Category Archives: Copyright Law

Have You Been Contacted by the BSA? Don’t Wait to Contact an Attorney.

In past articles, we have discussed what to do if you have been contacted by the Business Software Alliance (“BSA”) regarding potentially unlicensed software. See Driving Your Computer without a License: Beware the Wrath of the BSA and Software Audit Demand from the BSA.

This article, however, will focus on the importance of getting an attorney involved early in the process. Recently, a potential client contacted the firm who was in the middle of negotiations with the BSA over alleged unlicensed software. By the time we were contacted, the company had already conducted an audit, without any limitations, and provided the results to the BSA. The company had subsequently received a settlement offer from the BSA and was looking for legal advice regarding the offer.

While it is smart to seek out legal representation, by this point almost all the leverage the company had to negotiate was gone. The company had given the BSA everything they had asked for and provided the BSA with evidence, evidence the company itself created, of the infringing software.

Had the company sought legal representation as soon as it received the first demand from the BSA, it would have had significantly more leverage to negotiate and would have likely not sent the BSA evidence that incriminated itself.

The BSA conducts fishing expeditions. The BSA takes some evidence of infringing software (e.g., a former employee reports a company to the BSA for having unlicensed copies of Microsoft Office) and attempts to use that information to “fish” for other potentially unlicensed software belonging to any of their member companies, which include Adobe, ANSYS, Apple, Autodesk, Bentley Systems, CA Technologies, CNC/Mastercam, DataStax, Dell, IBM, Intuit, Microsoft, Minitab, Oracle, salesforce.com, SAS, Siemens PLM, Splunk, Symantec, The MathWorks, Trend Micro, Trimble and Workday.

Essentially, the BSA will request that an audit of all software belonging to any of its member companies be conducted and a report furnished to it, despite only having information to support infringement of one product belonging to only one member company. If a company blindly follows this request, it could be turning over evidence to the BSA that the BSA will turn around and use against it for significant monetary damages (up to $150,000 per infringing work).

Involving an attorney early in the process will help ensure that any audit is limited only to the software for which the BSA has credible evidence of infringement and that any incriminating evidence is not disclosed to the BSA.

By doing this, the company can limit its exposure and keep significant leverage in negotiating any settlement. Once the cat is out of the bag, however, it is too late and the BSA will hold all the cards.

If you have received a demand letter from the BSA, you should contact an attorney at Smith & Associates to discuss your rights.

False, Fraudulent, and Bad Faith DMCA Take Down Claims

Picture this. You’re are a YouTube personality who happened to hit it big and before you know it you are relying on income from your YouTube channel as your sole source of income. Your videos consist mainly of criticizing or commenting on issues that are important to you. However, with this rise in fame also comes a rise in detractors – people who are not happy that you are criticizing them. These detractors want nothing more than to hurt you and prevent others from hearing your criticisms. So, what do these detractors do? They file a DMCA takedown notice claiming that your video (or videos) are infringing on their copyright. You are now in the position of defending yourself or risking copyright strikes by YouTube. Worse, even if you file a counter-notice, the video will still have been offline for some time, causing a serious interruption in your source of income. Do you have any recourse against these bad-faith, fraudulent takedown notices? The answer is yes, and this article discusses what those options are.

Congress passed the Digital Millennium Copyright Act (the “DMCA”) in 1998 to address the changing world of copyrights in lieu of the rise of the internet. Over two decades later, the DMCA still provides an efficient mechanism to allow copyright holders to easily have infringing content removed from an internet service provider like YouTube without the need to file expensive lawsuits.

The DMCA, among other things, created a notice-takedown process that, if followed by service providers (like YouTube), insulates them from copyright liability for any infringing content posted on their site. In general, the way that the takedown-notice procedure works is as follows:

A copyright holder files a takedown notice, under penalty of perjury, with a service provider claiming that the site is hosting infringing content owned by the copyright holder;
The service provider then removes the allegedly infringing content and notifies the person who posted the content;
The posting party then has the right to file a counter-notification, informing the service provider that the content is not infringing; and
If a counter-notice is filed, the service provider must re-host the content unless the original copyright holder files a lawsuit.

In most cases, this process works well and allows content creators, especially small content creators, the ability to police their works without needing to resort to expensive, federal copyright litigation.

