Software Licensing Essay Example
Software Licensing Essay Example

Software Licensing Essay Example

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  • Pages: 12 (3143 words)
  • Published: December 11, 2018
  • Type: Research Paper
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In 1993, the Software Publishers Association revealed that software piracy caused a worldwide loss of $12.5 billion. Just in the United States, the loss amounted to $2.2 billion. Despite earning more than 40 percent of their revenues from global markets, the software industry suffered 85 percent of its piracy losses outside the US. Additionally, according to the association's report, illegally obtained business software accounted for 35 percent of all software in the United States, including 30 percent acquired through corporate piracy.

In a corporate or business environment, each computer requires its own software and manuals. It is illegal for corporations or businesses to use the same software on multiple computers, copy software without permission, or distribute it without written consent from the manufacturer. Software managers are responsible for ensuring legal compliance, managing assets, and controlling costs within their organizations. The

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distribution and licensing of software often require assistance from legal departments and human resources teams.

Based on federal statutes with Constitutional authority, information can be considered property protected by patent and copyright laws. To treat unauthorized copying of computerized information as theft, the government relies on alternative theories that see information as property. Violating trade secret rights can result in criminal offenses in most jurisdictions due to state legislation governing trade secrets. While the definition of a trade secret may vary between states, it typically involves elements such as confidentiality and limited industry knowledge.

A court may allow the use of a trade secret if it is independently discovered or developed by another person or if the owner fails to adequately protect its secrecy.

In 1964, the United States Copyright Office started registering software as a type of literary

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expression. This decision was influenced by the Supreme Court case White-Smith Music Co. v. Apollo, which ruled that a piano roll used in a player piano did not violate copyrighted music because it was considered part of a mechanical device. Since computer programs are both textual (like a book) and mechanical (like the piano roll), the Copyright Office chose to grant copyright protection based on the rule of doubt.

In 1974, Congress established the Natural Commission on New Technological Uses (CONTU) with the purpose of addressing the sufficiency of existing copyright laws for computer technology and determining the extent of protection for computer programs. CONTU concluded that copyright protection should go beyond just the literal source code of a computer program but left it to evolving case law to ultimately determine how far this protection should extend.

The commission concluded that copyright was the most effective means of safeguarding intellectual property, as opposed to trade secrets and patents. This determination subsequently led to the establishment of the 1980 Computer Software Act, which serves as a guideline for interpreting the Act. The Copyright Act was modified in 1980 to explicitly encompass computer programs. According to Title 17 of the United States Code, it is illegal to reproduce or distribute copyrighted material without permission, except for creating a single backup copy for archival purposes. Any written material, including computer programs, that is fixed in a tangible form automatically receives copyright protection. Therefore, there is no need to submit a software program copy to the Copyright Office in Washington, D.C., in order for it to be protected under copyright law.

It is important to remember that copyright is a form of

property right. To stop the unauthorized sale of your software programs, you need to get an injunction from a federal court and seek compensation for the damage caused by the sale. In 1990, Congress passed the Software Rental Amendments Act (Public Law 101-650), which made it illegal to commercially rent, lease, or lend software without obtaining explicit written permission from the copyright owner. In 1992, Congress introduced an amendment to Title 18 of the United States Code.

Public Law 102-561, also known as software piracy legislation, makes it a federal offense to reproduce or distribute unauthorized copies of software valued at $2,500 or more. This offense carries severe penalties, including up to five years in prison and fines reaching $250,000. The law explicitly prohibits profiting from copying software, making multiple copies for different users within an organization, and supplying unauthorized copies to others. If caught with pirated software, violators can be charged under both civil and criminal law.

In cases of copyright infringement, individuals or companies found guilty may face civil actions such as injunctions and payment for actual damages (including the infringer's profits), or statutory damages of up to $100,000 per infringement. Criminal consequences for copyright infringement can result in fines of up to $250,000 and imprisonment for up to five years for a first offense. A second offense can lead to imprisonment for up to ten years along with fines or both. Counterfeiting or copying software not only causes financial loss for developers but also impacts the entire software industry due to piracy.

