Illegal ASPs pose a big threat

Users can be prosecuted for using unlicensed software even if they are only renting it from an application service provider (ASP).

Geoff Webster, chief executive of the Federation Against Soft-ware Theft (Fast), cautions ignorance is no protection from the law. The customer is liable if an ASP falsely claims to be authorised by software publishers.

"Unfortunately it's like the stolen car syndrome, where you buy a car in good faith and find it is stolen. The fact the ASP was not bona fide does not absolve you of liability," he warned.

Other software licensing problems that can arise from using an ASP include employees increasing the number of licensed applications by copying them.

"For the person who uses the ASP and the software, there is a liability for making sure the software is properly licensed to the ASP, irrespective of whether the software is in your control," said Dai Davis of legal firm Nabarro Nathanson.

Losing access to data through damage or dispute with an ASP is another big problem, Davis added.

"The best advice is that possession is nine-tenths of the law. If you don't have a backup of your data, you have a problem," he said.

Earlier this month US time-tracking, invoicing and accounting ASP Red Gorilla closed down without notice, leaving customers cut off from mission-critical applications and data.

Firms in dispute with an ASP can issue a court order because of a breach of contract, but Davis said that businesses are unlikely to find co-operative liquidators if the ASP has gone bust.

Problems will remain until the ASP market matures, analysts say. "There must be a risk until ASPs become secure. It's a danger that the ASP and the customer have to anticipate," said Ovum senior analyst, Mary Hope.