Practice Good Software License Ethics to Survive a Software License Audit

How would you fare in a software license audit?

It may be a question worth investigating if you’re not sure of the answer.  Failing to prove your compliance in a software licensing audit can be quite costly.

While you may think the chances of your organization being chosen for a software license audit are slim to none, the risk is still there. After all, something as simple as going over the number of installations allowed in your volume software license can put you out of compliance.

How Software License Audits Come About

Think you’re above being the subject of a software license audit? Think again.

Aside from the rare misfortune of being chosen for a random audit by the Business Software Alliance (BSA) or Microsoft themselves, BSA offers the public the option to report software piracy right on their website.

That leaves the door wide open for [disgruntled] employees & associates to blow the whistle on all of your little piracy practices – whether it was accidental or not – leaving you to deal with the hassles of a software license audit.

The “Joys” of Software License Audits

Should software license auditors come knocking at your door, here are all of the materials they’ll be asking for:

1. Software license proofs of purchase


2. Invoices & sales receipts from software vendors


3. Any certificates of software authenticity


4. Comparisons of installations to purchase software licenses – including any upgrades, free & paid.

Hopefully you will have majority of what’s listed above on-hand and ready to go within the few weeks allowed to get everything in order.

After the auditors have rummaged through all of your records, they’ll report back with what’s missing, how much it’s going to cost you & how to keep history from repeating itself in the future if you’re found to be non-compliant.

Meet the Consequences of Non-Compliance

If you have the misfortune of failing a software license audit, the penalty fees can run quite steep.

Since software licenses are backed by vendor contracts & U.S. copyright law, both civil and criminal penalties may apply.

Businesses inadvertently participating in software piracy due to not properly licensing used software can suffer fines of up to $150,000 per illegally installed copy. That includes software that was purchased but not properly licensed.

Individuals that pirate software – even if it’s by accident – can face up to five years of jail time and $250,000 in fines.

Keep in mind that’s just what you’re paying to the software vendors.

Let’s not forget the hefty legal fees you’re likely to incur or name-dragging in the dirt to the public. It’s not a pretty picture.

Protect Your Company – And Wallet!

What can you do to make sure you’re found compliant in a software license audit?

• Make sure you purchase the appropriate number of software licenses. If you buy volume licensing, make sure that you don’t exceed the number of allowed installations.


• Make sure you understand the terms of purchase software licenses. Is it a concurrent user license or a per-seat license? In other words, if you have 10 computers but only 5 work at a time, can you get away with buying 5 licenses or do you need 10? Be sure that you have a full understanding of what you’re buying and what it takes to be compliant.


• Keep complete, accurate records of your purchased software licenses. Say you do actually purchase the correct number of software licenses and you do not exceed the number of allowed installations – can you prove that? If not, your business can still be fined thousands of dollars for licenses you may have actually paid for, but lack the paperwork to prove it.

“Meh, That’s Too Much Work!”

Should you feel that it's just too much work to research, purchase & keep records that will protect you in the event of a software license audit, then maybe it's time you look into a company that offers software license management services.

Or, you can always push your luck & hope that you never have to face a software license audit. But I suggest that you read a few software license audit horror stories first:

• Temple University Pays $100,000 to Seattle Software Claims


• Microsoft Licensing: A Cautionary Tale

Photo Credit: kiewic