Software developers invest a significant amount of time and money in the development of software for public use. When individuals purchase genuine software,

a portion of their payment contributes to research and development efforts for new software.

There are three forms of software piracy. The first is software counterfeiting, which involves illegally replicating and selling copyrighted software as if it were authentic. The second form is hard disk loading, where unauthorized copies of software are loaded onto personal computer hard disks by computer dealers to incentivize hardware purchases from them. The third form is downloading copyrighted software from electronic bulletin boards or through Internet connections using modems.

When piracy occurs, consumers end up paying higher prices on new software or upgrade versions. In the United States, federal appellate courts have ruled that copyright protection extends to operating systems, object code, and ROM-based software. Some lower federal courts have also recognized microcode (the instruction set on microprocessor chips) and the visual appearance of computer screens as eligible for copyright protection.

The widespread development of multimedia applications has led to significant challenges in obtaining copyright clearance for text, images, video, and sound. The United States Government actively protects the rights of the software industry. During raids conducted by the Business Software Alliance (BSA), Federal Marshals or local law enforcement officials are involved. The Software Publishers Association (SPA), the main trade association in the PC software industry, collaborates closely with the FBI and has provided them with an enforcement manual to investigate pirate bulletin board systems and organizations (audits). With the assistance of the FBI, enforcement actions have resulted in recoveries amounting to $16 million since the program's inception in 1990. The SPA also finances an educational program to educate individuals and companies about software usage and legalities.

This program provides PC users with the

necessary tools to comply with copyright law and become software legal. The SPA also offers free brochures that provide information on the legal use of software for individuals and businesses. Additionally, a 12-minute videotape is available to assist corporations in understanding copyright law, featuring frequently asked questions along with their answers. The videotape is available in both French and Spanish, and over 35,000 copies have been sold. Furthermore, the SPA has created a free Self-Audit Kit that enables organizations to assess their software usage practices. Included in the kit is a software inventory management program designed to track commercial software programs on all hard disks.

The program scans PC hard drives for over 1300 widely used business programs. Additionally, the SPA Software Management Guide is offered to assist companies in auditing their current software policies, educating employees about legal software use, and establishing procedures for purchasing, registering, upgrading, and backing up computer systems. The guide also includes an Internal Controls Analysis and Questionnaire, as well as all of the SPA's current anti-piracy materials. The U.S.

The software industry is currently grappling with challenges like advanced network environments and intense competition between software companies and hardware manufacturers. Moreover, there is an exponential rise in the distribution of software on a large scale through mass marketing. The market is flooded with various types of software, and this diversity continues to grow daily. These include user-friendly interfaces for widely-used applications like spreadsheets and highly advanced technical software used in integrated circuit design.

The role of software in our daily lives is becoming increasingly important. This includes embedded software, which is crucial in places like doctors' offices and automotive

shops. The dependence on software in these locations is growing as it provides the flexibility to meet various user needs. As technology continues to shape and enhance our lives, there is a greater demand in the software industry. One major concern is how to address software-related issues. Customers now expect customized software that caters to their specific business or personal needs, and they anticipate that software development firms will accommodate their preferences. On the other hand, software development firms worry about lost revenue and increased costs due to software piracy, unauthorized use, excessive discounts, and longer sales cycles. Both customers and software development firms incur high administrative costs when it comes to managing software programs.

Software licensing policies were initially developed to protect the revenue of software developers from potential piracy. Software delivery consists of several components referred to as Asoftware emailprotected. The cost of a Asoftware emailprotected depends on various factors including physical delivery pricing, metric discounts, license periods, support and maintenance, license management, tech support, change in use bug fixes, and platform migration. The most commonly seen type of software license in businesses is the Aemailprotected license. There are four categories classified as a network license.

