The True Cost of Defending Against Copyright Infringement Litigation

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Software publishers and entities like the BSA| The Software Alliance and the SIIA regularly audit companies to investigate copyright infringement claims. These entities seek monetary penalties if any infringement is discovered, and in the majority of cases, reach an out of court settlement for an agreed upon sum.

Sometimes, settlement negotiations break down and one or both parties resort to pursuing claims in court. In many instances, the auditing entity will pursue litigation if it believes that the audit target is refusing to participate in the audit process or is unwilling to reach an amicable resolution. In other instances, a company may choose to fight any potential copyright infringement claims in court rather than participate in an arbitrary auditing process defined by the publisher or auditing entity. There are a few key costs to consider when determining how to defend against software infringement claims.

  1. Legal fees may be tens of thousands of dollars per month
    Typically, a party can expect to spend several thousand dollars per month in court costs to defend against copyright infringement claims. These fees will have to cover communication between the parties, legal research, necessary court filings, meetings with opposing counsel or judges, and preparation for and attendance in court hearings.
  2. Time diverted from company business
    Regardless of whether a company chooses to participate in the audit or pursue litigation, the process will take time and resources away from company business, which may cause the company to suffer financially. Litigation may drag on for months or even years, and preserving all of the necessary evidence may become taxing as software requires upgrading and hardware must be replaced. Everything must be preserved in order to avoid spoliation of evidence of claims, which may create a host of technical problems for the companies seeking to resolve the infringement claims.
  3. Cost if unsuccessful
    While companies that initiate the first filing are often seeking a declaratory judgment that they are not violating any copyrights, publishers and auditing entities will frequently make counterclaims and request additional damages for willful infringement if successful. Even the most diligent companies sometimes find that some software is not compliant, which means a court may find liability for copyright infringement damages. If the software publisher is successful, it could collect actual or statutory damages from the infringement, which could be significant.
  4. Cost of future compliance
    Regardless of whether a company is ultimately successful in court, it will be required to remediate any compliance issues and purchase any necessary licenses. This expense is often overlooked by companies seeking to resolve any outstanding claims. However, any resolution will typically require these purchases to be made and recommend a company implement a software asset management program to manage future compliance.

All of these factors should be considered when evaluating strategy for resolving any outstanding copyright infringement claims. If in doubt, it is important to consult an attorney experienced in software copyright infringement.