Scott Technology Attorneys

Software Audit FAQ

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Q. What happens if we ignore a request for a software audit?

A. Companies targeted for audit are not required to cooperate with the trade associations or publishers, but resolution without litigation is highly unlikely without an agreement from the target company to participate in a voluntary audit.

Q. What types of software audit matters should be handled by legal counsel?

A. In light of the highly specialized issues that arise in software audits, unrepresented or underrepresented clients generally make a series of common mistakes that jeopardize their legal position.

Q. What is the most common mistake company’s make in responding to a software audit?

A. The most common mistake we encounter in software audits is the failure to compile and produce accurate installation information.

Q. Which software vendors are most likely to audit our company?

A. Here are the vendors we encounter the most in our practice: Microsoft, Autodesk, Adobe, IBM, Oracle, SAP, and Borland.

Q. How should my company respond to a request for a software audit?

A. A request for a software audit is a legal matter that should be handled by your company’s inside or outside legal counsel.

Q. What are the best practices for conducting an internal investigation regarding software license compliance?

A. Software audit investigations generally involve:

  1. Automated discovery of the relevant software products
  2. License entitlement review
  3. Technical use case review for each product
  4. Application of the licensing rules to the facts
Q. Why is a self-audit better than a third-party audit conducted by Deloite, KPMG, or E&Y?

A. All software audits involve the gathering and validation of information regarding the use of computer software. In a self-audit the customer conducts an investigation and represents to the publisher that it is true and correct. In publisher audits, a third-party conducts an audit and the customer invariable challenges the findings. The self-audit is more efficient and is fairest to both sides.

Q. What are the key provisions to include in a pre-audit agreement?
  1. Rule 408 Protections for Audit Materials
  2. Access to Information
  3. Time-frames for information sharing
  4. Audit Deliverables
  5. True-Up Provisions for any Compliance Findings
Q. Our internal investigation is still pending, is it possible to determine the amount in controversy in our software audit?

A. Yes, in certain instances, it is possible to gauge the amount in controversy before an internal investigation is completed. Factors we consider include: recent settlements with the same vendor on a similar issue; specific product and deployment counts; the strengths and weaknesses of the legal points on both sides.

Q. We received an unreasonable demand from a software vendor, what process should we follow to develop our counter offer?

A. You should respond by developing an analysis of what your company would owe assuming you would prevail on all legal arguments and offer that number as your initial counter-offer.

Q. What happens if we are unable to negotiate a business resolution to our software audit?

A. We are usually able to negotiate an out-of-court resolution to most software audit disputes. Occasionally, there are cases that do not settle and one side or the other files litigation in a federal district court.

Q. What are the most important business considerations when considering litigation in a software audit dispute?

A. Here is what you should consider before filing litigation in a software audit:

  1. Amount in controversy
  2. Switching costs
  3. Probability of success
  4. Impact on internal resources
  5. Legal fees and expenses