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August 19, 2011

Microsoft Company Store Restricts Terms of Use, Leads to Licensing Confusion

Microsoft offers its employees an opportunity to buy discounted software if they agree to restrictive usage terms when purchasing from the Microsoft Company Store. In addition to the online Microsoft Company Store, employees may go to one of a few different physical locations, including one near the Microsoft campus visitor center. The Microsoft Company Store is separate and distinct from the online Microsoft Store, which is aimed at the general public.

The Microsoft End User License Agreement (“EULA”) outlines terms controlling the use of each of its products. Many of its products allow commercial use in a business setting. Although anyone can go to the Microsoft Company Store, only Microsoft employees are allowed to purchase discounted Microsoft software. These products sold to Microsoft employees are specifically restricted from use in a commercial setting, limiting usage to personal only.

Although it is unlikely that the general public could accidentally purchase software from the Company Store, some users are confused by the non-commercial restrictions for software purchased at the “Microsoft Store.” Additionally, Microsoft employees should be cognizant of potential licensing pitfalls if attempting to use any of the software in a commercial setting or if they buy software for their friends and relatives to use in a corporate setting. The terms of use on the products sold explicitly prevent commercial use.

Software licensing is a complex issue that may cause complications for consumers or businesses seeking to properly comply with licensing terms. If you are facing a copyright infringement claim from a software publisher, or simply seek information related to software compliance and licensing, you should contact experienced counsel to assist you with evaluating your rights.

August 2, 2011

Consumer Groups Urge the Supreme Court to Reconsider the Vernor Case

A number of consumer groups – including the Electronic Frontier Foundation, the Consumer Federation of America, the American Library Association, Association of Research Libraries, Association of College and Research Libraries, U.S. Public Interest Research Group, and Public Knowledge – recently filed a “friend of the court” brief asking the Supreme Court to reconsider the Ninth Circuit’s decision in Autodesk v. Vernor. Those groups are asking the Court to determine what they consider to be an important question: What is the impact of technology licensing on the First-Sale Doctrine?

The Supreme Court will determine whether it will reconsider the Ninth Circuit Vernor opinion holding that an owner of a copyrighted work may license its work and retain ownership and control over its distribution. The Ninth Circuit overturned a lower court ruling that the First-Sale Doctrine applied to software sales, and that purchasers of software licenses were entitled to transfer, distribute, or sell the software. The First-Sale Doctrine allows an owner of a copy of copyrighted work to transfer or sell the copy, unlike a license, which restricts the transferability of a copyrighted product. The consumer groups are petitioning the Supreme Court to grant a hearing to determine whether the First-Sale Doctrine applies to the sale of software, and grants the owner of the copy the right to sell, rather than a license to use the product.

The Supreme Court will evaluate whether so-called “magic words” contained in an End User License Agreement (“EULA”) undermine a consumer’s right to own and distribute a copyrighted work. These “magic words” are terms relating to licensing restrictions in the EULA. If the Supreme Court decides there is merit in the arguments set forth in the brief, it may grant a hearing to consider the Vernor case. If the Supreme Court grants the petition, it will likely set a date to hear oral arguments from each party before making a final ruling.

A new decision in the Vernor case may potentially have far-reaching implications for copyrighted works, especially software. If the Supreme Court determines that purchasers of software own a copy of the work, rather than just a license, consumers might be free to sell or transfer their copies of copyrighted works without regard to the restrictions in the EULA. The consumer groups who filed the brief argue that “after an individual copy has been sold, the first sale doctrine puts further dispositions of the copy beyond the reach of the copyright owner.”

If you are facing a copyright infringement claim from a software publisher, you should contact experienced counsel to assist you with evaluating your rights and the appropriate strategy for your defense.

April 8, 2011

Tech Companies Concerned Over Washington State Software Legislation

On April 4, the Washington state legislature passed a bill making it a violation of the state’s unfair competition laws for a business to sell products in Washington “while using stolen or misappropriated information technology in its business operations,” provided that the business first receives notice of the alleged misappropriation. The law applies regardless of whether the theft or misappropriation takes place inside the state or even inside the USA – if a company based in China engages in software piracy in China, the Washington law still affects the sale of goods inside the state.

