The Potential Risks and Countermeasures in Using Software

Several engineers of Company A downloaded drawing software from the internet. A few months later, Company A received a Lawyer’s Letter from Company B, in which it stated that Company A had downloaded Company B’s software, Company B required Company A to pay the license fee amount up to RMB 1 million. The evidence of using was attached to the Lawyer’s Letter. Company A insisted that it was the employees’ personal behavior, so it refused to pay the license fee. Then Company B filed the lawsuit to the court, under the mediation of the court, finally, the two parties reached a settlement agreement, and Company A still had to pay the license fee for a certain amount as agreed by both parties.

Various software might improve the efficiency, however, if the companies fail to manage them well, they might become the ‘time bomb’.

In practice, some companies have consciously taken certain measures. For example, some companies have stipulated the rules in managing software in their internal rules and regulations, such as, the employees shall not use the pirated software, or download any software without the permission of the company, and etc.. However, such internal rules and regulations could not eliminate the risks of infringement. On the one hand, the company has the responsibility to supervise its employees’ behavior, if it has the rules but it fails to supervise the implementation of such rules, then such rules would be doubted; on the other hand, the company is the beneficiary by using the pirated software. This is why most of such cases would be solved by a settlement agreement, and the ‘infringement party’ should pay the license fee. Another example is that some companies require the employees to buy the laptop by themselves, by which the companies would insist that the infringement is the employee’s personal behavior. But the majority judgments would take the above 2 aspects into consideration and order the the ‘infringement party’ to undertake the compensation liability.

In order to reduce the legal risks by using the pirated software, we would like to recommend the companies take the following aspects into consideration.

Firstly, for the normal office software, the company could require the supplier to pre-install the legitimate software (the edition shall be the enterprise edition instead of the home edition) while purchase or rent the hardware. In addition, it would be better to prescribe that the copyright liabilities related to the pre-installed software shall be undertaken by the supplier. In consideration of the cost and litigation risks, for those alternative software, it would be better to use the software with a relevant lower price, while a company has downloaded the pirated software inadvertently, the copyright owner may not claim or the claimed compensation would not be a large amount.

Secondly, for those special software, such as a certain software for R&D or marketing design and etc., the company could install the software with copyright on the specified computer for the relevant employees to use, in addition, the company should stipulated in the internal rules and regulations on prohibiting the employees to install such software on the other computer.

Finally, in order to eliminate being claimed for infringement, especially for the supervision liabilities, the company should stipulate the rules on downloading and using the software in its internal rules and regulations. And the companies shall check the employees’ computers regularly, and correct any violations of the aforesaid rules.