSA, but to do so without compromising any legal rights. Prior to submitting audit materials on behalf of clients we require that the BSA sign a contract protecting the confidentiality of the audit materials and ensuring that the audit materials will not be used in court if the case cannot be settled informally.

BSA Settlement Demands

The Software Alliance has developed a standard formula for assessing fines as part of its settlement process. It is important to note that the BSA is not a governmental entity and has no independent authority to levy an enforceable fine. The Software Alliance fines are therefore merely offered in settlement to avoid litigation and, like all pre-litigation settlement offers, are negotiable with the help of experienced counsel.

The BSA's methodology for calculating fines starts by treating as unlicensed all software products for which there is a lack of adequate documentation, including dated proofs of purchase. All proofs of purchase must be dated prior to The Software Alliance's initial letter to be considered valid evidence. Because companies may not always have access to the requisite dated proofs of purchase, the BSA's proposed fines are often based, in part, on software titles that companies legally own and properly acquired.

The Software Alliance also unbundles the products in software suites such as Microsoft Office and Adobe Creative Suite. So instead of proposing a fine based upon one copy of Microsoft Office, the BSA proposes a fine for Microsoft Outlook, Microsoft Word, Microsoft Excel, and Microsoft PowerPoint. The result is a proposed fine of $1,026 for a product that retails for $339.

After disallowing credit for valid software without dated proofs of purchase and unbundling all software suites, TheSoftware Alliance then applies an arbitrary multiple of three times the full retail price for each software title. Accordingly, one allegedly unlicensed copy of Microsoft Office will carry a proposed fine of $ 3,288.

To add insult to injury, The Software Alliance's proposed fine will include a line item for $5,000 to $7,500 to pay the BSA's attorney's fees. While this is not usually a large number as a percentage, it should be taken into account when considering potential exposure. To calculate your potential exposure, use our Business Software Alliance Fine Calculator.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.