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Mitigating Negative Publicity from Software Audits

By Stephanie Robinson

The Business Software Alliance (BSA) recently announced that it entered into a settlement agreement with a small-to-medium-sized motor sports dealer and equipment supplier in Greenville, South Carolina, regarding the dealer?s alleged use of unlicensed, Adobe and Microsoft software. The BSA said that under the settlement, the targeted dealer, which apparently owns only 40 to 50 computers, was required to make a settlement payment of slightly more than $72,000.00 and also to agree ?to delete all unlicensed copies of software installed on its computers, acquire any necessary replacement licenses and commit to implementing stronger software license management practices.? There was no statement from the dealer included in the press release, a copy of which is available here. There is also a brief article regarding the matter from a local media outlet here. Businesses that endure software audits initiated by the BSA or by the Software & Information Industry Association (SIIA), often come to the unpleasant realization toward the end of the ordeal that, in addition to the settlement payment, the costs of investigation and diversion of resources, and the legal fees already incurred on the path to reaching a settlement agreement, the auditing entity often demands that it be allowed to publicize the matter in a press release such as the one described above. In the vast majority of cases, the negative value to the business of such publicity is proportionally far greater than any positive value derived from the auditing entity. Nevertheless, the BSA and SIIA both typically demand that businesses pay a high premium to keep the existence of or details regarding an audit settlement from public attention. Businesses that fail to account and plan for such a premium at the outset of an audit engagement may be faced with the grim prospect toward the end of the matter of having to accept terms that include costly negative publicity that, especially in some tech-related industries, can be very damaging to a business? reputation. It is important to keep confidentiality in mind at the outset of the software audit process and, after a preliminary exposure estimate is calculated, to determine whether the cost of the bad press that audits often entail will be greater than the price to include confidentiality terms in an eventual settlement agreement. In cases where that price is too high, there may be less-expensive alternatives to explore at settlement, such as inclusion of terms that give the business the right to review and contribute to a press release prior to publication or terms that allow the auditing entity the right to publish the existence of the settlement, but not the details. A knowledgeable software audit attorney can provide valuable assistance in considering these and other options to mitigate the lingering effects of a BSA or SIIA software audit.

Full post as published by Business and Technology Law on February 27, 2008 (boomark / email).