Concurrent use licenses allow a specific number of users to access and run licensed software simultaneously. Site licenses cover usage at a single site, but are gradually being replaced by enterprise licenses. Enterprise licenses cover all sites within a corporation due to the prevalence of virtual computing environments. Node licenses, mainly used in client/server environments, are also being phased out. These licenses restrict the usage of the licensed software to a specified workstation that requires user login for access

and execution of the software application. Currently, network systems are adopting measurement software, enabling vendors to offer more flexible licensing arrangements.

This management software controls the number of users or clients who can simultaneously access and use the application software. This control is crucial as it ensures that users are charged only for their required amount of software, while also allowing vendors to monitor and protect their intellectual property. A new type of license called emailprotected license has emerged, which grants the end user a specific dollar value worth of software licenses (e.g., licenses for different business applications), as long as the total value in use stays below a certain dollar amount.

The advent of emailprotected licensing has introduced a novel way for businesses to utilize software across multiple computer systems without the need for separate licenses. In contrast, traditional emailprotected licensing requires agreement to terms upon breaking a shrink-wrap seal or opening a sealed envelope containing the software. Initially, it was assumed that businesses would only use software temporarily; however, technological advancements now necessitate 24-hour global access, presenting challenges for software development firms. Floating licenses are not restricted to specific workstations but can be accessed by anyone on a network. On the other hand, shareware, freeware, and public domain software each have their own regulations governing distribution, copying, usage, and modification.

The concept of shareware pertains to software that is initially distributed at a reduced price, yet necessitates payment and registration for complete utilization following a specific duration. The software can be accessed on a trial basis, enabling users to test a limited version. If the user desires to continue utilizing the shareware program, they can find

details regarding registration and fees within the program itself. Registration typically entails receiving a printed manual, an updated version of the software (often enhanced with additional features), and legal authorization for usage in both personal and professional settings.

Both shareware and freeware can be easily found on the internet at a minimal cost or for free. Shareware provides users with the opportunity to fully evaluate a program before buying it, while still respecting the copyright of its authors. Freeware, on the other hand, is offered without any expectation of payment but often lacks technical support. Public domain software, also available online, is freely released without any restrictions on usage.

The text may be copied, modified, and distributed by the end user. A license manager is an application similar to a system utility that manages or monitors the usage of another application used by the end user. It is commonly employed to protect intellectual property (to prevent unauthorized copying) and/or enhance competitiveness by providing various ways to evaluate, purchase, and pay for software. By managing the number of users for an application, the license manager removes the necessity of controlling the number of copies of the application. Thus, it enables the end user to run one or more applications on multiple machines without violating the terms stated in the license agreement.

SPA has created a program to aid businesses in detecting and resolving problems prior to legal ramifications, penalties, and adverse public perception. The program is comprised of eight essential elements:

  1. Designate a software manager to oversee and enforce the company's software policy.
  2. Uphold a code of ethics concerning software usage, which prohibits the illegal use of copyrighted software except

for backup and archival purposes.

  • Create a process for acquiring and registering software that involves assessing the company's software requirements, evaluating various software packages, and obtaining approval from supervisors.
  • 1. Maintain open lines of communication throughout this process.
    2. Create and maintain a software log that includes acquisition date, registration details (including serial number), network version, location of software usage, original software location, licensing agreement information, and location of the original disks.
    3. Conduct periodic audits or as-needed reviews to compare the software log with purchase records or other relevant documents.
    4. Implement an education and training program to ensure employees are knowledgeable about software and its various applications.
    5. Maintain a library of software licenses and provide users with copies of the agreements.

    After completing the aforementioned five points, the company can enjoy several benefits such as obtaining software legally, receiving comprehensive documentation, accessing technical support when necessary, and receiving upgrade notices.

    Patents do not protect specific systems; instead, they protect specific techniques that can be utilized for system development or specific features that systems can provide.

