Tough law guards licences

New laws covering software licensing agreements will put penalties more in line with the criminal offences of theft and fraud rather than those of breach of contract.

Experts said that firms should tighten management of software licences and IT assets to ensure they avoid the tougher penalties and any resulting bad publicity.

The new laws are enshrined in an amendment act, which passed largely unnoticed onto the statute books on 20 November.

Paul Brennan, general counsel at anti-piracy organisation the Federation Against Software Theft (Fast), said the act makes it easier for enforcement bodies to take action. "It has loosened up the whole process," he said.

"In the past, police had to request a suspect to come to the station for further enquiries or had to wait to obtain an arrest warrant. Now, they can arrest a company director on the spot if they are suspected of deliberately using illegal software."

Criminal law

In 2003 Fast will crack down on underlicensing, said Brennan. "We get 400 calls a year reporting firms that have bought one copy of software and are using it in multiples," he said. "Our focus will be less on settlements and more on turning to the criminal law."

The Copyright etc and Trade Marks (Offences and Enforcement) Act 2002 increases the maximum prison sentence for criminal copyright infringement from two to 10 years. Firms with unlicensed software could fall foul of this provision.

The new law gives more powers to police to confiscate computers or unlicensed materials and make arrests. It also extends the circumstances in which police can seek warrants to look for illegally copied materials. The act amends the Copyright, Designs and Patents Act and Trade Marks Act.

An increasing number of firms are at risk legal action over licensing. James Fair, vice president of asset management specialist MRO Software in Europe, said 6,500 European firms fell foul of software licensing laws last year, and paid a total of £28m in fines.

"Directors who don't adhere to the software licensing laws could find themselves in expensive legal hot water. This may take the form of criminal prosecution," he warned. Fair added that this could leave company chiefs with a criminal record. This could taint firms' reputations, and damage shareholder confidence and business value.

Rupert Battcock, an IT lawyer at law firm Nabarro Nathanson, said professional pirates would probably be the main targets for police, but any firm copying software illegally or exceeding the number of copies for which they have licences is at risk. "It needs to be realised that the criminal provisions can be used against companies engaged in this sort of thing," he warned.

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