The Weaponization of Software License Audits

Many organizations still remember the sting of being a victim of the dreaded patent trolls. Patents were granted to encourage, recognize, and reward innovation. Awarding the inventors with a well-defined degree of exclusivity for a period of time improves their chances of both financial reward and the recuping their initial investment. “Patent troll” is a derogatory term that describes a business or entity that uses patent infringement claims to win legal judgments or out-of-court settlements for profit using patent law outside its intended purpose. Speaking during an online Fireside Hangout talk on patent trolls, President Barack Obama stated these rogue figures and organizations fail to produce anything of value themselves. They’re just trying to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them. In 2013, it was reported that the number of lawsuits in just 2 years brought by this cottage industry had nearly tripled and accounted for 62% of all patent lawsuits in the US All told, in 2019, the victims of patent trolls paid $29 billion, a 400% increase in less than 4 years, not to mention tens of billions of dollars lost in shareholder value.

Software License Audits

“Software license audits” have provided fertile ground for vendors to generate revenue for many years. Gartner reported, “Vendor-imposed and revenue-motivated audits are increasing for organizations of all sizes and industries.” Numerous industry publications fully support this fact in articles such as “Software Audits: How High Tech Plays Hardball” (InfoWorld) and “Software audits continue to rise”CIO).

“In the decade we have been checking companies for software license compliance, we have yet to find a company 100% compliant,” said Dean Bolton, the chief architect at LicenseFortress, “so it should come as no surprise that large software vendors have become diligent in their software license audits.”

It was just a matter of time before the lure of easy money enticed others to find alternate paths that would allow them to take advantage of the complicated contracts which comprise today’s software licensing agreements, just as the patent trolls learned to take advantage of the patent system outside its intended purpose. This new generation, the “software licensing troll,” has taken a page out of the patent troll guide and is distorting the state of software license contract safeguards beyond their intended purpose.

Weaponization

No one disputes that software vendors have a right to protect their intellectual property. It is standard practice when a business purchases software from a vendor to include the right to perform a periodic software license compliance audit in the contract. It’s also common practice to have in the contractual language that failure to comply with the request for a software audit grants the vendor the right to revoke the customer’s privilege to use the software preemptively. Many vendors require the customer to run proprietary scripts or specialized software to facilitate the software license audit. Even if it’s not a contractual requirement, it’s common for a vendor to request that the customer use that same software or scripts to facilitate the software license audit.

Software is routinely delivered through a download. During the download or installation process, there is a requirement for the customer to read a contract and click a harmless checkbox signifying agreement to it. How many of us read those contracts? These requirements and others were put in place so that reputable vendors could protect their intellectual property.

Just as the patent troll used patent law outside its intended purpose, the very tools that vendors put in place to protect their intellectual property can easily be weaponized by unscrupulous vendors.

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