The Importance of Software Compliance

Your growing business needs more support, so you hire a new employee. You have carved out a work space and purchased another computer for her. She is able to start right away since you found an old Microsoft Office disc (which you previously installed on another employee’s system). Then, several weeks down the road, your new hire is just not working out and has to be let go. Next thing you know, you are summoned to court and ordered to pay thousands in fines for software license infringement. This nightmare scenario happens more often than you think, and there are enforcement programs and companies who will pay handsome sums to whistle-blowers like your disgruntled ex-employee. According to an article, Microsoft Office is the most common software used in business today. No matter how small your business, you are required to have the correct license for each device running the MS Office Suite and in the correct version. A small business attorney will help you with all of your software licensing issues, including your own intellectual property that should be protected.

Microsoft, like other large technology companies, has been aggressively reconciling software licenses through audits in an effort to reduce piracy and abuse. They tally up users and licenses for their products, including Windows, Office, and Windows Server. If you are not in compliance, you will be faced with costly fees – “true-ups” – to update your software licensing. And, the more out of compliance your business is, the more costly the fines. Here are five helpful points to keep small businesses compliant with big corporations like Microsoft.

 Small Business Compliance is Very Important

Companies, like yours, in the small business category tend to grow very rapidly. Say you begin with an operation of 20 employees/20 computers. As you grow and add more users, you should purchase more licenses, something many people neglect to do. Five years down the road, you could be several licenses behind, resulting in thousands of dollars in true-up fees. Your small business attorney will make sure you stay current and compliant with your software licenses.

Audits are Fear-Instilling and Time-Consuming

There are plenty of things you should or would rather be doing than scouring your receipts and serial numbers. Keeping good records, understanding your agreements, and knowing what is being used by all of your employees will give you peace of mind and drastically reduce your stress level in the event of a software audit. You can create a compliance checklist with your attorney.

 Original Equipment Manufacturer (OEM) Licenses are Different Than Open Licenses

Software licensing can be a confusing combination of technology and legal jargon. An OEM license applies to one specific piece of equipment, and even if an OEM license key is printed on the side of a piece of hardware, it cannot be used on another machine. However, an open source license can be used on any piece of equipment.

 Volume License Keys (VLK) Have Limits

If you choose to buy a license using a VLK – e.g. 75 versions of MS Office for a multi-activation key – once you reach the agreed upon limit, the license is no longer usable. Each time you activate the key, it will decrease by one.

Compliance Matters to Businesses, Big and Small

Running genuine software not only renders your equipment faster and more secure and reliable, but it will also keep your small business out of trouble with big tech companies. Software compliance is just as important as protecting your proprietary software from being stolen by others. You can register easily and quickly with the United States Copyright Office.

If you need help with software licensing, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Business Attorney. Phone: 720-258-6647. Email:

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