Businesses fined £2.2m in 2010 for using unlicensed software

The British Software Alliance says culprits' actual losses would have been much higher

The cost to UK businesses of using unlicensed software throughout 2010 totalled £2.2m in fines, according to the Business Software Alliance (BSA).

The largest settlement in the UK in 2010 was £40,000. And the total was more than double the cost to businesses in 2009.

Other big payouts came from design company Native Design, which settled an unlicensed software dispute last year for £24,000, and Glasgow-based Barrhead Travel, which paid out over £10,000.

The BSA also suggests that the £2.2m figure only represents the amount paid out as a direct result of legal action, and actually the real cost is a lot higher.

It said that the costs cited exclude legal expenses, disruption to business operations, the impact on cash flow when having to make unplanned software purchases, damage to reputation and the repercussions of operational downtime.

"Informant reports come through frequently and businesses need to be aware that it is easy for employees to blow the whistle on unlicensed software use," said Julian Swan, director, compliance marketing EMEA, BSA.

"Companies that cut corners to save costs when it comes to renewing software licences are breaking the law - this is an ideal excuse for frustrated employees to secure some payback on management that thinks it can get more with less."

The BSA insists that these costs have a wider impact on the economy.

Research carried out in 2010 by analysts IDC for BSA found that by reducing the 27 per cent software piracy rate in the UK to 10 per cent over four years, 13,011 high tech jobs would be generated. By 2013, the move would also see new economic activity generate £5.4bn, with HMRC able to claim £1.5bn in new taxes over the same period.

"This is money that businesses can ill-afford to lose, especially during an economic downturn," said Michala Wardell, chair, BSA UK committee.

"Many businesses need to understand that software is a valuable asset and a key driver of growth for UK plc. Companies that don't comply can expect to face stiff financial penalties as a consequence."