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Call for reform as unlicensed software use rises

'Couldn't care less' attitude needs to change

Applying The Sun ruling to software

Graham Arthur acknowledges that using software without a licence is quite different from using the content of medical records without authority. "You can't really say that the software publisher would never have granted a licence," he said. "And there's no case law on the application of 97(2) in software that helps either the BSA or the infringer."

Arthur referred to recent cases in Norway, France and Latvia where the courts have, in cases of unlicensed software use, applied similar domestic laws – and decided that the copyright owner is not entitled to additional damages. He reckons the reasoning is unfair and he hopes it would not be followed over here – especially as he sees the same "couldn't care less" attitude in many of BSA’s cases. The cases in France and Latvia are being appealed.

He gives an example of how the BSA makes a calculation of loss: "If you're using Photoshop 4.0 without a licence and you're caught, you are told to buy a licence. You can't buy a licence for version 4.0 today – you have to buy a licence for the current version. But that will mean that the user has used two versions, but paid only one licence fee. The loss in that case is the licence fee that should have been paid for version 4.0. If we ascertain that version 4.0 has been used for, say, two years without a licence, we'll also claim for lost interest on that licence.” That combination will cost more than buying version 7.0 legitimately – so there is some deterrent; but not much.

Then comes the claim for additional damages under section 97(2). Arthur does not express much confidence of success. "We know that we'll only get an award if the circumstances are appropriate. It's perceived to be a provision against bootleggers," he said.

If the defendant had been using Photoshop 7.0 for two years – i.e. a situation where there is no room to argue about upgrades – the BSA would claim some interest, but it wouldn't be much. It would just represent the advantage to the copyright owner if the licence had been bought two years earlier and invested. "That wouldn't be fair – there is no deterrent – so this is where we might seek to rely on 97(2), especially if the software had been cracked." What he describes is wilful infringement, not just licence creep.

A subscription model, rather than a perpetual licence, might provide a greater deterrent: two years' unlicensed use will become expensive and that figure is added to payments for ongoing use. But it is unrealistic to expect the entire software industry to suddenly make the shift to a subscription model. Instead, the BSA is looking for legislative reform.

"We are talking to the government about getting a new provision in our copyright law that allows for a punitive award as part of a damages award," Arthur said. "The US has a remedy of statutory damages; Ireland has a very generous additional damages remedy. We want similar powers here."

He describes our courts as being "squeamish" and "confused" about section 97(2). Parliament needs to address that, he says.

What the creative industry hopes is not that it will profit from damages; rather, it wants a change in behaviour. Infringement is rife – but stringent penalties could deter it. The BSA claims that its aim is not to recover large sums in court actions, but to change behaviour. The risk of having to pay such sums can help, in the BSA’s view, change the "couldn't care less" attitude.

Arthur admits that the BSA settles all of its cases. He said: "The cost of going to court outweighs the amount at stake, even though liability is cut and dried. There is no advantage to either party in going all the way to court to argue about damages. A damages assessment is independent of the hearing on liability and a damages assessment rarely sets a precedent: each case turns on its own circumstances."

The BSA writes to infringers, sets out a sum and invites settlement. Court procedure demands that parties at least attempt to settle their claim. So Arthur's letter will claim for the licence fee, the interest and a figure under section 97(2) – although he confirms that "we'll be upfront in admitting that the case law on this part is not particularly helpful," he says. The uncertainty persuades the BSA to negotiate on this figure, rather than the concrete part of its claim.

The Department of Constitutional Affairs is expected to launch a consultation on damages later in the year. It forms part of the UK's implementation of the EU Enforcement Directive. While the UK is not obliged to change its 97(2) provision, the BSA and other creative industry bodies will answer that consultation, lobbying for reform.

See: Judgment in Nottinghamshire Healthcare NHS Trust v. News Group Newspapers

Copyright © 2006, OUT-LAW.com

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