OUR THOUGHTS ON:

Software Piracy and the Business Software Alliance

Tax|Automobile

By Jackie Emert

The Business Software Alliance (the "BSA") is a nonprofit, self-funded alliance that advocates for enforcement of anti-piracy laws. The BSA is not a legal enforcement agency. Its main threat is that of civil litigation due to copyright laws. The BSA represents key software industry players such as Microsoft, Adobe and Apple.

Surprisingly, more than one out of every three copies of software installed worldwide is pirated. Most BSA investigations begin with a tip from a disgruntled current or former employee. The BSA offers these tipsters rewards of up to $200,000 for information regarding unlicensed software.

Dealerships are prime candidates for BSA action. The BSA has pursued enforcement action against several dealers with settlements approaching $1 million. On March 7, 2012, the BSA announced a settlement with the Alexander Automotive Group in the amount of $325,000 for unlicensed copies of Microsoft software. Read the full article, "Tennessee Automotive Dealer Pays Heavy Fines."

Not only are the fines steep, but the BSA website paints offenders as thieves, which can obviously lead to negative publicity. The majority of the time, the crime is unintentional. Dealer executives usually have limited technology experience, and software licensing rules can be complicated. Employee practices are also a prime cause of software piracy. Often, executives are unaware that employees are sharing accounts that are not allowed in accordance with the license. Nonetheless, ignorance is not an acceptable excuse for non-compliance. The BSA will also require annual full license audits and require all employees to sign a software code of ethics.

There are telltale signs that copyright infringements exist, and action needs to be taken today to protect dealerships. The use of Microsoft Office 2003 or earlier versions is a huge red flag. The 2003 version can still be installed as many times as you want, on as many computers as you want. The BSA requires proof of purchase (i.e., receipts) for each copy of installed software. An invoice is not enough. Other signs of piracy include using custom built or "white-box" PCs and purchasing software licenses from the internet (i.e., eBay).

Executives are driven to save money. On occasion, cutting corners to cut cost will not have any negative effects. If cutting corners makes you noncompliant though, problems regarding piracy can snowball, and the fines and negative publicity will greatly outweigh any cost savings associated with noncompliance.

Stay tuned for "what to do if contacted by the BSA."

© 2012 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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