    Having a patent grants the inventor exclusivity for 17 years to use their invention. It is not allowed to use a patented technique or feature in a system without the patent-owner's permission, even if it is implemented differently. Since a computer program typically includes multiple techniques and features, it can infringe on multiple patents simultaneously. A computer program is constructed using ideal mathematical entities that strictly adhere to abstract rules, rather than being modeled approximately. A case illustrating this occurred in the 1st Federal District Court, where Borland International, Inc. filed a complaint against Lotus Development Corp.

    The Supreme Court ruled in favor of the 1st

    Circuit decision, stating that Lotus 1-2-3 menu commands and their order cannot be owned by one entity. This means that elements such as file formats, menu structures and programming languages are not eligible for patent protection. However, software license agreements have become a popular method for protecting proprietary rights in computer software. These agreements work alongside other forms of intellectual property rights, such as patents and copyrights.

    Software license agreements fulfill several roles in transactions involving the transfer of computer technology. The primary legal function is to safeguard the licenser's proprietary rights in the transferred software. They also regulate the revenue generated by licensed software and establish the rights and responsibilities of the parties regarding the performance of the licensed technology. Issues related to these functions include the applicability of Article 2 of the Uniform Commercial Code (UCC), which encompasses matters like offering and disclaiming warranties, as well as determining the appropriate types of licenses to utilize (such as single users/CPU licenses, Site/enterprise licenses, and network/concurrent licenses). In terms of protection, trade secret, copyright, and patent law serve as different forms that may exist independently of any underlying business transactions and do not necessarily require the transfer of intellectual property between parties.

    When there is a need for a license agreement, it is usually because of a transfer of intellectual property, such as computer software. Transactions involving computer software are subject to federal and state laws. Contractual and trade secrets aspects are governed by state law, while federal law handles patent, copyright, and antitrust issues. Each state has its own version of a trade secret doctrine, but the common thread is that if you treat information

    as confidential and it helps your competitive position, you can prevent others from using it if they obtained the information improperly and even seek damages. Software is essential for a computer, and there are two types: operating systems software and application software.

    The operating system software simplifies program development for the system, reducing the need for extensive code writing. It serves as an interface between computer hardware, application programs, and users. Application software includes computer programs that perform specific functions for users, such as word processing, bookkeeping, or financial analysis. In recent years, two legal cases have sparked debate over copyright protection for software elements. Prior to 1992, many federal courts regarded the ruling in Whenlan v Jaslow Dental Laboratory as a precedent for similar cases.

    The small software company, Whenlan, developed an accounting program for Jaslow Dental Laboratory. However, Jaslow decided to modify the software to run on personal computers and began selling it. Although the source code was different, the data structures, logic, and program structure remained identical to Whenlan's version. Jaslow argued that these duplicated elements were part of the idea rather than the expression. However, the court ruled that the combination of data structures, logic, and program structure constituted a single function of a computer program and therefore deserved copyright protection. However, in 1992, this protection was weakened due to the Computer Associates v. ruling.

    Altai, Inc., a software developer, was accused of copying modules from a software package developed by Computer Associates. These modules controlled the running of applications on IBM mainframes. The court rejected the argument that a computer program embodies only one function, as it recognized that programs are made up

    of sub-routines that have their own ideas. The court found that limiting software copyright protection in this way was in accordance with the intent of Congress. As a result, software copyright is currently narrower than it used to be.

    Bibliography

    1. Brandel, William, "Licensing stymies users," URL:"http://www.viman.com/license/license.html#policy", Viman Software, Inc., 1994.
    2. Business Software Alliance, "Software Piracy and the Law," URL:"http://www.bsa.org/bsa/docs/soft_pl.html", Business Software Alliance, 1995.
    3. Software Publishers Association, "SPA Anti-Piracy Backgrounder," URL:"http://www.spa.org/piracy/pi_back.htm", Software Publishers Association, 1995.
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