SOFTWARE LICENCE DISPUTES

Nowadays, it is rare that a company does not use software developed by a commercial publisher. Many organisations rely on externally developed software for the financial recording, operations and other aspects of their activities.

A recent study by the Business Software Alliance (BSA) and INSEAD, entitled ‘Competitive Advantage – The Economic Impact of Properly Licensed Software’, shows that the piracy rate in most high-income countries is over 25 percent of the total commercial value of the software. In a country such as Germany, where the commercial value of properly licensed software is estimated to be US$6.4bn, the value of pirated software amounts to US$2.2bn. Even if these figures represent an inflated view of the reality, it is apparent that the amount of missed revenue for software publishers is staggering.

As a result, it is no surprise that most prominent software publishers have certain licence compliance programs in place to verify the use of their software by their clients. Many companies have been inflicted with licence audits or software asset management reviews. And some have resulted in disputes, such as the US$330m claim of Airvana Network Solutions Inc. against Ericsson AB.

An organisation’s challenge

Though the term ‘software piracy’ creates an impression that improper licensing is deliberately performed by corporate criminals, practice shows that non-compliance seems to be the natural state of any IT system. In many cases, commercial or other software has been embedded into a company’s system and daily operations in such a way that they have become a critical component of the organisation’s functioning.

Jul-Sep 2013 issue

PricewaterhouseCoopers Enterprise Advisory Cvba/Scrl