The measure results in potential civil liability for affected companies doing business in the state, and it also enables the state attorney general to pursue civil damages and injunctive relief against violators. Unsurprisingly, the bill was heavily favored by Microsoft, one of Washington’s largest private employers, which gains a significant new remedy for the unlicensed use of its software products. However, tech companies like Apple, Dell and Motorola lobbied hard against the bill, since it effectively forces them to conduct costly due diligence into their suppliers’ IP and software-licensing practices.

Washington is not the first state to consider this kind of legislation – Louisiana passed a similar measure last year, and Microsoft is actively pursuing a state-by-state campaign to pass similar laws. However, Washington probably is the most economically significant state to pass this kind of measure. Negatively affected businesses can expect to find themselves hauled into Washington state court in the event of a violation or, if they are outside its jurisdiction, might find their product inventory located in Washington being impounded and subject to forfeiture. It also would not be surprising to see this kind of measure used as leverage against businesses in software audit-related matters.

March 18, 2011

Limewire Copyright-Litigation Woes Continue

In 2010, music-sharing website Limewire shut down amid allegations that it facilitated copyright infringement. Subsequently, a lawsuit brought by more than 30 music publishers was filed and settled under confidential terms. However, Limewire is still facing a lawsuit brought by 13 record companies, including Atlantic, Elektra, Interscope, Motown, Sony BMG, Virgin, and Warner Brothers, which is set for trial in May. (Music publishers and recording companies are able to pursue separate copyright-infringement claims based on the fact that they hold different rights -- the copyright in the composition for the former and the copyright in the actual sound recording for the latter.)

Limewire was designed to allow free file-sharing among its members, and the record labels have claimed more than $1 billion in damages as a result of those activities. In a summary judgment ruling last May, the company was found to have induced copyright infringement and unfair competition. However, discovery pertaining to the plaintiffs’ damages is ongoing, and Limewire is seeking to prove that the labels’ damages claims are inaccurate and exaggerated.

File-sharing sites have been heavily scrutinized for posting copyrighted content, and many have faced copyright-infringement claims. Owners of web sites whose users engage in file-sharing need to be aware of their potential for exposure to copyright-related claims and should take steps to prevent illegal distribution of copyrighted or pirated materials using their services.

White House Recommends New Measures to Combat IP Infringement

On March 15, 2011, the White House released its White Paper on Intellectual Property Enforcement Legislative Recommendations, outlining a number of proposals for preventing IP-rights violations and for empowering the U.S. government to more effectively enforce copyrights and trademarks, including new punishments proposed for violations.

The 20-page paper (a copy of which is available here) includes suggestions such as legislative action to include unlicensed streaming of content over the Internet within the scope of “distribution”-based copyright violations, which are felonies under federal law. The white paper also suggests extending government wiretapping authority to criminal copyright and trademark cases.

Copyright infringement matters are pursued most commonly in civil court for damages brought by copyright holders. However, the federal government increasingly is taking efforts to pursue and prosecute criminal copyright violations. These efforts have led to arrests and prosecutions, recently including a Houston man, Bryan McCarthy, who was accused of criminal copyright infringement for streaming live video feeds of sporting events on his web site. If convicted, McCarthy faces up to 5 years in jail. Extending the government’s authority for wiretapping of phone lines and web sites would grant the government more control over web content and could facilitate domain-name seizures.

However, some critics warn that excessive government authority to wiretap and seize web sites may lead to a chilling effect on first amendment rights, and a slippery slope to abuse of power. It will be interesting to see the extent to which Congress takes action on the suggestions in the white paper.

March 8, 2011

Web Site Operator Faces Jail for Copyright Infringement

The U.S government continues to take strong measures against persons accused of illegally making copyrighted material available on the Internet. In a recent example, a Texas resident named Bryan McCarthy was arrested for criminal copyright infringement following an investigation by the Department of Homeland Security’s Immigration and Customs Enforcement division, and he now faces five years in jail for posting streaming copyrighted videos of live sporting events on his web site. McCarthy operated www.channelsurfing.net – a domain name that was seized by the government – which did not directly host any content itself, but which instead embedded content from other sites. Prosecutors allege McCarthy sold advertising on his web site and profited from the copyrighted material, earning approximately $90,000.00.

