Pennsylvania-Based Insurance Company Settles With BSA for Unlicensed Software Use, Agrees to Pay $105k

July 15, 2009

The Business Software Alliance (BSA), which represents the world's commercial software industry, announced today that Donegal Mutual Insurance Company of Marietta, PA paid $105,000 to settle claims that it had unlicensed copies of Microsoft software installed on its computers. As part of the settlement agreement, Donegal agreed to delete all unlicensed copies of software on its computers, purchase any licenses necessary to become compliant, and commit to implementing stronger software asset management (SAM) practices.

BSA was alerted to the unlicensed software use by a confidential report made on BSA's website www.nopiracy.com. Each year, BSA receives more than 2,500 reports of software piracy to its website and hotline, 1-888-NO PIRACY. The majority of BSA's leads come from current or former employees who had information related to the unlicensed software activity.

"Upon learning of the licensing problem, Donegal immediately came into compliance," said a spokesperson from the company.

Through BSA's "Know it, Report it, Reward it" program, individuals who provide qualified reports of software piracy are eligible to receive up to $1 million in cash rewards. In 2008, the BSA paid a total of $136,100 in rewards to 42 individuals for tips about software piracy. Despite the rewards program, many opt not to take the reward. Informal studies conducted by BSA suggest that a key driver for reporting software piracy is the motivation to simply "do the right thing."

Software piracy affects more than just the software industry. According to the Sixth Annual BSA and IDC Global Software Piracy Study, the worldwide PC software piracy rate rose from 38 percent to 41 percent and the retail value of unlicensed software--representing revenue losses to software companies--was estimated at $53 billion. Piracy also saps local governments of needed tax revenues and spreads information security risks. However, reducing piracy also brings economic benefits for the local IT industry. For every $1 of PC software licensed, there is another $3 to $4 of revenues for local service and distribution firms. "If one message is loud and clear, it's that doing the right thing by using legal software is the key to both reducing piracy, strengthening the local IT industry, and driving jobs so needed during these challenging economic times," said Jenny Blank, Senior Director of Legal Affairs for BSA.

Financial Risks

Businesses found to be using pirated software could pay thousands of dollars in damages for infringing BSA members' copyrights. A company found using pirated software and violating copyright laws can be liable for damages of up to $150,000 for each software title copied. If convicted, violators can be fined up to $250,000 per title or given a jail term of up to five years, or both.

When BSA receives a tip about a company using unlicensed software, it typically contacts the company and asks it to conduct an audit of its software assets. Then both parties work toward a resolution that involves immediate legalization of software. If an agreement cannot be reached, BSA may opt to file a lawsuit, as in last July's case with Taney Engineering of Nevada.

Security Risks

By utilizing pirated software, users' networks and computers are vulnerable to serious IT security threats. Company computers could be infected with Trojans, viruses, malware, and other threats. The lack of security could also compromise sensitive data and the personal information of its employees and customers. As companies and government agencies have found, having confidential information exposed to outsiders is costly and can also put an organization's reputation at risk.

Tools & Resources to Ensure Compliance

BSA works with businesses to help ensure that their company isn't at risk for financial, technical, and legal risks associated with illegal software. In addition to resources provided on www.bsa.org, BSA partnered with the U.S. Small Business Administration to educate up to 100,000 small businesses on software licenses, copyright laws, tips on how to purchase safe and legal software online, and how to develop a Software Asset Management program. Through the partnership, BSA helps small businesses develop smart strategies to manage their software.

Businesses trying to determine whether their organizations are using unlicensed software can download the free software audit tools at www.bsaaudit.com.

SOURCE Business Software Alliance