It is fairly easy to access and download unlicensed copies of software on the internet. However, you should be aware that downloading this software can get you into trouble. Software owners generally own copyright over these works and are willing to enforce their rights. If you have downloaded unlicensed software and the owner of the genuine software is demanding damages, you should carefully consider your legal rights and obligations before responding to the letter. This article sets out:

  • how copyright protects software; and
  • how to respond to a demand of damages.

How Does Copyright Protect Software?

Copyright is a legal protection that preserves the intellectual property of peoples’ creative works. This allows the original creator to control how people use their work.

For example, copyright applies to:

  • photographs;
  • literary works;
  • designs; and
  • music.

Software is generally protected by copyright as a literary work, just like a book would be. This means that the owner has exclusive rights to use and distribute the software. They can also extend licenses to people, which gives them the right to use the software.

Copyright in software will usually be infringed where a person downloads and runs an unauthorised or unlicensed copy of software. This means that you should: 

  • always obtain a licence before downloading or using software; and 
  • comply with the conditions of your licence or permission.

How to Respond to the Demand?

If you receive a demand from a copyright owner for using unlicensed software and you have in fact infringed their copyright, you should try to resolve the matter before it progresses.

What to Expect From a Demand for Damages

The letter will likely include a demand for payment. This will likely represent: 

  • the value of the unpaid licence fee, which you would have paid if you had legally licenced the software; and 
  • costs for the copyright owner’s legal fees.

The copyright owner may also request payment for additional compensation. This is because, in certain circumstances, a court can order you to pay additional penalties for causing harm to the copyright owner. 

For instance, if: 

  • your infringement is particularly blatant or deliberate; 
  • you derived a benefit; 
  • your conduct after being alerted to the infringement has warranted additional compensation; or
  • other circumstances have arisen that warrant compensation.

You should contact a lawyer to discuss: 

  • whether you are in fact guilty of copyright infringement; and 
  • what your rights and obligations are.

Options for Settlement

If you have infringed copyright by downloading unlicensed software, you may wish to consider making a settlement offer to the copyright owner. Most parties would prefer to resolve a matter privately, to avoid the cost and time commitment required by court proceedings.

When making a settlement offer, you should initially agree to certain ‘undertakings’. Undertakings are legally enforceable promises. In the circumstances, you may wish to undertake to: 

  • avoid infringing the copyright owner’s copyright in the future;  
  • delete all copies of unlicensed software immediately; or
  • take out a licence fee for the software going forward.

If a financial offer is required, you should assess what you would have paid for the software had you licenced the software properly for the period of your unauthorised use. This is a reasonable way of determining what amount of compensation you should offer.

In any case, if you wish to settle the matter, you should: 

  • demonstrate to the copyright owner that you are serious about reaching a resolution; and 
  • make a reasonable offer. 

Even if your first offer is not accepted, it may encourage further negotiations to resolve the matter. What you offer will depend on: 

  • your financial restrictions; 
  • the circumstances of the matter; and 
  • what you are comfortable with. 

You should ensure that you make your settlement offers ‘without prejudice’. Any communication that you mark as ‘without prejudice’ for the purpose of resolving a dispute cannot be used against you in any court proceedings, except where an award of legal costs is concerned once you have resolved the matter. This means that if the copyright holder rejects your offer, it will not affect your rights to defend the matter in court proceedings.

Confidentiality

Depending on your circumstances, it may be important to you that the: 

  • matter remains confidential; and 
  • copyright owner does not discuss the contents of any agreement that you reach.

Negative publicity may be harmful to the reputation of your business. Therefore, you may wish to make it a term of your settlement offer that the parties: 

  • keep the matter confidential; and 
  • do not disclose the details of the matter to third parties.

Statement of Final Settlement

Lastly, you should ensure that any offer you make to resolve the matter includes a statement that ‘the offer is made in full and final settlement’. This will prevent the copyright owner from making further claims against you, your employees or agents regarding the facts of the matter. 

Key Takeaways

Make sure that you seriously consider the implications of any demand letter that you receive from the copyright owner of unlicensed software. If you have in fact used unlicensed copies of software and your conduct is not defensible, you should consider: 

  • taking steps to resolve the matter; and 
  • settle the matter before it proceeds any further. 

You should also consider contacting a lawyer so that you understand your rights and obligations before responding to the letter. If you have downloaded unlicensed software and would like legal assistance, contact LegalVision’s IP lawyers on 1300 544 755 or fill out the form on this page.

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