However, people have been able to abuse this process to attack enemies and competitors, and to censor critics. Critics often use small portions of video or text from the person they are criticizing to put the criticism in context. This use, as discussed below, would clearly be fair use and allowable. However, the person being criticized will then file a DMCA takedown notice claiming that, because snippets of his videos or text are used, the video infringes on his copyright. These takedowns are not valid and are nothing more than attempts to censor perfectly acceptable speech and shield the person from criticism.

The DMCA provides a remedy for these bad-faith takedowns, specifically:

Any person who knowingly materially misrepresents under this section—

(1) that material or activity is infringing, or
(2) that material or activity was removed or disabled by mistake or misidentification, shall be liable for any damages, including costs and attorneys’ fees, incurred by the alleged infringer, by any copyright owner or copyright owner’s authorized licensee, or by a service provider, who is injured by such misrepresentation, as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing, or in replacing the removed material or ceasing to disable access to it.

17 U.S.C.A. § 512

Thus, if someone files a fraudulent DMCA takedown notice, they can be sued for the damages caused, along with the costs and attorneys’ fees that were incurred in pursuing those damages. In many cases, the costs of attorneys’ fees can far outweigh the actual damages.

The big issue that arises in these types of cases is “fair use.” Fair use is defined as follows:

[T]he fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.

17 U.S.C. § 107

One of the most important things to remember about fair us is that “fair use is not just excused by the law, it is wholly authorized by the law.” Lenz v. Universal Music Corp., 815 F.3d 1145, 1151 (9th Cir. 2016). Thus, even if someone is using a copyrighted work, if it is being used as authorized by 17 U.S.C. § 107, the use is not infringing.

What many of these fraudulent takedown requests hang their hat on is that their copyrighted content was included in some way in the video in question. However, they fail to undertake any sort of good-faith analysis as to whether fair use is applicable or not. Most often, uses of a copyrighted work, especially snippets of that work, to criticize the work or the author are protected by fair use. However, the sender of the notice doesn’t actually have a legitimate concern about copyright infringement, but instead is concerned with attempting to censor critics or punish people the sender does not like.

Unfortunately for these senders, the Court has addressed this issue and concluded that “a copyright holder must consider the existence of fair use before sending a takedown notification” and “form a subjective good faith belief that a use is not authorized[.]” Id at 1153.

Therefore, if the sender did not conduct a good faith, fair use evaluation before sending the takedown notice, they can be subject to liability, including damages, attorneys’ fees, and costs.

If you have been the subject of a bad-faith DMCA takedown notice, you should contact an attorney at Smith & Associates for a free consultation to discuss your situation and your potential remedies.

Driving Your Computer without a License: Beware the Wrath of the BSA

Imagine this: your company has grown from the original handful of employees to dozens or even hundreds of employees, all with their own workstations, home computers, and laptops with remote access to your company server. You receive a letter one day from an organization called the “Business Software Alliance” (“BSA”) warning you that your company could be responsible for massive licensing fees and penalties because your employees are using unlicensed or mis-licensed software products. When you begin to internally investigate this claim, you discover you have little or no documentation showing the licensing for the software installed on your company’s computers. You just upgraded your computers and software and added what you needed as the company grew, never suspecting you would one day be called upon to “prove” that you properly purchased, installed and licensed the software at each workstation. And now you are facing an ultimatum that failure to provide proof for each and every license will result in dire consequences. What do you do? This article discusses the steps you can take before ever being contacted by the BSA and what to do after the BSA has sent its demand letter.

The BSA describes itself as “the leading advocate for the global software industry before governments and in the international marketplace.” Businesses that have been on the receiving end of its compliance program, however, usually have less favorable words to describe the BSA. The BSA’s aggressive assertion of its members’ rights stretches the bounds of copyright law and the underlying software licenses at issue. Once the BSA has a company in its sights that it believes has unlicensed or improperly licensed software, the BSA will seek to extract as much in fines from the company as possible and, if a settlement cannot be reached, it has a well-known reputation for taking companies to federal court to enforce its members’ rights.

