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Forty-four percent of Britain's small and medium-sized businesses lack any form of software licensing policy, exposing them to legal and security problems, according to a survey by PC World Business.

The survey of 750 IT managers of businesses up to 500 employees also revealed that more than half of small businesses (58 per cent) don’t keep records on the software they own and don’t have filed or readily accessible licence certificates if requested by software publishers.

Despite this, 87 per cent of businesses believe themselves to be compliant with all legal requirements.

Penalties for software piracy include an unlimited fine or even a prison sentence. All standard software packages are sold with a licence which specifies how many copies can be used. Breeching this licence by using, making or selling illegal copies is a criminal offence, and businesses risk being sued by software publishers for piracy.

In addition, the research discovered that 67 per cent of businesses are buying new software licences every time they purchase a new computer – a strong indication that they are unaware of the cost and efficiency benefits of purchasing company-wide software licences which cover a set number of machines rather than individual software licences.

Richard Harrison of PC World Business said: “A software license policy is essential to all businesses. Not only does it eliminate the legal risks, it also creates numerous efficiencies, such as cutting down the risks of viruses and allows businesses to receive regular upgrades and technical support. While a software licence for every computer is required, buying a licence with a computer is not the right approach. It difficult to keep track of all licences and to match them with the individual machine, and there are also other options which will save businesses money, administration time while ensuring businesses are legally compliant.”

Struan Robertson, editor of OUT-LAW.COM and an IT lawyer with Pinsent Masons, said: "Most businesses would never think of themselves as software pirates, but software mismanagement amounts to the same thing in the eyes of the BSA. The BSA expects 100 per cent compliance and incentivises staff to blow the whistle on employers who fall short. This may seem harsh, but the BSA is right that any licence creep is actionable - so companies have no choice but to stay in control of their licensing. A good policy should make that easier and can help with a compliance audit."

The survey also revealed that awareness of the Business Software Alliance (BSA), a global organisation that polices software licensing, is very low, with only 59 per cent of British businesses aware of its existence. The BSA offers a reward of up to £10,000 for information on illegal use of software.

Copyright © 2005, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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