UK SME Pays Nearly £100,000 for Using Under-licensed Software

Based in Isleworth, First Choice Facilities was found with unlicensed Adobe, Autodesk, Microsoft and Symantec products. The company claimed it had not purposely used unlicensed software but unknowingly inherited the problem during the course of the acquisition. Nevertheless, it has now had to part with a lot of money as a result of failing to run sufficient checks.

During an acquisition, acquiring companies can wrongly assume that the software they inherit is properly licenced and the licences will automatically transfer to them. This is a common mistake, particularly for small businesses with limited expert advice to hand. In fact, licencing statements for the company being purchased are often not reviewed in time, or even readily available. The acquiring firm needs to be quite bullish in ensuring any licencing costs associated with an acquisition are properly identified and accounted for in financial statements as part of the acquisition cost – or risk exposing itself to redress. As was the case with First Choice Facilities, the BSA will take action against the use of unlicensed software regardless of how the software comes into a company’s possession.

Michala Wardell, Chair of the BSA UK Committee, says, “Being found with unlicensed software can be an absolute nightmare for many companies. But the repercussions for an acquiring company can be even more pronounced. Buying or merging with another firm is expensive in itself. As an acquiring company, finding out, when it’s too late, that you didn’t run the necessary checks and inadvertently infringed intellectual property (IP) rights can result in hefty damages and substantial, unforeseen costs to buy the very software licences you should have bought in the first place. As we continue to educate businesses on the risks of inheriting unlicensed software through a merger and acquisition, businesses will struggle to cite ignorance as a mitigating factor and those found with unlicensed software could be liable to pay greater sums of money in damages.”

Julian Swan, Director, Compliance Marketing EMEA, BSA, comments, “It’s worth noting that the First Choice Facilities’ case came to the BSA’s attention following information from a whistleblower. Companies should always be on their guard. It only takes one disgruntled employee to place a company at the centre of a legal battle. The best advice I can impart to any business is to strive to be whiter-than-white. They should contact their software providers to ensure they are properly licensed before it’s too late and they come to the BSA’s attention. Help is always at hand – as long as they seek it at the earliest possible opportunity. In fact they might even find they can save money in the long-term by helping to identify duplications and surplus licences.”

Software piracy is a costly problem for the UK economy. More than one in four installations of software is unlicensed, and the commercial value of this piracy is £1.2 billion[1]. This means that the chances of acquiring a company with unlicensed software are high.

The BSA website provides guidance and resources that can help ensure a company is operating efficiently and legally. Further information and software compliance tools are available from www.bsa.org.

Confidential reports of suspected software piracy, whether regarding businesses using unlicensed software, or individuals and organisations selling pirated software over the internet can also be made through the BSA website.

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