Some critics claim that such charges do not comport with U.S. legal requirements that some kind of “copying” must occur in order to support a claim for copyright infringement. (It appears that no videos were hosted directly from any computers owned or controlled by Mr. McCarthy.) Additionally, some argue the seizure of domain names under such circumstances has questionable legal support and could implicate free speech rights if the associated sites are not directly distributing copyrighted material.

Web site owners engaging in posting or embedding material that may be copyrighted must be vigilant in preventing the use of their sites for illegal activity. If in doubt about the use of copyrighted materials, it is advisable to seek legal counsel.

February 23, 2011

Sony Threatens to Ban Copyright Infringers From PS3 Services

In February, Sony posted a notice on its official PlayStation blog threatening to permanently ban users from the company’s online PlayStation services if those users deploy circumvention devices or software to “jailbreak” their PlayStation consoles, thereby enabling those consoles to play pirated or otherwise unauthorized game software. Sony considers such activities to be a violation of the PlayStation software license agreement and a breach of the anti-circumvention provisions of the Digital Millennium Copyright Act (DMCA). The announcement represents the latest in a series of anti-PlayStation-jailbreaking actions by Sony, which previously sought a temporary restraining order against hackers who published a how-to guide for PS3 jailbreaking.

Hardware and software tools used to overcome encryption or access-control functions in software can constitute violations of the anti-circumvention provision of the DMCA. That provision allows for civil and, in cases of willful conduct, criminal penalties for users found to have violated its terms. The court also may grant necessary injunctive relief and may apply punitive and actual damages in response to profits received as a result of the infringement, in addition to attorney’s fees for the copyright owner.

Although Sony’s lawsuit against the hackers is ongoing, Sony was granted an inspection of the defendants’ hard drive and the right to remove any circumvention devices found. The hackers’ web site also was ordered to be removed from YouTube. If Sony ultimately prevails against the hackers, it may seek civil damages in addition to the injunction relief already granted.

February 7, 2011

Congress Considering Legislation To Create Internet Kill Switch

As Egypt’s government seized control and cut off that nation’s access to the Internet last week, U.S. Senator Joseph Lieberman reintroduced the “Protecting Cyberspace as a National Asset Act of 2010” legislation, commonly referred to as the Internet Kill Switch Bill. Although the timing unintentionally coincided with the events in Egypt, sponsors of the bill have no intention to abandon the legislation.

The bill is designed to grant the government power to disable the internet in the event of a cyber emergency. The Internet Kill Switch Bill expands the scope of the Communications Act of 1934, which authorized the government to eliminate access to communication. The legislation will empower the President with authority to work with Internet service providers to shut down access to critical infrastructure in the event of an emergency, although it is not yet clear what circumstances may prompt such an action. Proposed language precludes judicial review of the government’s designation of vital Internet and computer systems subject to the Act. Homeland Security would have the authority to establish a list of vital systems and assets that would be affected by the Bill.

Especially in light of the recent events in Egypt, however, there may be a greater likelihood that this legislation will meet stiff opposition in Congress. Moreover, even if it were to be passed in its present form, heightened public sensitivity to the issue would seem to guarantee legal challenges.

January 20, 2011

China Makes Moves to Crack Down On Software Piracy

Chinese officials reportedly have arrested nearly 4,000 people in connection with software piracy allegations and have ordered nearly 200 web sites to remove content believed to constitute copyright infringements. Some Chinese web sites have replaced unauthorized content with deals from labels like Sony and Warner Brothers, but these web sites are struggling with the expense to acquire legitimately licensed movies and music. In addition, recent investigations into approximately 2,000 cases of copyright infringement may have a monetary value of $350 million. Chinese officials say they expect their campaign against software piracy to last through May, but U.S. officials expect the process may extend well beyond that time-frame.

