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Attorneys

Over Installing Software May Subject A Company to Liability for Copyright Infringement

May 15 2007

By Scott Hervey

Its that time again; time to upgrade your computer operating system and associated programs. Microsoft’s new operating system, Vista, is coming pre-installed on new computers and laptops, along with new versions of Microsoft Word, Excel and Outlook. Along with Vista, other business software manufactures are taking this opportunity to roll out upgrades and offer entirely new programs.

Anytime a company decides to upgrade or purchase a new program which has to be rolled out to a significant number of users, the company’s IT department faces a very big task – to install numerous copies of the program in as time efficient manner as possible. The IT department may face even greater challenges where users of a particular program are not assigned to one specific computer workstation but need to have access to the program on multiple computer work stations. To deal with this situation, instead of individually installing the program onto each machine, the IT department may use hard drive imaging-copying the complete content of a master hard drive on to the hard drive of individual computers. Where a company has purchased a limited number of licenses to a program, but must install it on a larger number of computer stations, an IT department may configure access to the program such that only a particular number of users have access to it at any one time. Depending on the type of software license the company acquired, this could be the prelude to a Copyright infringement lawsuit.

Software can be licensed to users in a variety of different manners. Some software companies license software for a flat fee and allow for an unlimited number of users on an unlimited number of computers. Others may supply the software for free but require the licensee to subscribe to a service contract. Others grant a license on a per user or per computer station basis. Where a company has acquired a license which allows the software to be installed on an unlimited number of computers, over installation is not an issue. Likewise, where a company has acquired a license which allows use by no more than a particular number of users at any one time, regardless of the number of computer stations on which the software is installed, as long as the software is configured to limit access accordingly, over installation may not be an issue. However, where a company is granted a license on a per computer station basis, over installation, regardless whether or not the program is configured to limit access, can be very problematic.

In Wall Data Incorporated v. Los Angeles County Sheriff’s Department the L.A. county Sheriff’s department faced a similar problem. It had acquired 3,663 licenses to a particular computer program for use in the jail facility. Because of the mobility of the officers working in the jail facility, the Sheriff’s department determined it needed to have the program installed on 6,007 computer stations. The Sheriff’s department configured the program such that only 3,663 users were allowed to access the program at any one time.

The license grant in the Sheriff’s license agreement provided as follows:

Wall Data … grants you (“You”), the end user, a non-exclusive license to use the enclosed software program … on a single Designated Computer for which the software has been activated. A “Designated Computer” is either (i) a stand-alone workstation, or (ii) a networked workstation which does not permit the Software to be shared with other networked workstations. You may not use the Software in any other multiple computer or multiple user arrangement. You may not use the Software other than on a Designated Computer, except that You may transfer the Software to another Designated Computer and reactivate it for use with such other Designated Computer not more than once every 30 days, provided that the Software is removed from the Designated Computer from which it is transferred.

On appeal, the Ninth Circuit upheld the lower court’s trial verdict of copyright infringement in favor of Wall Data. The Court found the license agreement to be very specific regarding the number of computers on which the program could be installed and that it did not allow for over installation. The Court stated that the Sheriff’s department should have negotiated for the flexibility it desired rather than buying a few licenses and installing the program on practically all its computers. The over installation of the program in violation of the terms of the license grant constituted indefensible copyright infringement.

The lesson to be learned is not to brush aside the shrink wrap license agreement that comes with pre-packaged computer software, or click “OK” on the click wrap license agreement that comes with downloadable software. Be sure to read and understand them first before you take any action which you may later regret.