The Jig Is Up

Amazingly Little Grace

The cold, hard truth is that the BSA can and will prosecute; and, like the IRS, it likes to make examples of small fries so you'll tell a friend. Even if you choose not to tell anyone, expect to find your name on the next BSA press release branding you a corporate miscreant; and small-business miscreants are remarkably easy to flush out.

Usually, an office visit isn't necessary, says Kruger. Most companies start bargaining after getting one of BSA's heart-stopping letters. Those go out shortly after BSA's periodic radio and direct-mail blitzes of select American cities. BSA will blanket a town with its 1-888-NO-PIRACY hotline, offering 30 days of grace to any company that turns itself in and gets right. If a company is already under investigation, however, it is not eligible for the grace period.

Maybe you're too busy to get all your drives checked in 30 days. Maybe it'll take you that long just to get over the shock and check out the BSA. Or maybe a jilted current or former employee jotted down the toll-free number and is savoring the prospect of a little payback.

That's what Steve McSwain figures happened to IPI Security. As general manager of the Irving, Texas, security firm, he was upgrading IPI's 30 desktops when he got a BSA letter demanding more than $100,000. McSwain is pretty sure he was ratted out by the ex-employee who had brought the illegal software into IPI in the first place--an irony not uncommon.

Because federal copyright law specifies up to $150,000 in damages for each infringed work, BSA initially billed IPI for the retail price of every Microsoft Office component installed. In the end, they finally settled for about $69,000.

"Overall, they were very fair," says McSwain, who had to delete the offending programs and buy new copies. Now, he spends 30 hours quarterly ensuring all his software is legal.

The fines wiped out IPI's profits for the year. But that's the point BSA wants to make. "An important principal [of enforcement] is to make it more expensive to copy software illegally than to buy it in the first place," says Kruger.

What to do? Spend a lot of time making sure every program in your company is legal. Yes, it's expensive and hard to keep employees in line during the everyday shot and shell of business. But don't rely on excuses or begging if you come into BSA's crosshairs.

The only defense is not having more software than you can prove you own. Oh, and it wouldn't hurt to stay close, close friends with all your employees-current and former.

:: Don't get busted ::
Want to keep the software police away?
  • Permit only approved programs on your workstations.
  • Keep original program disks and documentation under lock and key..
  • Put one employee in charge of purchasing, installation and license maintenance.
  • Buy original disks, manuals, license agreements and warranties directly from publishers or authorized resellers.
  • Be wary of software compilations from different publishers, and don't buy anything labeled "back-up," "academic," "OEM," "NFR" or "CDR."
  • Regularly audit your PCs using BSA's free GASP utility (, and match product names, versions and serial numbers to your licenses.
  • Whenever possible, run software from servers with site licenses.

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This article was originally published in the May 2002 print edition of Entrepreneur with the headline: The Jig Is Up.

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