Software piracy within the context of U.S.-China relations was an important discussion point during Chinese leader Hu Jintao’s recent visit with President Barack Obama, as it has been in past meetings.” The United States has been pressuring China – host to many hotspots of copyright infringement, where counterfeit software, video games, music, and movies are produced – to enforce copyrights and trademarks to prevent software piracy and counterfeit goods from mass production.

The new steps taken by the Chinese government indicate that China is at least serious about appearing to prevent IP infringement within its borders, though time will tell whether recent reported efforts are for the purpose of gaining short-term leverage in trade discussions or are indicative of meaningful, lasting reform.

December 27, 2010

Supreme Court Upholds Ninth Circuit Ruling Limiting First-Sale Copyright Doctrine

Omega sued Costco for copyright infringement, alleging Costco purchased heavily discounted watches from unauthorized resellers in Europe. Costco defended against the copyright claims by invoking the First Sale Doctrine, which allows a reseller to sell a copyrighted work without the original copyright holder’s permission. Omega lost in the trial court, but won a reversal before the Ninth Circuit Court of Appeals, which ruled the First Sale Doctrine did not apply to copies of a work produced overseas.

In a rare, evenly split 4-4 decision, from which Justice Elena Kagan recused herself, the U.S. Supreme Court affirmed the Ninth Circuit’s ruling. The decision has the same effect as if the Supreme Court never agreed to hear the appeal from the Ninth Circuit’s decision, and it means that some resellers like Costco may be liable for copyright infringement for selling imported, copyrighted content without authorization from the copyright owner. (Interestingly, Omega began stamping a small copyrighted design on the back of its watches in 2003 for the specific purpose of allowing it to bring copyright suits in U.S. courts.)

This case represented an opportunity for the Supreme Court to interpret the range of the First Sale Doctrine, and it could have impacted copyright infringement lawsuits significantly if it had become binding. However, because the ruling was made by a split decision, it does not necessarily affect cases outside the Ninth Circuit. It also remains to be seen if subsequent lawsuits – especially those not presenting a conflict-of-interest problem for any of the justices – will reach the Supreme Court and result in an authoritative ruling on the First Sale Doctrine.

In the meantime, resellers of copyrighted content should work closely with counsel to explore the extent to which the Ninth Circuit’s ruling may apply to their activities.

U.S. Funds World-Wide IP Infringement Enforcement

The United States government has earmarked money for intellectual property enforcement education and training for many foreign nations. Countries including China, Brazil and several located in sub-Saharan Africa as well as Interpol will work with U.S. officials to collaborate in the delivery of IP rights-protection training.

The projects being funded have diverse aims. One Latin-American program will focus on training judges from Peru, Chile, Brazil, Argentina, Paraguay and Uruguay regarding digital copyright piracy crimes, while another in that region will be directed at combating the sale of counterfeit pharmaceuticals. China – which has been devoting increasing effort to IP enforcement in response to rampant piracy and counterfeit-goods problems within its borders – will be participating in three different, regional programs providing training for judges, prosecutors and other enforcement officials and also aiming to strengthen regional cooperation. In another project, U.S. Department of Homeland Security officials will be working with Interpol to deliver training workshops for developing countries.

The U.S. government continues to fund initiatives to protect intellectual property abroad and to pressure foreign governments to actively prevent copyright infringement and software piracy. With IP rights-infringement issues generally much more prevalent in Asia, Latin America and developing countries, it is hoped that such programs will help to thwart copyright infringement and to reduce the availability and production of counterfeit goods.

December 10, 2010

XBox Player Escapes Criminal Charges for Cracking Gaming Codes

On December 2, 2010, criminal charges were dismissed against a defendant in California who was facing up to 10 years in prison for running a business circumventing security measures for Xbox gaming systems. Matthew Crippen had been charged with two counts of breaching anti-circumvention provisions in the Digital Millennium Copyright Act (DMCA) by modifying gaming consoles to play pirated games.

The DMCA contains prohibitions against circumventing software security protocols designed to prevent the use of unlicensed software. A person may defend against copyright infringement claims by asserting the “fair use” defense, which allows the unauthorized use of copyrighted materials under certain limited circumstances, such as writing a news article or parody, or reverse engineering computer technology. However, the judge ruled Crippen could not use the “fair use” defense in the criminal trial.