To add insult to injury, if not handled properly, the BSA will publicly shame companies that have unlicensed software, naming them and the amounts paid. For example, the BSA will publish articles like these naming the company and the amount of the settlement:

In the face of the aggressive tactics employed by the BSA, companies who are facing a demand from the BSA need someone just as aggressive to defend their rights.

What is the BSA?

The BSA is a trade organization representing software companies around the world. Its members include such companies as Adobe, Apple, Autodesk, IBM, Oracle, Microsoft, and Siemens. The BSA lobbies governments around the world, seeking to advance their members’ interest.

Non-member companies, however, mainly know the BSA for its compliance and enforcement efforts. The BSA aggressively seeks out companies who have unlicensed (or mis-licensed) copies of its members’ software. This aggressive approach includes running television and radio commercials offering monetary rewards to workers if they report unlicensed copies of software on their employer’s computers. In a recent case from Australia, the BSA paid its “informant” $10,000 for reporting unlicensed software on his company’s computers. In short, the BSA is using cash rewards as incentives to get employees, especially disgruntled employees, to “rat” on their companies for unlicensed software use.

Once the BSA suspects a company of having unlicensed software, the BSA will send the potentially infringing company a letter demanding to audit the entire company’s software installations and accompanying licenses threatening fines up to $150,000 per violation. The letter will advise that the company should contact them to resolve the issue otherwise litigation may occur. This threat is not an idle one. BSA is well-known for aggressively enforcing its members’ rights and has a well-known reputation for following through with its threats to take an alleged violation to court.

Take Action Now to Avoid Any Encounter with the BSA

As described below, once the BSA is involved, the costs to remedy unlicensed or mis-licensed software increases dramatically. Companies should take immediate action, prior to the BSA becoming involved, to ensure that the software they are using is properly licensed and installed.

This is not as simple a task as it may seem. For example, most software licenses, especially on the server side, are conditioned upon the number of server cores, the number of users, a specific user, or some combination of those three. However, as server virtualization becomes more popular and ubiquitous, determining the number of server cores and particular users on a virtualized server becomes more technical. In addition to the technical issues, there is also the issue of well-meaning employees downloading software that is “free,” without realizing it is only free for personal or education uses and requires a paid license for commercial use. As such, any internal audit needs to include not just legal professionals to review the licenses, but IT professionals to fully understand exactly where and how the software has been installed and is being accessed.

Moreover, a company may wish to enlist the help of legal counsel to conduct this audit through the help of a third-party IT service. Should the company later become involved in copyright litigation resulting from unlicensed software, the use of legal counsel and third-party IT professionals can potentially keep the results of the audit confidential and prevent the right’s holder from using the results of the internal audit against the company.

Once the audit is conducted, the company should ensure that all of its software is properly licensed and, if not, purchase the appropriate licensing or uninstall the software from the company’s systems.

After the system is properly audited and licensed, the company should then create and implement policies and procedures regarding the installation and licensing of software to ensure that all future software installations are reviewed by legal counsel and only installed and accessed in accordance with the license. IT professionals should also be involved in this process to ensure that rules are in place to enforce the terms of the license.

What If I’ve Already Been Contacted by the BSA?

Once the BSA has contacted a company and alleged copyright infringement, that company should seek immediate assistance from legal counsel. The BSA, as stated before, is very aggressive in enforcing its members’ rights and failure to timely and properly act can end up costing the company significantly.

After retaining counsel, the first step in dealing with a BSA response letter is to discuss mitigating the issues and keeping the burden on the BSA to prove its case should the case end up in court. For example, internal emails regarding potential infringement may be discoverable by the BSA in court. While a manager’s first instinct may be to send an email to the IT department asking about unlicensed software, the IT department’s response may not be something that the company wants the BSA to read. As such, the first communication after receiving the letter should be to an attorney. Any communications with IT (or other) staff, should only be at the direction of that attorney.

Further, now that the company has been put on notice of potential copyright litigation, unless directed to by its attorney, no changes should be made to the underlying system. If the case goes to court, uninstalling or deleting improperly licensed software could be seen as an attempt destroy or alter evidence if the case goes to trial.

