Software Piracy Risks: How to Protect Yourself and Avoid Financial Penalties

Software Piracy or Use of Counterfeit software is the unauthorized use of software. It has always been a grey area for both software publishers and organizations. Software piracy is an especially massive issue in emerging markets such as Eastern Europe, Asia or Latin America. In these developing countries, we see a lack of awareness of software licensing practices and the implications of pirated or counterfeit software. But with the globalization and externalization of IT services, a large number of companies around the world are being affected and the risk of using pirated software should be a concern to anyone.

In this article, you can learn about some of the risks associated with pirated software use, how you can stay away from it, and also how to avoid paying money back to software publishers or other anti-piracy organizations.

Why you should care about pirated software use

Truth is, not many organizations have good internal software inventory practices like keeping a clean record of all software purchases over time, regularly checking deployed licenses within the entire environment, and reconciling the purchase and use of software to decide whether they need to buy more or they need to reduce the current number of licenses. When it comes to pirated use of software, large organizations may not even be aware that their regional teams may use software purchased or downloaded through unofficial channels.

Most concerns are related to software installed/purchased through unauthorized sources/resellers or IT Admins deliberately installing pirated software to minimize cost. Unfortunately, these people are often interested in keeping the costs down. However, this only works out in the short term or until they get caught.

We have made a list of top three (3) risks, outlining the most serious risks you are faced with when installing pirated software.

1. Pirated software will infect your PC and, potentially, the entire network

Most of the time, pirated software applications include malicious code that put your organization at risk and your system hacked. These programs often include trojans and viruses that allow cybercriminals to gain access to sensitive data such as employee information, banking information or any other important documents, but also deleting crucial apps for the network maintenance and thus breaching the security of the entire network. In recent years, there have been several surveys conducted worldwide that confirms there is a real connection between malware and unlicensed software.

1. Pirated software may not work properly and will fail on you

We are all familiar with the regular updates required to perform on Windows Operating System. These updates are usually related to security patches when security holes are discovered but are also meant to fix bugs and provide customer support. And it’s usually the same as any other software. By using pirated software, you prevent yourself from access to the latest updates that will keep your PC safe from cyberattacks. But you also reduce your chances to have a functioning software that will eventually crash.

1. Pirated software will bring your company significant fines for copyright infringement

BSA is a global organization known for fighting businesses that distribute or use counterfeit software. They won’t step back if they find out your company is using illegitimate software and the responsible person may even end up behind bars. But there are some software publishers who run anti-piracy programs individually. Such programs will often require companies to pay hefty amounts such as three (3) to five (5) times the price of the software.

BSA and how they may impact your organization’s revenue

Not many end-users are aware of the existence of The Software Alliance or more commonly known as BSA which was founded by Microsoft in 1988. Since then, major software vendors adhered to BSA; massive software publishers are part of BSA and they follow very closely the software piracy issues across the world. Their main role is to promote legal software use and to protect their IP against counterfeiting; as mentioned before, they are not afraid of taking legal action against companies where counterfeit software is used. Most of the time, it is the dissatisfied employees or former employees who send tips to BSA. The Alliance even has its’ own toll-free hotline where anyone can anonymously report such use of unlicensed software. If your company is reported for misuse of software, you need to be prepared to pay enormous fees and face lawsuits against BSA.

How to protect yourself against pirated software use and avoid penalty fees

Identifying pirated software can be an almost impossible job if you don’t know what you’re looking for. Every software application is based on different technologies and uses various licensing models. Most software programs are locked to a license key, but nobody except for the software publisher will have access to a complete database of the genuine license keys.

However, there are a few things that companies can do pro-actively to avoid massive fines or even a notification letter from BSA.

1. Perform self-audits for all software installed across your organization. It may be a time and resource-consuming process but will save you money in the long term. Make sure to inventory all devices where software applications are installed. This is more often easier to say than done because knowledge is the key when evaluating software licenses. Our recommended practice is to implement a software asset management program to guide you through regular checks of your software use.
2. Purchase additional licenses to cover potential compliance gaps. If you identify any shortfall in licenses by undergoing a self-audit, make sure to cover the deficit with proper licenses purchased from authorized resellers or the vendor itself.
3. Limit user access to application installations. Adopt a software policy at the organizational level which doesn’t allow your employees to have admin rights and install programs themselves on their local PC. Additionally, create internal procedures where software administrators make themselves responsible for software that is installed across the company.
4. Write internal procedures and perform regular mock audits. It’s not enough to do an assessment of your software and hardware environment and then forget about it. Evaluation of license use should be a recurring task for your team; moreover, the process needs to be documented and updated on a constant basis.
5. Engage with subject matter experts. When all of the above fails, you can always seek expert support. Working with third party companies who specialize in software asset management (SAM) and anti-piracy discovery practices will save you time and money in the long term. These companies have specific search terms to identify any trace of pirated software installations. They also have knowledge around the latest licensing models and can help you create the baseline of your license purchase and installations while calling out any anomalies identified in your systems.

Contact us

If you are concerned that your company may use pirated software but don’t know where to start, we recommend seeking expert help. Connor Consulting has strong expertise in anti-piracy programs and can work closely with your organizations to identify software licensing gaps, but also provide support in understanding any misuse for your software and whether any pirated software is deployed across your environment.