Tech & Work

Software management can prevent legal headaches

Novell Inc. just settled a lawsuit against two companies illegally selling its software. We'll tell you how to make sure the software you're buying, and using today, is legitimate and how you can save some money, as well.


While it may appear to be a nonissue for most enterprises, software and operating system piracy is happening these days—from judge’s chambers to resellers’ factories. While you may have a legit vendor, there is a small chance he or she is inadvertently passing along pirated products.

If you don’t think you need to double-check, consider that two of the three 1992 presidential candidates ran campaigns on illegally copied operating systems, according to Novell Inc., the Provo, UT-based e-business solutions and Net services provider. The vendor plays the incident down, saying the candidates likely didn’t know. Then there’s the state Supreme Court justice who asked his IS manager to create two networks from one OS. The justice was quickly educated on the topic of intellectual property.

Is piracy always just a harmless mistake? Apparently not, insofar as a recent court ruling indicates. In January, a California judge ordered Cableware Technology, Inc. and MJ Systems, Inc., of City of Industry, CA., to pay $750,000 to Novell for copyright and trademark infringement. The unauthorized resellers had been illegally selling upgrade copies of Novell’s NOS as "new." During the court proceedings, Novell stated that it had evidence that the companies were illegally copying and reselling software, as well.

Illegal software costs the tech industry nearly $12 billion a year, according to software industry watchdog Business Software Alliance’s (BSA) Global Piracy Study for 2000, and Software piracy impinges on state tax revenue, as well—to the tune of $322 million in California alone, reports the BSA.

Illegal software can cost CIOs and corporate leaders, too, if they are caught and prosecuted. In this article, you'll learn about a software management process that can help ensure that you’re using legit products, and I'll also pass along some tips on how to spot illegal software.

Where are you vulnerable?
Despite the legal actions afoot, many companies still aren’t policing software assets, according to experts. It’s a dangerous strategy, as illegal software can enter an enterprise in a variety of ways. For example, employees may download software onto their work PC and/or bring in software from home, or an IS staffer might overextend the number of seats on a license to help out a friend in another department.

Proactive software management can reduce your organization's exposure to possible illegal practices. Proper asset management can save as much as 10 percent of the IT budget, says Alan Plastow, president and CEO of Louisville, OH-based software-management services provider Software Asset Management Services, Inc. The savings are due to efficiency and the elimination of unnecessary licenses.

Both Plastow and the BSA recommend these approaches to managing software assets. They include:
  1. Appoint a software manager: A software manager should record all software purchases, collecting every product name, serial number, and version number. The GASP compliance and auditing tool, available for free on the BSA Web site, simplifies the electronic inventory process. The manager can then compare the electronic inventory to an inventory of physical disks, manuals, and licenses.
  2. Create and communicate a software policy: The policy should have buy-in from all managers and be posted around the company. Violations of the policy are often grounds for termination.
  3. Take inventory of assets frequently: It’s not enough to inventory things once. Regular inventory, perhaps as often as monthly, will both enforce your software policy and reveal any illegal software use.

Another approach to avoiding illegitimate software, though perhaps more costly, is to purchase site licenses that support an unlimited number of computers. This simplifies license tracking, and the remaining software needs can be purchased as bundles and installed.

How to spot illegal software
Assuming you have taken the proper precautions to monitor your present software use, the next step is to avoid purchasing illegal copies, which is pretty straightforward: Check with the manufacturer for authorized resellers in your area and shop with them.

The BSA offers this additional advice:
  • If the software seems too cheap to be true, it probably is.
  • Stay clear of products that are sold without documentation and resellers who offer to make backup copies. They’ll commonly give you the copies and you’ll never see the legitimate software because it doesn’t exist.
  • Watch out for products labeled “NFR” ("not for resale") or “OEM” ("original equipment manufacturer").

“Counterfeit products run a broad range,” explained Ed Morin, worldwide antipiracy manager for Novell. "The labels, the manuals, the printing on the CDs…everything about it could be counterfeit."

In the Novell court case, Cableware and MJ Systems were selling operating systems that had been manufactured for Novell as part of a larger service package. The tip-off was the OEM label on the software, which was supposed to be bundled with hardware and service support. The two companies provided neither, making the software licenses illegal, although the disks themselves were not counterfeit.

The two companies marketed the OSs just as any reseller would, through cold calls, ads in trade publications, Web sites, and fax blasts. But the pricing was significantly cheaper than pricing for legit licenses. In the end, the companies distributed thousands of units illegally, mostly to other resellers, according to Novell.

“There is no 100-percent-foolproof way to know every time if you’ve purchased legal software,” noted Morin.

Novell and antipiracy organizations say that any suspicions should be quickly investigated and that if there’s any doubt, no matter how small, it’s time to make a call to the manufacturer, just to be sure.

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