This might have been a landmark case for DMCA criminal charges having been brought against a person accused of modifying a gaming console to play pirated games. If the court had found Crippen guilty, he faced up to five years for each violation of the DMCA. However, the judge noted serious flaws with the case, and prosecutors ultimately withdrew the charges.

This case nevertheless could impact the way the government deals with all software piracy and alleged copyright infringement. Many such allegations currently come in the form of civil claims from the Business Software Alliance (“BSA”) or Software & Information Industry Association (“SIIA”) on behalf of software publishers. It will be interesting to see if the government begins to pursue criminal charges more frequently in cases where the BSA or the SIIA might otherwise have been the main protagonist.

October 8, 2010

Using Social Networking Sites in Commercial or Legal Contexts Can Be Hazardous

Social networking web sites have become an emerging conduit for small companies to recruit and conduct business. However, while some companies find this to be a successful means to expand business opportunities, others, such as Mark One Financial, have discovered that use of social networking for some purposes carries risks. Mark One attempted to collect debt from a Florida individual who had fallen behind on auto payments by contacting her friends and family members on Facebook. It is now facing a lawsuit for abuse and harassing attempts to collect debt, including a request for an injunction against using Facebook as a means to contact its clients.

This is one of the few cases to date in which a court has been asked to block a business from using a social networking site to communicate to consumers or their friends or family members. However, based on the broad reach of such sites in modern society – and on the wealth of personal information that some users publish on those sites, either intentionally or unwittingly – we expect to see an increasing number of such cases in the future. Business owners take care in communicating with and soliciting business from consumers social networking sites.

However, it also is important for consumers to protect their privacy on such sites in order to prevent unwanted communications from businesses or potential legal entanglements. District Attorneys’ offices routinely check sites such as Facebook or MySpace after arresting or charging a person with a crime in order to investigate his or her background, with prosecutors using the information, pictures, videos, and friend lists as means to gain information about the person arrested. Other attorneys also use the networking sites in order to glean information about opposing parties and witnesses in family law and civil litigation matters.

If in doubt about how to protect privacy or to legally conduct business using social networking, contact an experienced attorney to assist in navigating any potential pitfalls.

September 20, 2010

Facebook Claims Ownership of “Book” and “Face”

Social networking giant Facebook recently filed a trademark infringement lawsuit against Teachbook.com, an upstart networking web site for teachers. Although Teachbook obtained a trademark in 2009, Facebook’s suit claims its incorporation of the word “book” constitutes unfair competition and trademark dilution. Teachbook denies the trademark infringement claims and asserts that Facebook does not own the word “book.” Teachbook also has vowed to vigorously defend itself against Facebook’s claims.

Evidently completing the thought initiated by the Teachbook case, Facebook also is seeking to trademark the word “face.” However, that application is being opposed by Aaron Greenspan, former roommate of Facebook founder Mark Zuckerberg, who claims Facebook was his idea and has paperwork with the U.S. Patent & Trademark Office in an effort to prevent Facebook from obtaining the registration.

Facebook’s quest to obtain ownership of the words “book” and “face” may have far-reaching implications for many existing businesses using those words in their company or product names. If successful, Facebook’s efforts also conceivably could initiate a tidal-wave of trademark applications seeking registrations for common words. The success of those applications likely would depend heavily on the goods or services proposed to be associated with the marks, with the likelihood of a registration increasing in proportion to the extent to which the idea embodied by the trademark differs from those goods or services (for example, think of the word “apple” used to market computers and personal electronic devices).

As with most Facebook-related legal issues, the unfolding of these recent developments should be very interesting to watch.

August 18, 2010

Lawsuits Against Gripe Sites Can Backfire

Web sites catering to online reviews of businesses – including sites dedicated to reviewing (some might say attacking) only one business – have created public relations nightmares for many businesses. In some cases, the targeted businesses perceive the content of the gripe sites to be defamatory or infringing of the target’s intellectual property rights. However, while it may tempting to threaten legal action against these sites, companies are learning that such action may cost more than it achieves and may risk further bad publicity as a result of so-called oppressive prosecution. A good example is the recent case of Career Agents Network, Inc. v. CareerAgentsNetwork.Biz.