Most letters from the BSA will state that they have information that the company is infringing on one of its members’ rights. However, the letter will then demand that the company do an audit of all its computers related to all of the member companies, not just the one the BSA suspects as unlicensed. After making sure that internal mitigation is occurring, the next step is to then limit the scope of the audit. The goal is to limit the audit to only the software owned by the member company for which the BSA believes is having its rights infringed. Otherwise, the company may be providing the BSA with information about unlicensed software that the BSA was unaware of, increasing the scope of the issue and the monetary amount of any settlement or eventual damages award. Thus, if the BSA has reason to believe a company is infringing on Microsoft’s copyrights, the audit should be limited to only Microsoft, and should not include the other member companies.

Once the scope has been limited, an internal audit needs to occur. It is highly recommended that this internal audit be conducted by a third-party IT company at the direction of legal counsel. Should the case be taken to court, these steps will minimize the likelihood that the BSA will be able to discover them. Further, in the case that they do eventually get discovered, the audit should be limited to only the software or company at issue. For example, if the BSA agrees to limit the scope to Autodesk products, the audit should only include Autodesk products.

When a listing of all of the installed products of the member company are complied, then licenses need to be gathered for each of these installations. Moreover, especially as it relates to server-side software, an understanding of where the software is installed and who is accessing it needs to be determined. Once all of this is compiled, the attorney should be able to make an internal determination as to what, if any, software is not properly licensed.

The BSA typically is willing to settle infringement issues for what amounts to four-times the licensing costs. The BSA will usually demand that the infringer pay the BSA three-times the licensing cost as a fine and, if the company wishes to keep the software installed, also purchase a license for the software. So, if it was determined that there were four copies of Microsoft Office, which retails for $250.00, that were installed but not licensed, the BSA would demand that the company purchase a license for these copies ($250 x 4) and then pay a fine equal to three times the licensing amount for each of these copies ($250 x 4 x 3). Thus, the likely cost to settle an infringement issue involving only four copies of Microsoft Office would be around $4,000.00.

Keeping the BSA’s likely settlement position in mind, once the internal audit is concluded, a discussion needs to be held to determine what, if anything, should be turned over to the BSA. The Copyright Act allows a rights holder, assuming other conditions are met, to seek actual damages or statutory damages ranging from $750 to $30,000 per infringement. If it can be shown that the infringement was intentional, those damages can rise to $150,000 per infringement. Further, the court has the authority to award the prevailing party its attorneys’ fees, which, depending on the case, can eclipse the actual damages award.

In addition to damages, the BSA has its own take as to what constitutes infringement and what constitutes proof of a license. Not surprisingly, that take is incredibly favorable to the BSA members and pushes the limit of what a judge or jury may consider infringement. For example, in prior dealings with the BSA, it has taken the position that a 15 year old installation of Microsoft Server 2000 was infringing because the physical license could not be found, despite assurances from the IT department that the license was purchased when it was installed and, due to the timeframes, would have necessarily been physically purchased from a store as opposed to being downloaded as much of the software today is. In any dealings with the BSA, an experienced attorney who is able to push back against these overreaching claims by the BSA is essential.

All of these factors need to be considered when determining how to respond to the BSA. Clearly understanding your rights and the potential risks involved is crucial to making the proper decision on how to respond to the BSA.

Finally, if the decision to settle with the BSA is made, it is important that it be negotiated properly. The BSA is known for publishing settlements and publicly highlighting the infringement and settlement amounts it has recovered for its members to publicly shaming the infringing company. In addition to any other terms, the settlement needs to explicitly make clear that the settlement is confidential and that the BSA will not disclose it or the allegations of infringement to anyone.

Conclusion

The BSA is aggressive defending the rights of its member companies. You deserve attorneys who will be just as aggressive in defending your rights. Whether it is ensuring that your company is in compliance with the applicable licenses or pushing back against the BSA’s overreaching interpretations of copyright law, Smith & Associates can help your company against software copyright infringement claims.

Should you need any assistance or have any questions about these issues, please feel free to give us a call for a free consultation.

BMI Copyright Infringement Lawsuits

Yesterday, BMI filed two copyright infringement lawsuits against area restaurants. In these lawsuits, BMI maintains that these restaurants allowed the unauthorized public performance of songs to which it holds the copyright. In layman’s terms, this means that the restaurant played the radio over the speakers without first purchasing a license from BMI.

