the informant is the same person responsible for software compliance at the company they are reporting.
Dallas, Texas (Vocus) October 30, 2009
The BSA, a trade group of large commercial software publishers including Adobe, Autodesk, Microsoft, Rosetta Stone, and Quark reports that the state of Texas is a top five hotspot for illegal software with a large portion of reports coming from the Houston area, Dallas-Fort Worth a close second, Austin and San Antonio a distant third and fourth.
Jenny Blank, Senior Director of Legal Affairs for BSA said in an October 29 press release, that "there are clearly a lot of companies in Texas who are not concerned that they are breaking the law…"
Robert J. Scott, Managing Partner, of Scott & Scott, LLP, disagrees with Ms. Blank. "We are not at all surprised that Texas would have a high rate of whistleblower reports to the BSA, based on the fact that the Texas August jobless rate hit 8% for the first time in 22 years and Houston had an 8.4% unemployment rate in August, up from 5.2% in August 2008. According to the U.S. Department of Labor's Bureau of Labor Statistics, the 62,200 jobs lost during the month give Texas the largest over-the-month employment decrease in the nation."
Scott continues: "High unemployment, and the BSA's offer of up to $1 million cash reward for confidential information on unlicensed software, creates the perfect breeding ground for increased software piracy reports, and may have nothing to do with what Ms. Blank claims, that 'people in the area are obviously quite concerned about this issue and don't like the idea of local companies using what amounts to stolen software products' "
Although the BSA has been aggressively marketing financial incentives to disgruntled employees to make anonymous tips against their employers with reward payments of up to a $1 million, by their own admission, they have only paid out a total of $220,650 to 63 individuals for verifiable tips of software piracy (an average of $3502) since 2008. Each year, according to the BSA, they receive more than 2,500 reports of software piracy from across the country. The BSA admits that the majority of the reports come from current or former employees. In many instances, Scott says, "the informant is the same person responsible for software compliance at the company they are reporting."
Scott & Scott, LLP recommends that companies implement the following procedures into their business practices to protect themselves from the risk of a software audit:
•Create Standardized Agreements With Publishers: Many companies do not realize that they have leverage when negotiating license agreements with publishers. In fact, companies can develop favorable software license agreements with the assistance of their own legal counsel. Favorable provisions can include "no audit" clauses or voluntary "true-ups" to reduce the costs of compliance management and the total costs of ownership.
•Retain Proofs of Purchase and Keep Accurate Records: Contrary to popular belief, trade associations and publishers only accept dated proofs of purchase, with an entity name matching that of the audited company. Anything less will fall short of publishers' mandated proof of ownership and therefore, repurchase of the assets in question may become necessary.
•Choose Integrated, IT Asset Management Tools: Asset management should be built into every company's ongoing business processes to ensure that this process and license compliance become core competencies. The ability to conduct routine reconciliations is required to ensure software license and Sarbanes-Oxley compliance.
•Obtain Expert Assistance in the Event of An Audit: Audit defense is most effective with the representation of specialized legal counsel to avoid the common mistakes that may jeopardize a company's legal position. Any automated discovery that is conducted under the supervision of legal counsel will be protected by attorney-client and work-product privileges, should an out-of-court resolution not be possible.
About Us: Scott & Scott, LLP (http://www.scottandscottllp.com and http://www.bsadefense.com) is one of the only U.S. law firms with a practice group dedicated to BSA and SIIA Defense. Scott & Scott's legal and technology professionals provide software audit defense and software compliance solutions and have years of experience successfully defending software defense cases.
Robert Scott, a recognized expert on software licensing and BSA audit defense, is available for interviews.
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