Breaking and associated brands will be offline for scheduled maintenance Saturday May 8 3 AM US EST to 12 PM EST. We apologize for the inconvenience.


Thank you for sharing!

Your article was successfully shared with the contacts you provided.
There are numerous misunderstandings in the areas of software copyright, and the legal and ethical implications of software use, licensing and copying. The consequences of failure to understand or adhere to these rules and laws can be disastrous to your firm, small or large. Quite simply, to make or download unauthorized copies of software — so called softlifting — is a copyright infringement that exposes your firm to severe civil and criminal penalties. Whether you are casually making an extra copy for a friend, or buying a single software program and then installing it on a number of your firm’s personal computers, you are committing copyright infringement — “software piracy.” Under the copyright laws you may be liable for actual damages or as much as $150,000 in statutory damages for each program copied. Criminal prosecution for copyright infringement can result in a fine up to $250,000, or jail for up to five years, or both. In addition to these penalties, a prosecution for software piracy can cause significant damage to your firm’s reputation. What is permitted when it comes to installing software at the office? Although software license terms vary, a good rule of thumb is: one software package per computer, unless the terms of the license agreement allow for multiple use of the program. Most often, the licenses provide that you have the right to load the software onto a single computer and make one backup copy. Microsoft Licenses are “non-concurrent.” In other words, if you have 10 computers that run Office XP, but no more than six ever run it at the same time, you still need to buy 10 licenses. Some software publishers’ licenses allow for “remote” or “home” use of their software. You may be permitted to copy their software onto a second machine for use when you are not at your office computer. Check the specific software license to see if you are allowed to do this. Software piracy in your firm can occur when: • One licensed copy is used to install a program on multiple computers; • Software is acquired via an upgrade offer without having a legal copy of the version to be upgraded; • Acquiring academic or other restricted or non-retail software without a license for commercial use; • Unauthorized copies of firm licensed software are made and distributed within or outside the workplace. One resource to help avoid a copyright infringement problem is the Microsoft Software Inventory Analyzer. This free program from Microsoft is designed to help firms and businesses inventory their Microsoft software. After running the program, it prepares a totally confidential report of Microsoft product installations to enable you to determine if your software is correctly licensed. Microsoft recently introduced “product activation technology” in several of their products, including Office XP and Windows XP, to reduce unauthorized copying. With Office XP, you have 50 grace launches before you must activate the product by registering with Microsoft. If you do not activate within 50 launches, the product will go into reduced-functionality mode. You can activate the product over the Internet or by telephone. The activation process analyses your computer hardware and creates a unique installation ID that is communicated to Microsoft. This means that if you overhaul your computer by replacing a substantial number of hardware components, the software will assume that more than one computer is using the license and you will have to contact Microsoft and explain to them what you are doing with your computer, and convince them to give you another unlock key to reactivate it. This process is a part of the retail versions of their products; it is not necessarily part of the Open License versions. While Microsoft cracks down on software piracy the world over, the software giant itself was convicted of piracy charges in France last year for illegal use of another company’s source code. While reportedly under appeal, Microsoft faces a fine of about $442,000. EMPLOYEE PIRACY Software piracy by employees is a growing business threat. Under “vicarious liability” of the U.S. Copyright Act, an employer is liable for acts committed by its employees when those acts are within the scope of their employment duties. Another theory of liability is the doctrine of contributory copyright infringement, whereby a party who does not do an infringing act but who aids or encourages it is liable for the infringement. To protect your firm from potential software copyright infringement liability, establish a written policy regarding the use of personal computer software. A written “Software Guideline Policy” should cover the following topics: • General statement of policy purpose; • Software acquisition; • Registration of software; • Installation of software; • Employee software usage; and • Penalties and reprimands. Each employee must sign a copy of the firm’s policy, acknowledging acceptance of the terms and conditions and agreeing to abide by them. A well-executed “No Copy” policy will go a long way toward relieving firm liability in a copyright infringement action. Because of recent court decisions in favor of software developers, several organizations have established toll free hot lines and reward systems to encourage people to turn in violators. After all, a disgruntled employee is only a phone call away from causing you and your firm serious trouble if you are in violation of your software licenses. All software purchased and installed in your firm should be in compliance with the software developer’s license agreement. That, along with the implementation of a written Software Guideline Policy is key to reducing your firm’s potential liability for software copyright infringement. Roger Schechter is of counsel and director of technology for Grotta, Glassman & Hoffman ( in Roseland, N.J. If you are interested in submitting an article to, please click herefor our submission guidelines.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

Reprints & Licensing
Mentioned in a story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.