Software watchdog pounds local engineering firm

BY IAN MYLCHREEST
BUSINESS PRESS

Henderson-based Broadbent & Associates paid $228,000 to the Business Software Alliance to settle claims that it was running unlicensed software on its computers.

The BSA, an industry watchdog, is funded by major software makers, including Microsoft, Adobe and Apple.

Its information typically comes from whistle-blowers who include disgruntled former and current employees at companies charged with violations.David Majors, the alliance's senior enforcement attorney, said the group wants to make an example of illegal software users.

Broadbent cooperated with the software alliance, the industry-funded watchdog said in a statement, and took immediate steps to ensure licensing compliance while strengthening its software management practices.

Details of the company's violations were not available, and the software association refused to identify the products that were misused or what actually occurred.

Broadbent executives declined to comment beyond releasing a statement that accepted responsibility for the violations.

"Our company respects the intellectual property rights of third parties just as we expect third parties to respect our rights," said Broadbent President Rob Miller. "We are disappointed that the BSA chose to create unnecessary and inappropriate issues by issuing the press release."

The software alliance typically sends strongly worded warning letters to potential users of unlicensed software, said Melise Blakeslee, a Washington-based attorney with the law firm of McDermott Will & Emery. "Those letters are pretty aggressive," she noted.

Blakeslee was not involved in the case but handles similar complaints leveled against software users.

She generally advises clients to cooperate because they are typically in the wrong. Cooperation, she said, reduces the size of a settlement.

Lawyer David Majors, the software alliance's senior enforcement attorney, said the organization does not launch investigations without a strong reason.

"Our information is pretty solid," Majors noted. "We also work with our member companies to check out the claims before we make allegations."

Software makers often require businesses using servers and networks to allow them to inspect their offices to ensure their products are not being used illegally. The practice is typically a part of purchase contracts.

Blakeslee says cooperation does not mean that a company is admitting any wrongdoing.

"My aim is to get my client to pay as little as possible," Blakeslee said, noting that federal law permits fines of as much as $150,000 per offense.

Other lawyers who have shepherded clients through the process agree that clients should cooperate even if a violation is accidental.

Snell & Wilmer attorney Wendy Neal, said the association typically seeks fines totaling triple the cost of licensing fees from offenders who cooperate. As a result, Neal estimated that Broadbent must have used about $70,000 worth of unlicensed software.

Money collected from such fines does not go to the software maker whose product was used illegally, but is returned to the software alliance to continue its worldwide crusade against piracy.

In addition to paying the money, any firm settling with the organization can expect to garner negative publicity.

In some cases, the business using the product might not be the illegal user.

"Sometimes, the problem is with an outsourced IT provider," Blakeslee notes.

Lionel Sawyer and Collins Attorney Greg Gemignani, who has sued on behalf of Microsoft for copyright infringement, said that providers, particularly small providers, will often use the same licenses repeatedly.

"They sometimes sell 300 percent of their inventory," he said, laughing. That means they have used a single disk to install software on different machines. Even when users think they have bought a valid copy, they are technically pirating the software.

Gemignani adds that software makers are generally lenient with users who thought they were doing the right thing.

But Blakeslee notes that federal law provides for strict liability. Even if a company was ignorant of the use or the software was installed by a malicious employee, the company is still on the hook for the illegal usage.