"The word processing software we use at the office is a breeze to work with. I'll make a copy for you."
That kind of offer, so commonplace these days as personal computers proliferate, may get the company for which the generous soul works into real legal trouble. Letting employes make such copies is only one of the ways in which a firm can unwittingly set itself up for a suit for software piracy, the members of the torts section of the American Bar Association were alerted recently.
"More and more businesses of all types are automating their activities, harnessing the power of computers to run software which will perform repetitive clerical or business functions in order to increase productivity and reduce errors. Within the software user organization, there are many instances in which copyright infringement can occur, often without an individual realizing it has occurred," warns Akiba Stern, a lawyer with Hartford Insurance Group.
And if a company is found guilty of software piracy, chances are that its current insurance policy will not cover the legal costs involved. It is expected to be late 1989, at the earliest, before insurance companies start offering such protection, Stern says.
The reason for the legal vulnerability is that at present the law is just not very clear on what is fair and what is not in using software you have bought or licensed. For instance, most users make a backup copy of key software, so that in case the original diskette is damaged by a power surge -- or by spilled coffee -- disaster will not strike. But once the backup copy is made, there's a tendency to use it.
Stern suggests that there's nothing unlawful about an executive taking the backup copy of a spreadsheet program home and using it on his family computer at night. It's still one person using the software, and it makes little difference whether it is the backup or the original that is in play.
But "software vendors become seriously concerned when multiple copies are used on multiple machines at any one time, as opposed to one copy of the software being used on one machine at a time." If the backup copy stays at the executive's house and his wife uses it during the day to run the figures on her consulting business while he is using the original at the office, the software developer has clearly lost out on a sale.
If the program has been transferred to a hard disk, the user tends to be even more cavalier about who has the floppy, and it may pass from hand to hand.
Wise bosses won't wink at such misuses, but will make it clear that company policy is to strictly honor intellectual property rights. That means occasional audits to make sure the number of copies of a particular software found on computers matches the number purchased. And it also means not suggesting that a department can handle a budget squeeze by buying fewer copies of expensive software and making more copies.
Now, a software developer is not likely to sue a customer because it lets an employe give her brother-in-law a bootleg copy of a word processing package. But a demonstrable policy of respecting the rights of software developers can be persuasive if more serious charges of commercial exploitation of a vendor's know-how are ever leveled. And that can happen almost inadvertently.
Here's how. A company buys some software, but after a while decides to customize it to fit its specific corporate needs. That means that in-house programmers become intimately familiar with the structure of the purchased software. Later, in developing other programs for other uses, they may, without even realizing it, use some of the protected knowhow of the purchased software.
No one is likely to know. But it is increasingly common for a company to try to recoup some of the cost of developing its own software by then selling it to others in the industry with parallel needs.
And if that software is based on on organizational concept absorbed from another firm's software, it almost demands that the original developer go to court to protect its interests. That's when a record of being scrupulous can pay off.
Companies can get in trouble, too, when a programmer leaves for a new job. The ex-employe may carry in his or her head knowledge that the first copany promised to keep secret, and then use it in the new job without giving a thought to infringement liability.
At the least, a warning in an exit interview of just what secrecy agreements have been signed with the software vendor may help prevent a later lawsuit.
So far there have been few cases, and most of the ones that have come to court involved intentional copying -- albeit copying that the defendant company insists is lawful.
But as in any developing area, it is the duty of the lawyers to warn of the dire possibilities. And the duty of the managers to decide how much risk to absorb in getting on with the business at hand.Moskowitz covers legal affairs for McGraw-Hill World News.