Reading time: 5 minutes

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.

Webinars

How Franchisors Can Avoid Misleading and Deceptive Conduct

Wednesday 18 May | 11:00 - 11:45am

Online
Ensure your franchise is not accused of misleading and deceptive conduct. Register for our free webinar today.
Register Now

New Kid on the Blockchain: Understanding the Proposed Laws for Crypto, NFT and Blockchain Projects

Wednesday 25 May | 10:00 - 10:45am

Online
If you operate in the crypto space, ensure you understand the Federal Government’s proposed licensing and regulation changes. Register today for our free webinar.
Register Now

How to Expand Your Business Into a Franchise

Thursday 26 May | 11:00 - 11:45am

Online
Drive rapid growth in your business by turning it into a franchise. To learn how, join our free webinar. Register today.
Register Now

Day in Court: What Happens When Your Business Goes to Court

Thursday 2 June | 11:00 - 11:45am

Online
If your business is going to court, then you need to understand the process. Our free webinar will explain.
Register Now

How to Manage a Construction Dispute

Thursday 9 June | 11:00 - 11:45am

Online
Protect your construction firm from disputes. To understand how, join our free webinar.
Register Now

Startup Financing: Venture Debt 101

Thursday 23 June | 11:00 - 11:45am

Online
Learn how venture debt can help take your startup to the next level. Register for our free webinar today.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer