Has Anyone Received the $1 Million ‘Report Software Piracy Now’ Reward from the Business Software Alliance?

More than a year after increasing its bounty from $200,000 to $1 million for qualified reports of software copyright infringement leads, the Business Software Alliance (BSA) has yet to reward a million dollars to anyone reporting on his organization’s intellectual property infractions.

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“The BSA hasn’t yet paid out $1 million, although we are very willing to do so if the opportunity arises,” writes BSA spokesman Rodger Correa in an e-mail. “That’s how serious we take our mission of [intellectual property] protection.”

In the first quarter of 2008, the BSA paid out just $58,000 in rewards to 14 separate individuals, Correa notes. However, he says, “we don’t comment on the size of any one individual reward.”

The Business Software Alliance is a formidable organization, acting as “the voice” of the world’s commercial software industry and its hardware partners before governments and in the international marketplace, Correa notes. The BSA speaks for vendors such as Apple, CA, Cisco Systems, Dell, EMC, HP, IBM, Intel, McAfee, Microsoft, SAP, Sybase, Symantec and many others. And its message is clear: Use our members’ software legally, or we will come after you.

The BSA’s “Press Room” on its website is eerily similar to a hunter’s “wall of game” that he has killed and stuffed for public viewing. A recent sampling, delivered with a certain amount of marketing flair, includes such trophies as: “BSA Puts the Brakes on Los Angeles-Area Car Dealership Group”; “Los Angeles-Area Engineering Company Pays $250,000 to The Business Software Alliance”; and “Dental Services Provider Fills Cavity in License Management Plan.”

Correa notes that its marketing initiatives, such as the online exhibit and the $1 million reward offer, serve to draw further attention to the BSA’s mission. They appear to be working.

According to the BSA’s fifth-annual study on global software piracy, of the 108 countries that are covered in the May 2008 report, the use of pirated software dropped in 67 countries; in just eight countries did the piracy rate increase. (For more, see “BSA’s Annual Study Shows Software Piracy Declining in Many Countries.”)

To Julie Machal-Fulks, a partner at Scott & Scott, a law firm that specializes in helping companies both reactively and proactively deal with software audits and compliance projects, the BSA has been effective in meeting its stated goals. (Scott & Scott is well known for its commentary on the “questionable practices of software industry enforcement programs.”)

“While some of their tactics have been questioned in both the media and by industry groups,” Machal-Fulks says, “I think the BSA’s reward program is successful for what it’s trying to accomplish: which is to get disgruntled employees to make reports against employers in order to provide at least an initial modicum of evidence that the BSA relies on to begin an investigation.”

High Bar Set to Get Reward; Not Everyone Wants Money, BSA Says

So how does one collect the reward? And what constitutes proper evidence” to get the BSA payoff? Correa explains in an e-mail: “In order to receive a reward, there must be a qualifying report, and a settlement agreement must be agreed upon with the particular company in question.” That’s as far as the Correa goes, however, in explaining its reward process.

According to a 2007 Infoworld article, the BSA has 22 terms and conditions that must be met before the $1 million payoff is awarded. “The rewards are based on sums received in out-of-court settlements, which is the most common way a company avoids any more punitive prosecution for piracy,” notes the article. “In order for the informer to earn the $1 million, a company would have to settle out of court with the BSA for anywhere between $10,000,001 to $15,000,000.”

Machal-Fulks calls it “a very closely guarded secret, how they calculate that number—despite the fact that we’ve asked them and other people have asked them numerous times in the past.”

Not everyone is in it for the money, Correa says. (The BSA does not reveal the names of anyone who reports software piracy.) “We have had cases where the potential reward would be substantial,” he adds, “but the source chose not to receive a reward.”

What You Need to Know About the BSA and Its Processes

Machal-Fulks says that there are a couple of things everyone should know about the BSA. First, is that the BSA is not a regulatory authority, and it doesn’t have any governmental authority. “It basically operates under a power of attorney from the software publishers, who have given the BSA the right to enforce the copyright of software licenses on the publishers’ behalf,” she says. “That’s the first thing many people don’t know.”

Second is that a BSA engagement typically starts with “the letter,” stating that it has reason to believe that your organization has violated the copyrights of these particular software publishers, and that the BSA can sue you, Machal-Fulks says. “But instead of suing you, we’ll give you an opportunity to give us all of this information we require, and at the end of the process, if you pay us a settlement, we will close our file without litigation,” she says. “That settlement number is what is what they call their ‘fine.'” (When asked, Machal-Fulks says that Scott & Scott has never received the much feared BSA audit letter.)

Third is that, in general, the BSA doesn’t necessarily depend on an analysis of the size or income of an organization before initiating an investigation, Machal-Fulks says. “A lot of people think, Why are they coming after me? I’m just a small business, with 15 employees. Why are they targeting me?” she says. “It’s my experience that the BSA is equally zealous about pursing alleged claims regardless of the size of target.”

And last is that a software audit and compliance investigation by the BSA or any other software publisher can be an expensive ordeal. “It can get really big,” Machal-Fulks says of the lawyer fees.

Machal-Fulks’ advice? Be proactive about software compliance and auditing.

“There are a lot of businesses undertaking software compliance initiatives,” she says. “Many of them are doing it reactively, in response to an audit that was initiated by the BSA. And many of them are proceeding proactively because they understand that there’s a potential risk out there associated with software licensing.”