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Software License Fines Fall Hardest on the Smallest

Nearly 90 percent of the fines collected annually by the Business Software Alliance for software license violations falls on small and midsize businesses, many of whom have no idea that they are violating copyrights and cannot afford to pay fines, SMBs and software industry sources told eWEEK. The Associated Press reported that figure Nov. 26, […]

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Karen Schwartz

Nov 28, 2007

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Nearly 90 percent of the fines collected annually by the Business Software Alliance for software license violations falls on small and midsize businesses, many of whom have no idea that they are violating copyrights and cannot afford to pay fines, SMBs and software industry sources told eWEEK.

The Associated Press reported that figure Nov. 26, claiming that close to 90 percent of the $13 million burden in BSA fines falls on SMBs. The BSA represents major software vendors and promotes copyright protection, cyber-security, trade and e-commerce.

The SMB community is calling the fines unfair, claiming most violations by SMBs are inadvertent and that paying the high fines can be major blows to their businesses.

“Nine out of 10 times, it’s an oversight instead of willful. They pay the fine and that’s the end of it,” said Laura DiDio, a research fellow at Yankee Group. “But in the case of smaller businesses, which are much less risk-tolerant, the impact to their businesses can be much more devastating because they don’t have the deep pockets of their larger enterprise brethren.”

Once targeted, however, businesses are on the hook to pay up, no matter what their circumstances.

“The ‘dog ate my homework’ excuse really won’t work unless there is a really good reason, like a natural disaster where something happened to your records,” DiDio said. “They play hardball when they get there.”

And not everyone has much sympathy for those who have violated the rules, whether unwittingly or not.

“Stealing is stealing,” said Chris Wolf, a senior analyst at Burton Group. “You have to send a message that software compliance is a big deal, no matter the size of the company.”

One of the reasons smaller companies may be more at risk of violating licenses, Wolf said, is because they are less likely to monitor software compliance rigorously, and they are less likely to use technology to do so.

“Large enterprises have some pretty strict software compliance and auditing policies in place. They have the resources to validate that they are complying with software licensing more easily than smaller organizations with smaller IT budgets,” he said.

As for SMBs concerned about being audited, “Look to leverage technology to ensure compliance of software licensing,” Wolf said. “It’s one thing to have a policy in place, but the only way compliance really works is if you are enforcing it with technology.”

Software License Fines Fall Hardest on the Smallest

Karen Schwartz

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