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Gexa Corporation Pays $400,000 to the Business Software Alliance: Robert J. Scott, Managing Partner, Scott & Scott LLP, Issues Response StatementDALLAS --(Business Wire)-- April 10, 2006 -- "Software license compliance, audits and settlements are issues that have been facing enterprises around the country, and in the Houston-area, for many years. While Scott & Scott understands the Business Software Alliance's desire to protect the intellectual property rights of its software publisher members, the firm believes it is important to inform businesses about some of the questionable enforcement methods the organization uses and offer recommendations for reducing the risks of external software audits from the Business Software Alliance, the Software Information and Industry Association or software publishers. First, the Business Software Alliance aggressively markets to disgruntled employees, offering financial incentives to make anonymous tips against their employers. Reward payments to disgruntled employees can be substantial, often up to $200,000. In many instances, the informant is the same person responsible for software compliance at the company they are reporting. That fact, coupled with the promise not to disclose the informant's name leads Scott & Scott to believe that the Business Software Alliance is incentivizing non-compliance to generate revenue, and significantly damages the organization's credibility. Additionally, the organization's threatening communications are a method of intimidating well-meaning companies, who often do not have the resources necessary to invest in costly compliance programs. Further, the software industry has failed to adopt standard naming conventions or product codes that can record software titles at the time of installation, making the asset discovery process extremely difficult to automate. This creates an enormous financial and personnel burden for companies that intend to purchase the appropriate amount of software, but cannot easily reconcile the software on their networks with what was purchased, and therefore need to create dedicated software asset management departments to conduct this effort manually. Finally, the Business Software Alliance has done nothing to simplify or standardize the license agreements of its member companies, which are all unique, lengthy and complex. This leaves the onus of compliance entirely on software customers - the very customers that the software publishers actively pursued to generate revenue. Scott & Scott recommends companies in Houston and around the country implement the following procedures into their business practices: -- Create Standardized Agreements With Publishers: Many companies do not realize that they have leverage when negotiating license agreements with publishers. In fact, companies can develop favorable software license agreements with the assistance of their own legal counsel. Favorable provisions can include "no audit" clauses or voluntary "true-ups" to reduce the costs of compliance management and the total costs of ownership. -- Retain Proofs of Purchase and Keep Accurate Records: Contrary to popular belief, trade associations and publishers only accept dated proofs of purchase, with an entity name matching that of the audited company. Anything less will fall short of publishers' mandated proof of ownership and therefore, repurchase of the assets in question may become necessary. Proper record keeping is the key to audit-readiness. -- Choose Integrated, IT Asset Management Tools: Asset management should be built into every company's ongoing business processes to ensure that this process and license compliance become core competencies. The ability to conduct routine reconciliations is required to ensure software license and Sarbanes-Oxley compliance. The implementation of a carefully selected, integrated IT asset management solution will help save money and ensure that license compliance becomes part of the company's culture. -- Obtain Expert Assistance in the Event of An Audit: Audit defense is most effective with the representation of specialized legal counsel to avoid the common mistakes that may jeopardize a company's legal position. Finally, any automated discovery that is conducted under the supervision of legal counsel will be protected by attorney-client and work-product privileges, should an out-of-court resolution not be possible." Robert Scott giving a presentation in association with the Houston Bar Association entitled, "Successfully Defending Software Audits," which will take place at Houston's Birraporetti's restaurant, on April 27th at noon. Please call 800.596.6176 or register online at www.scottandscottllp.com. Editor's Note: Robert Scott is an expert in software license compliance and conducts regular seminars entitled, "Successfully Defending Software Audits" and "Software Asset Management & The Law." Robert graduated summa cum laude from Austin College in Sherman, Texas with a B.A. in economics. He earned his law degree from Hofstra University School of Law in New York. Robert is a member of the State Bar of Texas, the Dallas Bar Association's Computer Law Section, the Information Systems Audit and Control Association, the Managed Services Providers Alliance, the IT Compliance Institute, and the Science and Technology Section of the American Bar Association. Scott & Scott (www.scottandscottllp.com, www.bsadefense.com and siiadefense.com) is a leading law and technology services firm dedicated to helping senior executives assess and reduce the legal, financial, and regulatory risks associated with software compliance. Scott & Scott's legal and technology professionals provide software audit defense and software compliance solutions, all protected by attorney-client and work-product privileges. |
