The Use of Illegal Software and Serious Consequences for Companies.

Software.

The term software is of English origin and has been defined by the RAE as the set of programs, instructions, and computer rules for executing certain rules on a computer. Software must therefore be understood as the intangible content of a computer, as opposed to its physical components, collectively referred to as hardware.

Software. Legal Protection. Intellectual Property.

As regulated in Article 96 LPI, software is understood as “any sequence of instructions or indications intended to be used, directly or indirectly, in a computer system to perform a function or task to obtain a specific result, regardless of its form of fixation“. These are, therefore, all those programs and routines that enable the obtaining of specific results.  

Software is regulated and protected by law, as it is considered an intellectual work, similar to scientific, artistic, or literary creations. This is established in Article 10.1(i) of the LPI, which recognizes that computer programs are subject to intellectual property, and, in relation to Article 1 of the law, such works belong to their author by the mere fact of being so, and with its Article 2, which recognizes intellectual property as a personal and patrimonial right and grants the creator full disposition and exploitation thereof, with no limitations other than those contemplated by law

There are different types of software, depending on their utility or use. They can be summarized into three main groups:

First, system software, which allows the user to interact with the hardware to manage resources and use the interface, thereby obtaining better performance from the operating system installed on their device. Notable examples include Microsoft Windows, GNU Linux, Mac OS, Android, etc.

Second, programming software, which enables the development of applications and the creation of different types of software through programming and logic. An example of this is Java or Android SDK.

Finally, application or utility software, through which the user can perform certain specific tasks on a device, such as word processing or image editing. We can find educational, medical, administrative applications, among others.

Free Software and Licensed Software. 

Although this is the classic or traditional classification of software types, they can also be classified according to the rights of their author, which is much more relevant from a legal standpoint. Based on this, two types of software must be distinguished:

Free license software does not necessarily mean that they are free programs; it should be understood as software that can be used, copied, modified, and distributed freely.

Proprietary or private license software refers to all those computer programs in which users likewise have the possibility to use, modify, or redistribute them, but with limitations. These cannot be copied or installed without paying for a usage license. A widely known example is Microsoft Office.

Unlicensed Software. Security and Business Risks.

The use of unlicensed software entails a series of consequences for companies, among which the following should be highlighted:

1.- Cybersecurity risk, given that there is a possibility that malware programs may be installed on the company’s computers (spyware, terminal hijacking programs, etc.). These are called malicious software and can be of various types, the most well-known being viruses. They are installed on devices without the knowledge of their owners. They can affect both individuals and companies; in the case of the latter, it can be especially dangerous, particularly for those that handle personal data on their terminals, in addition to endangering employee or client data due to lack of diligence, which could constitute a violation of the Data Protection Law with the resulting sanctions, which can amount, depending on the circumstances, to up to 20 million euros, in addition to the economic damage that having virus-infected computers can cause a company, leading to the loss of documents, the possibility of espionage by competitors, etc.

2.- In cases of mergers and acquisitions of companies, as well as investment and contracting with other companies, in which a purchase audit or “Due Diligence” is conducted (a procedure by which a company is investigated in search of certain aspects or factors that are unknown or hidden and are relevant to such operations), a company that uses unlicensed computer programs, with the risk that this entails, may be excluded from such process.

3.- It is grounds for denial of credit by banking institutions if it is considered that this lack of diligence may compromise its solvency. For the same reason, grants and subsidies from Public Administrations may be denied.

4.- It may result in the termination of a contract with the administration when these obligations have been classified as essential and are thus contemplated in the administrative clauses specifications.

5.- Cessation in the use of illegally acquired products during the judicial process, with the corresponding economic cost that this may entail.

6.- It may result in the loss of ISO 9001 certification. This certification attests that the company’s activities comply with an ISO quality standard. Section 6.3 of the ISO 9001 certification (which refers to infrastructure) includes software; the use of proprietary or private software without a license may result in the loss of this certification.

7.- Loss of reputation and prestige, as clients or other companies will hardly agree to provide information to a company convicted of fraudulent use of software. Its economic cost is much greater than the expenditure for acquiring licenses, which may even compromise the future of the company.

Unlicensed Software. Legal Risks.

In addition to the foregoing, and taking into consideration the protection that the law grants to software as Intellectual Property, its use without a license also entails legal risks, particularly the following:

1.- Civil liability actions before the courts for such infringements by the holder of the exploitation rights against the company that uses them without acquiring the pertinent licenses, bearing in mind that this type of amount is not covered by civil liability insurance.

2.- Criminal consequences, contemplated in Article 270.1 of the Criminal Code for the commission of a crime against intellectual property, with a prison sentence of six months to four years and a fine of twelve to twenty-four months, when a direct or indirect economic benefit is obtained to the detriment of a third party by exploiting a work without the authorization of its owners or assignees.

Bearing in mind that, following recent reforms, the criminal liability of legal entities is contemplated with a fine according to the benefit obtained, as regulated in Article 288 of the Criminal Code. Such liability also affects those who hold management positions in the company that violates these provisions.

Author: Inés Rodríguez Martín.

Attorneys Specializing in New Technologies | IN DIEM: Málaga, Seville, Madrid, Las Palmas de Gran Canaria, Almería, Huelva…

Our passion for new technologies and the best team of attorneys make IN DIEM offer innovative legal solutions for companies. Currently, IN DIEM Attorneys has offices in Málaga, Seville, Madrid, Las Palmas de Gran Canaria, Huelva….   We are at your disposal for whatever you need. You can reach us through the IN DIEM Attorneys Phone   (+34) 901 900 071. For emergencies, you can reach us on the IN DIEM 24-Hour Emergency Lawyers Phone: (+34) 610 667 452.

Would you like to know more about us…? We leave you this brief introductory video:

You will find us in Seville, Madrid, Las Palmas de Gran Canaria, Malaga, Tomares, Coria del Rio, Dos Hermanas, Mairena del Alcor, Estepona, Marbella, Mairena del Aljarafe… it will be a pleasure to assist you!