Forums: Discussions for entrepreneurs and small business.

Software Developer sells software to User under license.  According to license, User gets use of software and the right to make ONE backup copy per licensed copy.  Developer does an audit.  Developer finds that User has too many copies of the software.  Developer finds that User is not actually using any of the excess copies.  Has Developer suffered ACTUAL damages for the excess copies?  User says no, because Developer did not ACTUALLY lose any sales since User would not have paid to get permission to use copies of the software – the excess software was not being used. 

 

Your thoughts on ACTUAL damages?  The question here is NOT whether it is wrong to make excess copies, thought I know we will see posts that “stealing is stealing” – even though that is not the question.  The question here is whether Developer has suffered ACTUAL damages for sales that in all likelihood would not have even occurred and therefore sales that could not be “lost.”

 

(see recent THOROUGHBRED SOFTWARE INTERNATIONAL case for more details if desired)

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James Lindon, Ph.D. Patent Attorney
Lindon & Lindon, LLC
Cleveland, Ohio
Patents, Trademarks, Copyrights, Pharmacy Law, Litigation
[this is not legal advice - provided for discussion only]
Intellectual Property for the Individual and Small Business: Identify, Protect, Enforce, Defend.
"Fools rush in where angels fear to tread."
http://www.LindonLaw.com

Mr. Lindon.  I`ve always wondered about this in a different question, I think.

I purchase a copy of ms office and install it on both my pc and my laptop.  I use my pc when here and my laptop when traveling.  Obviously, not at the same time.  What say the law about this.  Do I need to buy two copies?

Please consult the software license agreement for the answer to that.  It is probably addressed there.

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James Lindon, Ph.D. Patent Attorney
Lindon & Lindon, LLC
Cleveland, Ohio
Patents, Trademarks, Copyrights, Pharmacy Law, Litigation
[this is not legal advice - provided for discussion only]
Intellectual Property for the Individual and Small Business: Identify, Protect, Enforce, Defend.
"Fools rush in where angels fear to tread."
http://www.LindonLaw.com

When it comes to software piracy, is there ever such a thing as ACTUAL damages?

Let`s say I am using a pirated piece of software, called SuperExpensiveTool 2.0.  This software retails for $499.  The price tag is way out of my budget range, so buying it was never a consideration.  If it were not for the pirated copy, I would not be using this software at all.  There are no "lost" sales - because I would have never bought it to begin with.  Are there actual damages in this case?

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Oleg Issers | StartupNation.com Web Team

50% of computer programming is trial and error. The other 50% is copy and paste.

Oleg, interesting point.

Excess copies is absurd. Am I not allowed to back up my own software now? If I have redundant backup drives ... 3 of them, maybe ... am I liable because I have 4 copies of it?
This is out of hand.

Well even though I side with the user, under the license agreement, which the user accepted, it says how many allowed copies are permitted, once they break that, it`s illegal and technically the developer is now loosing money and should be paid for that copy.  Lets relate it to music, the RIAA is not too fond of copied music at all, now of course they have the big lawyers that go in for battle while these smaller developer shops simply don’t which means they just can’t keep up. 

I think the real problem here is two fold. One, developers should allow users to put software on more than one machine, actually it shouldn`t be machine based anyways, it should be user based. Heck some software is processor based meaning if your server had 10 processors you need 10 copies, YIKES! Now for the second part, pricing. Like Oleg said, sometimes the software is just ridiculously priced and when developers do that they`re increasing the chances of pirated software. Not many people have a problem dropping 30-100$ on software but they do when it`s 400+. If they built the pricing system so it`s reasonable or offer other payment options like leased software, then more people would just pay for it. The current way licensing works just doesn’t lend well to corporate life and even computer life. How many times have you upgraded your PC, better call for another license? What about employee turn around? All these are factors that deal with piracy on a corporate level, too. Companies are struggling to keep up with laws on piracy because it’s so hard to track new licenses down, remove old ones, upgrades, etc…………..sometimes it’s just easier to have a pirated copy that I don’t need to call in for a new reg code when I’m setting up a machine or reinstalling an OS. Now larger companies usually offer blanket licenses that allow as many copies as necessary, so that’s a solution for larger corporations but us small guys get screwed and were usually the ones that need it on the laptop, office machine, home machine, etc.

 

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He who gets greedy like a pig, gets slaughtered like a hog!

ACTUAL damages is often thought of as lost sales - sales that might have been.  The argument that "there are no lost sales because I did not have the money to buy the software" probably does not get you too far.

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James Lindon, Ph.D. Patent Attorney
Lindon & Lindon, LLC
Cleveland, Ohio
Patents, Trademarks, Copyrights, Pharmacy Law, Litigation
[this is not legal advice - provided for discussion only]
Intellectual Property for the Individual and Small Business: Identify, Protect, Enforce, Defend.
"Fools rush in where angels fear to tread."
http://www.LindonLaw.com

True, the argument won`t stand up in court.  I am approaching this from a logical point of view rather than a legal one.  If I had never had any intention of buying the software in the first place, where is the lost sale? 

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Oleg Issers | StartupNation.com Web Team

50% of computer programming is trial and error. The other 50% is copy and paste.

I don`t know that lost sales can ever be absolutely proven - they are something that did not happen and MIGHT have happened.  The company might still have lost sales because you might have borrowed the money or coaxed your employer [or Santa Claus] into buying it for you.  Clearly, if you are USING the software, you are getting something of value from it and therefore might have bought it at some point or took steps to acquire it legally somehow.  The fear of getting caught using the software may also have caused you to commit some other crime to come up with the money - e.g. I am a private male stripper, and using my "hardware" on the weekends so I can use my "software" monday through friday.

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James Lindon, Ph.D. Patent Attorney
Lindon & Lindon, LLC
Cleveland, Ohio
Patents, Trademarks, Copyrights, Pharmacy Law, Litigation
[this is not legal advice - provided for discussion only]
Intellectual Property for the Individual and Small Business: Identify, Protect, Enforce, Defend.
"Fools rush in where angels fear to tread."
http://www.LindonLaw.com

If the law states that a might-have-been is legally acceptable, then the proposition makes sense. In other words, logic only needs to be internally consistent. "Rational" requires that logic also be applied to objective reality.

Ergo, yes, the developer suffered actual damages. It`s not a rational argument or judgement, but it`s a logical one.