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Software Licensing: Protecting Your Organization From Lawsuits By Lisa Radcliffe, Information Systems Director The H.E.L.P. Organization "U.S. copyright laws prohibit duplicating software for profit, making multiple copies for use by different users within an organization and giving an unauthorized copy to another individual. Individuals or businesses caught with pirated software may be tried under both civil and criminal courts. Criminal penalties for copyright infringement include fines up to $250,000 and jail terms up to five years, or both." -- The Business Software Alliance It is remarkable how often software licensing is misunderstood and misapplied. Frequently, an organization will own "a copy or two," while the software is actually installed, illegally, on a dozen machines. Common violations also occur when employees blur the boundaries between home and workplace. For many seemingly harmless reasons, software is "borrowed" with abandon. Catching up on office correspondence on your home computer in the evenings sounds like a noble endeavor; borrowing and installing the office's copy of word processing software to facilitate the operation, however, is illegal. Likewise, that cute screen saver the kids gave you for Father's Day is a licensing infringement when installed both at work and at home. Licensing Agreements Vary The licensing terms and conditions for most software are detailed (in very fine and mostly ignored print) and packaged with the media (diskettes, CD-ROM, etc.). The terms and conditions will be reflected in the software's purchase price. A site license with unlimited users will have the highest cost, whereas per-seat licenses will be the cheapest. In most cases, the very act of breaking the seal on the package creates the licensing contract between the user and the vendor. Licensing agreements fall into broad categories: Concurrent Users - usually applies to software intended for use in networked environments. A cap is set to how many users may access the software at one time. This licensing term is not user or station specific. Number of Seats - typically you must have a separate license for each machine running the software. Most environment/operating systems use such licensing, as do most retail office suites (e.g. Microsoft Office). Site Licenses - often implies that the software will only be installed at one "site" (generally meaning on one server, in a networked environment), but users may be unlimited. Remote access to that host by means of modem, WAN, and Internet may not require additional licenses. Installing another copy of that software at another site would. Usage Meters or Capitated Rates - generally does not limit your users or server sites to a certain number, but rather audits the volume of software usage. The charge is based on volume. An example of this would be software charges and licensing agreements based on the number of employees on your payroll on a weekly basis. The greater the employee volume, the greater the licensing. This is contractual agreement between the vendor and the licensing user. Shareware and Freeware - this category includes software that is downloadable "free" off the Internet. Always be sure to review the software licensing materials when installing downloaded software (not to mention scanning for viruses!). While shareware is intended to be copied and distributed, it is not always freeware. In some instances, there is a time limit or "evaluation period" after which you are expected to purchase the software. In other cases, the software may be free to nonprofits, but they may need to file a 501(c)3 status notice. Always read the fine print! To best protect your organization, it is imperative that you perform regular software licensing audits of all hardware and that you define and circulate clear, stringent legal software policies and procedures. It is useful for your Technology Department to conduct audits. There are programs that can track what is used and where it is located. Licenses can often be purchased less expensively in bulk, and nonprofit pricing is available through many vendors. While the initial process can be costly and painful, the long-term effect is a significant reduction in liability exposure for your organization. The Steps We Took HELP USA instituted such policies and procedures five years ago. The following is a list of the actions we took to protect our agency. Organization-wide hardware and software inventory - We manually surveyed each machine for installed software and then matched that with identifiable/existing licensing information. Created a database to track all information - We recorded serial numbers for each piece of installed software to correspond with our hardware inventory database. (These serial numbers can usually be found under the HELP/ABOUT menu option and correlate to the licensing agreement.) We then began matching software installed to licensing agreements by the types outlined above through surviving paper documentation and purchasing records for the organization. Restructured - We deleted all illegal software, purchased bulk licenses for necessary replacements and instituted strict written guidelines. To insure compliance, each site's Business or Office Manager performs the same audit and documents any changes in hardware or software annually. These changes are reviewed centrally for compliance and immediate steps are taken to correct any issues. Should you have any questions or concerns about this information, you can check with your software vendor or reseller for specific licensing terms, the Business Software Alliance Website (www.bsa.org), or feel free to call me at (212) 444-1912. Business Software Alliance Goes After Offenders In a recent push to deter software piracy, the Business Software Alliance (BSA) announced that it had collected more than $27 million dollars over the past five years from companies in the U.S. who have been caught, red-handed, copying software. California, Texas, Illinois, New York and Michigan top the list of states in which companies are most often caught with pirated software. In a similar effort, the BSA mass-mailed postcards proclaiming: "NAIL YOUR BOSS", specifically encouraging whistle blowing by disgruntled employees.
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Planning & Management.... An Agency Profile: Transitional Services for New York, Inc. (August, 2003) Software for Nonprofit Accounting (March, 2003) How to Accurately Plan Your Agency's IT Budget: A Workshop Synopsis (October, 2002) Would You Like To Improve Agency Communications? Develop an Intranet! (October, 2002) "Something from Nothing" - How Housing Works built a state-of-the-art IT infrastructure on a shoestring budget. (August, 2002) Making the Build-or-Buy Decision: A Thorough Analysis Before You Decide (February, 2002) Online Facilitation (December, 2001) The ABCs of ASPs (November, 2001) The Pros and Cons of ASPs (November, 2001) Using an Application Service Provider To Transform Your Agency (November, 2001) The Nonprofit Web Site: Tips for Attracting and Retaining Visitors (April, 2001) A Case Management System Case Study: Providence House (January, 2001) Covering Web Site Costs and Online Fund Development (January, 2001) I&R Best Practices: Profiles of Three NYC I&R Services (November, 2000) One To One Marketing for Nonprofits (May, 2000) Planning for Success: A Practical Approach to Technology (March, 2000) Networking for the Small Nonprofit: The Asian American Federation of New York (December, 1999) Developing a Technology Plan: Key to Getting Needed Funds (October, 1999) Should Your Organization be an E-Commerce Provider? (October, 1999) Stretch Your Technology Budget - Take Advantage of Product Donations (June, 1999) Contact Tracking That Works (April, 1999) How We're Using Information Technology to Further Our Mission (February, 1999) PeopleKnowledge: One Solution to Data Management (December, 1998) Softward Licensing: Protecting Your Organization From Lawsuits (October, 1998) Other Articles of Interest.... GuideStar: Getting Form 990 Online (October, 2001) Nonprofits Benefit from ePayments Technology (April, 2001) Paving the Way to the Future: DYCD's Comprehensive Contract Management System (January, 2001) Creating the Paperless Office (November, 2000) Globix Technology Grants Help Nonprofits Realize Operating Efficiencies (November, 2000) TECH-U-NET: Providing Technology Guidance to Nonprofits (November, 2000) Technology Technical Assistance: Why Use it, How to Manage it (May, 2000) New Web Site Facilitates Quality Program and Evaluation Planning (March, 2000) Lessons From the Life of a Learning and Access Center (December, 1999) Distance Learning and Training can be Low-Key, Low-Tech, and Low-Budget (October, 1999) If Your Computer is Looking a Little Green Around the Ears, it Might be a Virus (June, 1999) Program Donates Technology to Nonprofits (April, 1999) New York Today Offers Free Web Services for Nonprofits (February, 1999) Register Your Internet Domain Name Now (February, 1999) Diffusion Fund Enables Advanced Telecommunications for Disadvantaged. . .(December, 1998) BrookynX - A Guide to Getting Your Communities on the Net (October, 1998) Learning the FAQs: Free Education and Training for Nonprofits (October, 1998) |
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