Career Agents Network, Inc. (“CAN”) brought suit against a former customer, Lawrence White, who had developed a web site called careeragentsnetwork.biz solely to warn prospective customers against doing business with CAN. The lawsuit included claims under the Anti-cybersquatting Consumer Protection Act, alleging that White registered the web site in bad faith in an effort to profit from his use of CAN’s trademark. The complaint also included a more traditional trademark infringement claim under the Lanham Act. White prevailed, with the court finding that his site was simply meant as a forum to express dissatisfaction with CAN and not to reap profit by stealing potential customers from CAN. As a result, White not only succeeded in obtaining a dismissal of CAN’s claims but also received an award of attorney’s fees – the court determined CAN had brought the suit in an oppressive manner and that its claims were unfounded.

The case should be viewed as a warning to businesses to think carefully before retaliating against gripe sites and online critics with legal action. Litigation is always an expensive proposition, but the costs in this kind of scenario are augmented by the reputational damage that can result even from sending a threatening letter to a targeted business. Such letters have a habit of being posted on the sites in question and of further exacerbating the existing publicity problem.

A better solution, when possible, is usually to engage critics in an effort to resolve a negative experience through customer service efforts. Barring that, an effective search engine optimization strategy can help to bury search results pointing to gripe sites and to keep the majority of potential customers from encountering the negative content. A knowledgeable attorney can assist with those efforts and can provide an effective battle plan when informal efforts are found to be ineffective.

August 10, 2010

Victory for Consumers: Library of Congress and 5th Circuit Clarify Exceptions to DMCA

The Library of Congress and the 5th Circuit Court of appeals both recently made significant strides in expanding and clarifying the exceptions to the anti-circumvention provisions of the Digital Millennium Copyright Act (“DMCA”).

In its regular 3-year review of exemptions to the DMCA’s anti-circumvention exceptions, the Library of Congress, which includes the U.S. Copyright Office, added to the list so-called “jail breaking” of wireless telephones, most notably Apple’s iPhone. iPhone users are now able to modify, unlock, and use previously unauthorized applications on their cell phones. Apple had argued that modifications to its iPhones constituted unauthorized modification of its software. However, the Library of Congress emphasized that iPhone owners paid for the product and should have the right to modify their phone for their personal use. The new DMCA exceptions also include:

  • Circumvention of security measures in DVDs, when short portions of the content is to be used for “educational uses by college and university professors and by college and university film and media studies students
  • Circumvention of security measures in video games accessible on personal computers for certain testing and security-related operations
  • Circumvention of security measures in computer programs protected by out-of-date hardware-based security accessories (also known as “dongles”)
  • Circumvention of security measures in ebooks for the purpose of making the content accessible for readers with disabilities, provided that no other edition of the work allows accessibility-related modifications

In MGE UPS Systems Inc. v. GE Consumer and Industrial Inc., the 5th Circuit further clarified the overall scope of the DMCA’s anti-circumvention provisions in ruling that bypassing protections on copyrighted software in order to access or use the product does not necessarily trigger a DMCA claim. MGE had sued GE for copyright infringement, claiming GE hacked the software security key to access its copyrighted software. The Court held that simply viewing or using copyrighted software does not constitute unlawfully accessing copyrighted materials in violation of the DMCA, and that a copyright owner’s software security protections must protect against a right specifically granted Act. That holding also might be significant for some companies faced with allegations of unlicensed software use by organizations such as the Business Software Alliance (BSA) or the Software & Information Industry Associations (SIIA).

The DMCA is multi-faceted legislation, with some provisions that historically have been good for small to medium-sized businesses and some that have been less positive. These recent developments represent a net improvement to the effect of the law for most consumers of digital media.

July 8, 2010

Dave & Buster’s Busted

The FTC recently approved a settlement with Dave & Buster’s, Inc., a restaurant and arcade chain, for the largest recorded data breach of private credit card information.

