Software licensing and the law

A quick guide to the world of software licensing for small businesses

Many people freely duplicate or copy software not realising that this is illegal and could lead to prosecution. When running a small business it is vital that we all stay within the law by purchasing legal software. This Guide explains the world of software licensing for small businesses.

Software licencing and the law

Software is intellectual property. This means that smart people have spent a lot of time and effort to write the software as a commercial venture and this investment needs protecting.

In the world of software this protection is undertaken by the software license agreement that holds the owner or user of the software to a set of rules and regulations on what can and cannot be done with the software. A good example of what you cannot do is make multiple copies and sell them at a car boot sale – that is illegal.

For some reason some people believe that it is acceptable to freely copy and sell software, often at very cheap prices. For those wanting to start or run a small business it is very tempting to get a copy of a mainstream office productivity suite for a fraction of the proper price. This is illegal and will cause your business to have a tarnished reputation and reflect badly on you personally.

You will also have problems receiving technical support if the vendor discovers that your software is illegal.

By using legitimate software you will be avoiding legal problems and the cost of legal action and/or fines.

What is a software licence?

When you install software for the first time you will often see a screen prompting you to read the software licence displayed and then click a button to say “I accept” or “I decline”. If you accept the licence then the software is installed, if you decline then the software will not be installed.

Very few people will actually read this licence on the screen. Many will simply click onto the “I accept” button and install the product. It is worth having a read of the licence to make sure you really do accept the terms.

In fact one humorous vendor is meant to have added a line in their software licence saying “If you get to this line thank you for reading the licence. Call this number for a £100 gift token free of charge”. How many people called? None – because no one ever reads these licences!

If you buy software over the counter you will also receive a paper licence. This End User Licence Agreement (EULA) will often contain holograms, silver strips (called security threads) or other security features to prove it is legitimate.

The software will be wrapped in a DVD/CD holder which is sealed, and some manufacturers have a note on the disk box saying that if you break the seal then you accept the licence agreement for the software.

Pre-installed software

When you buy a PC you often have the option to have it pre-installed with software. When you receive the PC it will come with the software licenses in paper format confirming that you are the owner of legitimate software. The PC may also have a security sticker on the outside declaring the legitimate nature of the installed software.

If you buy a PC with pre-installed software and these licenses are missing then it could be that the software has been pirated and is illegal. If you buy second hand PCs make very sure that you have rights to use any installed software – some software manufacturers will not allow licenses to be transferred like this.

“Mischanneled” software

Some manufacturers will sell software cheaper to students and academics to encourage them to use it. This software will be marked as academic or student use only. If you are sold this software then using it for a small business is a breach of the licence agreement and you could be liable. Make sure any software you buy is designed for business use.

Grey market software

This refers to software that is meant for sale outside of the EU and Switzerland. It is often sold at a cheaper price once it has been imported. Use of this software is illegal.

Spotting fake software

There are a number of indicators that software may be illegal:  

  • The software is not in English.
  • The printing on the packaging is poor.
  • There is a product key printed on the DVC/CD.
  • Manufacturer’s certificate of authenticity not present (if applicable).
  • CD hologram is a sticker and not part of the CD itself.

Note that manufacturers apply different types of security devices to their software. If you are in any doubt you can check with the vendor directly.

These web sites may also be of interest:

Federation Against Software Theft

Business Software Alliance

Source: Software licensing and the law

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