Finland: Software licenses and possible risks

published on 14 September 2023 | reading time approx. 3 minutes

It is often said that the only long-term solution to piracy problem is making content widely available at a fair price. A new study from Finland shows that an increasing number of people are indeed turning to legitimate options. But does it apply also to software licenses? What are the risks and impacts of improper use of software and how to mitigate them? Find out in our article.

Given that the majority of Finns do not pirate at all, it is no surprise that 59 percent of Finns believe that illegally accessing copyrighted material is unacceptable.

What comes as a surprise though is, that despite this outcome, up to 22 percent of all software installed in Finland is unlicensed. Unusually high number, especially when illegal software can be nowadays quite easily detected. Therefore, special attention should be paid to software licenses and so-called software asset management.

Software claims

More and more companies seek legal help when approached by software manufacturers who claim illegal use of their software and demand from the companies in question payments of (often) large sums.

Manufacturers usually base their claims on data obtained through special tracking technologies. If the software is modified in order to make it usable for other users, the tracking technology is activated and begins to collect data such as the MAC address of the computer, the domain from which the computer reports, the date and time of use, etc.

It often happens that even though the company has purchased the license legally, it installs more copies of the software than it is allowed to, or forgets to uninstall the original version after purchasing a new one. Another risky situation might arise due to the installation of illegal software on a company computer by an employee without the knowledge of the employer or a case when the employee installs such software on his computer, from which he then logs into the company network.

Consequences of using unlicensed software

Quite often the infringer is not only obliged to pay reasonable compensation but also damages for any other loss occurred. It makes no difference whether the person knew or should have known about the unlawfulness of his or her act. Reasonable compensation is normally decided on the basis of license fees.^[1] In a situation where there are no general license fees, compensation is usually based on retail sale prices.^[2^]

In the most serious cases, both the company as well as the individual can be sentenced either to a fine for a copyright violation under Copyright act^[3^]or to a fine as well as imprisonment for up to two years, if the act is punishable as a copyright offence under the Criminal Code.^[4^]

Software asset management

These risky, time and money consuming situations can be prevented by a constructive business practice called software asset management (“SAM”). SAM can be described as the infrastructure and processes necessary for the effective management, control, and protection of the software assets. The goals of SAM are to reduce IT costs and limit risks related to the ownership and use of software, while maximizing IT responsiveness and end-user productivity. SAM – typically part of IT asset and risk management – is critical (especially) for large corporations' long-term business strategies.

Recommendation

With proper software asset management companies can mitigate risks and minimize costs coming from software disputes or software audits. During these audits software vendors (in co-operation with company) determine the exact number of software licenses in use, compare this information with the number of licenses purchased, and review how the software is being used in respect to the terms and conditions. The paid invoices are often needed as an evidence for user right verification.

If a company implements sufficient measures, like (i) ensuring compliance with corporate security policies, (ii) regular employee trainings, (iii) BYOD (Bring Your Own Device) ban, (iv) applying software inventory tools etc. it has a good chance of minimizing liability for copyright infringement. Therefore preventive measures, control mechanisms and regular internal audits remain the cornerstones of the effective software management.

[1] The above principle was set out in the Finnish Supreme Court decision KKO 1989:8.

[2] A reasonable compensation was considered to be the retail price for each copied software, by which the respective software could be lawfully obtained for use. (Finnish Supreme Court decision KKO 1998:91).

[3] Section 56a of the Finnish Copyright Act (Tekijänoikeuslaki 404/1961)

[4] Chapter 49, section 1 of the Finnish Criminal Code (Rikoslaki 39/1889)