Many restaurant owners are not aware that the simple act of playing songs over the speakers can constitute copyright infringement if the appropriate license is not purchased. This simple act can have large consequences. For each unauthorized song played, the restaurant can be liable for up to $150,000.00 in statutory damages plus attorney’s fees and costs. All of this just by turning on the radio.

If you or your company have been contacted by BMI regarding unauthorized performance of songs, you mast act quickly to protect your rights. At Smith & Associates, we not understand litigation and copyright law. If you need help addressing this or any other copyright issue, please contact us for a free consultation.

More BitTorrent John Doe Lawsuits Filed

Over the past few days, Plastic the Movie Limited has filed John Doe lawsuits against eight BitTorrent users alleging copyright infringement.

These lawsuits are ‘John Doe’ lawsuits because, at this time, the copyright holder does not know the name of the party they are accusing of infringement. Right now, all they know are the accused infringer’s IP address. From here, they copyright holders will subpoena the ISPs to determine who had the IP address at the time of the alleged infringement. Once that is determined, the copyright holders will update the lawsuits to name the correct individual.

Fortunately, most ISPs inform users before they give up their information. If you receive a letter informing you that you are the subject of a John Doe lawsuit, you should contact an attorney immediately. Damages in a copyright infringement suit are determined by statute and, if willful infringement is shown, can be as much as $150,000.00 per infringement plus opposing counsel’s attorney fees and costs. It is imperative that you act quickly to protect your rights.

At Smith & Associates, we not only understand litigation and copyright law, we understand the technology at the heart of these issues. We understand BitTorrent and the issues associated with associating an IP address to an individual. If you need help addressing this or any other copyright issue, please contact us for a free consultation.

Manny Film Files more BitTorrent Lawsuits

As predicted yesterday, Manny Fillm, LLC has filed more John Doe copyright infringement lawsuits. 11 more lawsuits have been filed so far today claiming that BitTorrent users downloaded the film Manny, a movie about boxer Manny Pacquiao. If you receive a letter informing you that you are the subject of a John Doe lawsuit, you should contact an attorney immediately. Damages in a copyright infringement suit are determined by statute and, if willful infringement is shown, can be as much as $150,000.00 per infringement plus opposing counsel’s attorney fees and costs. It is imperative that you act quickly to protect your rights.

More John Doe BitTorrent Lawsuits Filed

Today in the Middle District of Florida, Manny Film, LLC, owners of the movie ‘Manny’ about boxer Manny Pacquiao, filed three John Doe lawsuits. This company has already filed 46 John Doe lawsuits across Florida and it is expected that more are on the way. These three represent the latest in the movie industries attempt to punish people who infringe their copyrights via BitTorrent.

BitTorrent Lawsuits Filed Today

Today in the Middle District of Florida, a litany of John Doe lawsuits were filed alleging that BitTorrent users violated copyright law by downloading and making available certain copyrighted films. The first set of lawsuits is by Good Man Productions, Inc. for a Steven Seagal film entitled ‘A Good Man.’ Read a copy of one of the complaints here. The second set of lawsuits is by Poplar Oaks, Inc. for a movie entitled ‘A Certain Justice’ now titled ‘Puncture Wound.’ Read a copy of one of the complaints here.

Software Licensing and Enforcement

Software is rarely sold anymore, it is usually licensed. These licenses restrict how the software can be used and if the software can be resold. Even open source licenses, which convey rights to the users instead of take them away, have conditions on how the software can be used. When considering what to include in a software license or which open source license to use, it is important to consider how software licenses are enforced and what terms you want in your license.

License Terms vs. Covenant Terms

The enforceability of the license depends on what clause in the license is being breached and what remedy the developer is seeking. When someone breaches a copyright license, the courts look to the term that was breached to determine if it limited the scope of the license or if it was a mere covenant in the contract. For example, if the term limited the distribution method of the code, it would most likely be considered to be restricting the scope of the license. However, if the term involved how warranty claims were to be submitted, it would most likely be considered a mere covenant.

If the term being breached is considered a mere covenant, the remedies available are the traditional breach of contract remedies. While there are many of these remedies, for the most part this means that the remedy will be actual damages – how much money was actually lost because of the breach. This is not very easy to determine as the amount must be proven by evidence. For example, terms regarding the warranty of the software are usually considered covenants.

