Software Licenses

Most commercial software comes with End User License Agreements (EULA), to which the installer and/or user must agree before the software will function. Server software and client-server software may require additional licenses, such as per-seat licenses, per-user licenses, or other licenses related to the extent of use or specific functions.

Software Audits

Auditing a network to ensure software compliance involves creating a list of all programs and other licensable files on each machine, counting how many computers have each program involved, and comparing these numbers with the numbers of licenses. For example, to audit Windows XP licenses, simply count the number of machines running Windows XP (these are obvious), and then count the number of licenses, which may be produced either as OEM licenses affixed to the computer, or as retail or software assurance licenses. If there are more computers running Windows XP than there are licenses, then the organization needs to purchase additional licenses. If there are more licenses than computers running Windows XP, then the organization may purchase computers without Windows XP and install licensed copies of Windows XP themselves, until the numbers match (same number of licenses as installed copies). One exception to the latter situation is that OEM licenses usually cannot be transfered from machine to machine, so if a machine came with Windows XP and the user converted to Linux, the Windows XP license unfortunately cannot be counted towards another installation.

By now, a software audit procedure should seem like a very simple thing to do. Once again, it is simply a matter of comparing the number of times each piece of software is installed, to the number of licenses that the organization can produce for the same software.

If Software is Legitimately in Your Possession, but Licenses Cannot be Found

Many organizations find themselves in the position where they have legitimately purchased software but are unable to produce the documentation, either due to having moved, due to fire or natural disaster, or due to simply having misplaced or lost the documents. What then can be done to prove that the software was purchased legally?

We suggest the following steps:

• Produce the invoices or receipts for the licenses, which show that the organization paid to have the licenses for the software. If these cannot be found, then contact your vendor to request copies of their records.
• Create signed letters stating that you have not sold or given away the licenses, and store these along with the proof of purchase.
• Contact the software company, and request a copy of the legal agreement that would have been in force at the time of purchase, and store this along with the proof of purchase.
• Periodically hire an independent company such as Transparen Corporation to review your software license situation and perform an informal audit, where confidentiality is assured, to determine the level of license compliance of your organization, and to produce a declaration that at that point in time, the organization is in compliance. This means that after reviewing the number of software installations and working with the organization to correct any problems found (without penalties), Transparen would produce a document assuring auditors that on a particular date we reviewed the software installed on all machines as well as the proof of purchase and software licenses, and found that the two reconciled perfectly. In addition to providing a certified document for your records, we would keep a copy of this document. This way you may request that we produce it for insurance purposes if there is a fire or other incident that destroys other records.

These steps will produce documents that show you have acted in good faith and in accordance with software license provisions.

Willful non-compliance

Under no circumstance will Transparen take steps to report or disclose the presence of unlicensed software. Nor do we install or support such software. In addition to becoming ineligible for support from reputable support companies, there are significant financial penalties for non-compliance that should deter most legally incorporated companies from infringing on the rights of software companies.

Penalties for non-compliance

If an organization is willfully non-compliant with software licenses, and therefore infringes upon the copyrights of the software, the copyright owners or their representatives can file civil suits and/or criminal charges, with penalties of up to $20,000 per unlicensed copy, according to the Canadian Alliance Against Software Theft (CAAST). Most external audits are triggered by anonymous reports on the CAAST website or hotline, or by help desk requesting support for a product with a pirated identification number. As a result, CAAST may demand that the organization conduct an internal audit and report the results, file a lawsuit, seek an order permitting an unannounced inspection of the infringers computers, or make a referral for a criminal investigation. In every case they "seek to bring about compliance and negotiate a settlement or seek a court-ordered judgment for any infringement that occurs." (Please note that Transparen Corporation is in no way related to or associated with CAAST.)

An unpurchased software asset represents both an unaccounted asset and an unaccounted liability. Due to the stiff penalties, the liability associated with non-compliance makes it a very good idea to make software license management a top priority.

About the Cost of Software, and Alternatives

If software such as Windows XP (support) or Office XP is too expensive for the business, due either to the nature of the business, or the current size of the business, we are pleased to mention several alternatives. If making use of these alternatives, it is important to completely delete the unlicensed software in order to obtain the benefits of compliance. Here they are:

• Desktop Operating System - A free alternative to Windows is Linux, which is a product that we support. Please note that Linux itself has a license called the GPL, which in simple terms means that you may use the software for free, but if you distribute a binary copy, then you must also distribute the associated source code.
• Word Processing, Spreadsheet, and Presentation Software - There are many alternatives, but a comprehensive one is OpenOffice.org. Not only is this software capable of opening the majority of MS document formats, but it is well-polished software available for many platforms including Linux and Windows for free.
• Web Browsers - Try Mozilla or Firefox. We will support installation and rollout of Mozilla or Firefox.