A Software Audit Settlement Is Not Complete Until All Obligations Are Met
The majority of copyright infringement claims against consumers using copyrighted software are resolved by settlement rather than litigation, for a multitude of reasons. In some instances, the settlement agreements contain post-settlement obligations that can affect the release of liability for all copyright infringement claims. The following are the most common examples of the settlement obligations that must be completed in order to secure the release of liability.
1. Settlement Payment or installment payments.
The most obvious obligation typically is at the execution of the settlement – the payment. Sometimes the parties negotiate payment terms, so the payments may be made in installments. Regardless, all payments must be made and received in order to resolve the matter and secure the release of liability, or the copyright holder could choose to proceed with the copyright infringement claims in court.
2. Software Code of Ethics.
Many software copyright infringement settlements contain an obligation to prepare and circulate a Software Code of Ethics, which is a guideline for employees to help ensure that software is not unlawfully proliferated or copied. Sometimes the terms of settlement will require a signed copy be returned as part of the post-settlement obligations.
3. Certificate of Compliance and Exhibits.
One of the most important aspects of resolving software copyright infringement claims for the copyright owner is ensuring that the consumer remedies any license deficiencies. Settlement obligations may require an audited company to remediate these deficiencies by uninstalling or replacing unlicensed products, and providing proof in the form of a certificate of compliance and schedules as part of the settlement obligations. The terms of the settlement agreement can also require that this process be completed within a set period of time to ensure that the release of liability remains valid.
4. Annual Officer’s Certificate.
In some instances, a company may be required to conduct an annual self-audit to ensure the company continues to comply with all of its software licenses and supply an officer’s certificate to the copyright owner pursuant to the settlement agreement. Sometimes, due to the attenuated nature of these obligations, parties forget these requirements and do not follow through, which may jeopardize the entire settlement and release of liability.
If any of these provisions of the settlement agreement are not met, the copyright owner has the right to seek all legal actions under the Copyright Act in court because the release of liability is no longer valid. Settlement agreements contain very specific requirements and obligations, so it is important for a company to seek advice from a legal expert with experience in software licensing in order understand all of the obligations and ensure compliance.