Firms alerted to software licensing pitfall
Don't overlook licensing in takeover deals, warns Federation Against Software Theft
The Federation Against Software Theft (The Federation) has warned that companies on the acquisition trail could face civil or criminal prosecution if they fail to check software licence compliance.
According to The Federation, January 2004 saw the highest figures since October 2000 for global mergers and acquisitions, with $145bn worth of deals.
John Lovelock, manager of The Federation's legal affairs, said: "Software is an area that can get overlooked in the middle of a takeover deal.
"When a company buys or merges with another business, it needs to know what it is getting. This must include treating software licences as assets."
Company directors can be liable if business software is found to be unlicensed and consent can be demonstrated.
In 2002, changes in the Copyright & Trade Marks (Offences and Enforcement) Act increased the maximum penalty for software licence infringement from two years' to 10 years' imprisonment.
Lovelock added that corporate transactions take place under "enormous pressure" and that frequently there is no time to check all the finer details.
"Often information on software compliance levels and existing licensing agreements is not to hand and available for scrutiny," he said.
This creates a host of liability issues and is therefore a high-risk area for any organisation."
Ross Miller, managing director of VAR Trustmarque Solutions, which has a dedicated software licensing division, said: "If software isn't paid for it is treated as stolen goods.
"Checking licences should be part of the due diligence in an acquisition process, and software should be part of the asset register.
"But the more acquisitions happen, the more licensing opportunities there will be for the channel."