The hackers responsible for stealing credit card data from Dave & Buster’s gained access through an unsecured wireless Internet router, or wireless access point (WAP). The hackers had sought out businesses with no Internet security password and, after gaining access to the networks, had obtained credit card numbers and customer data in real time as the cards were swiped.

There is a growing trend for the FTC to seek civil damages for lax Internet security in order to encourage businesses to provide additional protective measures for online data, including wireless Internet routers. In addition to the monetary damages Dave & Buster’s will pay to settle the claim related to this data breach, the company will be required to maintain an information security program and to have its security systems professionally audited semi-annually.

Basic information security guidelines can help to prevent this type of breach. It is important to secure passwords, to enable firewall protection, and to institute additional, appropriate security safeguards to protect consumer information. This is especially important when dealing with sensitive financial data.

May 24, 2010

Timely Registration is Critical to Copyright Protection

Protecting copyrighted materials should be a core concern among people and businesses that develop original creative works, regardless of whether those works are published or unpublished. Timely registration with the U.S. Copyright Office is critical to protecting a copyright and to being able to obtain the full measure of legal remedies against infringers.

The requirements for registering copyrightable material, such as company brochures, advertisements, software, or other original works, are set forth in Chapter 4 of the U.S. Copyright Act. After those materials are created, the copyright applicant generally must submit an application for registration, a sample deposit of the work, and the appropriate fee to the Copyright Office to begin the registration process. Chapter 4 of the Copyright Act also provides that failure to take the steps necessary to obtain the registration may result in potential infringement actions being dismissed. In addition, even if the copyright in a work has been registered prior to filing suit, it is important to keep in mind that Chapter 4 further requires that a copyright be registered within 3 months after the initial publication date in order for the owner to be able to obtain statutory damages in litigation under the Copyright Act. Therefore, seeking an expedited registration for an infringed work may allow the plaintiff into court, but if the copyright registration date is more than 3 months after the date the subject work was published, that plaintiff will be deprived of the statutory damages remedy and forced to spend additional resources in an effort to prove actual damages, which, in many cases, may be negligible.

All owners should register their copyrights with the U.S. Copyright Office within the timeline provided under the Copyright Act in order to help safeguard the ability to effectively enforce those copyrights.

March 4, 2010

What is the BSA’s Definition of Software Piracy?

“Software piracy” is a favorite catch-phrase used by the Business Software Alliance (BSA) and the software companies it represents. Most people understand software piracy to involve the intentional copying and, in many cases, distribution of copyrighted software to third parties without permission of the copyright owner. Understandably, the term has extremely negative connotations, and most businesses will go to great lengths to avoid behavior that could reasonably be branded as “piracy.”

Unfortunately, the BSA’s definition of software piracy is considerably more broad than the common understanding and may be confusing to companies audited by the BSA who have never knowingly copied unlicensed software. During a BSA-initiated software audit, the BSA requires the businesses it targets to provide dated proofs of purchase for each software product installed on their computers. There are specific types of documentation the BSA accepts, and it usually rejects purchases from E-bay, Amazon, or similar Internet-based re-sellers. Therefore, if a company unknowingly purchases software from an unauthorized retailer or simply is unable to find receipts for products it purchased, the BSA will penalize the company as though it intentionally violated copyright law and “pirated” the software.

Worse, typically after an audit the BSA will enter into settlement agreements with the companies it accuses of copyright infringement. Unless a provision for confidentiality is included in a settlement agreement (usually only in return for a significant additional amount to be paid at settlement), there is nothing to prevent the BSA from publishing a press release identifying the targeted company, the software products involved, and the settlement amount, and otherwise making express or implied statements that the company is guilty of “software piracy.”

As a general rule, companies should keep all receipts from software purchases indefinitely, and they should purchase software only from authorized dealers. Additionally, recipients of letters from the BSA should seek experienced legal counsel to assist with the audit and to help negotiate a resolution that may prevent the unnecessarily negative publicity that can result from the BSA’s overzealous application of the “pirate” label.

About Keli Johnson

This page contains an archive of all entries posted to Business and Technology Law in the Keli Johnson category. They are listed from oldest to newest.

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