If the term being breached is limiting the license, then the breach is considered copyright infringement. This has advantages over a breach of contract action. The most important being that if the copyright was registered with the Copyright Office before the infringement, the copyright holder may be entitled to statutory damages between $750.00 and $150,000.00 per infringement. The copyright holder may also be entitled to attorney’s fees and costs. If the work is not registered before the infringement, the copyright holder is usually stuck having to prove the actual damages from the infringement. Whether or not the work was registered before the infringement, the copyright holder can also ask the court for an injunction to prevent the infringer from continuing to use the software.

When a developer is ready to license her software, what should she look out for?

Register the software with the Copyright Office. As stated above, having the work registered opens the door to remedies that do not require proof of damages. To make this even more attractive, it only costs $35.00 to register. There is no reason not to do this.
Ensure that your goals are met by the license. Whether you are using an open source license or a custom license, make sure that the terms that control the way your software is distributed are written in a way that actually accomplishes what YOU want to have happen with your software. Do not settle on a license because it is popular. Ensure that its terms meet the goals of your software project.
Consider a liquidated damages clause for covenants. Proving actual damages, especially with software licenses is extremely difficult to do. A liquidated damages clause can give a number to the actual damages in the case that one party breaches.
Prepare for if things go bad. You may want to disclaim any liability and warranties. You may also want to add a clause for attorney’s fees and costs. Also, you may want to add a choice of forum or arbitration clause to determine where or how any dispute would be handled.

What if someone is breaching your license?

If you have not done so already, register your work with the Copyright Office. To bring a claim in federal court, the work must first be registered. Get that process started as soon as possible.
Consider alternate options. If you have not registered with the Copyright Office prior to the infringement, or if the infringer has no money, a federal lawsuit may not be worth it financially. However, the Digital Millennium Copyright Act (DMCA) may offer some cheaper alternatives. This act offers a takedown procedure that asks web hosts to remove infringing material. If they refuse, they can be held liable for infringement. If the infringing work is being distributed via the Internet, a DMCA takedown notice may be a viable alternative to prevent the infringer from continuing to distribute the work without breaking the bank.
Talk to an attorney. Every situation is unique. An attorney can help you understand your situation and what your rights and options are.

If you or your company need help writing or enforcing a software license, contact us at Smith & Associates.

Software Audit Demand from the BSA

Recently, radio stations have started playing advertisements informing the listener that if they report software piracy at their place of work, they could receive a reward. While I do not condone software piracy, the Business Software Alliance (BSA), the company running the ads, along with the Software and Information Industry Association (SIIA) use very heavy-handed tactics when dealing with potential pirates. So what should you do if your company receives an audit request from the BSA, SIIA, or some other software company?

Don’t Ignore It – While it may be a valid strategy to ignore some demand letters, it is not the case with these audit requests. These companies will follow through with court cases. This can increase the costs of defense and possibly limit your options for the future.
Retain an Attorney – The BSA and SIIA have attorneys working for them with the goal of maximizing the payments made by potential infringers. You need an attorney working for you. An attorney can help ensure that the audit cannot be used against you in court and help you keep certain knowledge confidential. An attorney can help explain the copyright infringement laws – which don’t always agree with what the BSA and SIAA believe constitute copyright infringement. If infringing software is discovered, an attorney can also help you with negotiating the settlement agreement, ensuring that BSA and SIIA cannot publish your infringements publicly and the terms of any re-audit.
Don’t Buy New Licenses – Once you receive the audit demand, you may feel the need to go out and buy licenses for any non-licensed software. This will not fix the problem and will most likely just end up being a waste of money. The BSA/SIAA will look at the install date and the purchase date to ensure that the software was licensed for the entire time it was installed.
Don’t delete infringing software – Destroying evidence is never a good idea. This can lead to a presumption of infringement and possibly sanctions. This along with the fact that computer experts can recover deleted information makes deleting the infringing software a bad idea.

If you or your company have received a letter from the BSA, SIAA, or any other software company demanding an audit, contact us at Smith & Associates. The BSA/SIAA will use attorneys against you – don’t go it alone.