Clackmannanshire Council had entered into a "Select Agreement" with Microsoft. This agreement was meant to give the council access to the most cost effective way of buying Microsoft licenses. However, at the same time, Clackmannanshire Council bought 470 loose end-user licenses at further "discounted" prices. These licenses were delivered to Clackmannanshire Council in plastic supermarket bags.
Clackmannanshire Council presented these licenses to Microsoft for verification. However, as they were loose end-user licenses, they were declared invalid, as they were sold separately from a software package - and therefore illegal. The 470 loose end-user licenses also proved to be counterfeit.
Microsoft advised Clackmannanshire Council to go back to the supplier - known to Microsoft and the BSA as a supplier of illegal software licenses - to seek redress. Microsoft also advised that the council would need to purchase valid licenses to replace the 470 illegal ones in use. However, Clackmannanshire Council refused. It would not accept that the licenses were counterfeit.
Microsoft referred the case to the BSA early last year. Clackmannanshire Council was asked to carry out an audit of its software but it persistently refused to conduct the audit or to legalise its software. Accordingly, the BSA raised legal proceedings which resulted in the out-of-court settlement with the council agreeing to pay an undisclosed sum in damages in addition to legal costs.
Mike Newton, programme manager for BSA said:
"This is a classic case of the deal being too good to be true and proves that local councils are not immune to unscrupulous vendors. Local councils should be setting a good example, operating within the law, and should be vigilant when buying software.
"In instances such as this one where organisations find that they possess illegal software, it is imperative that they don't bury their heads in the sand but approach the software manufacturer and take advice on how to solve the problem and seek redress from the illegal supplier. Unfortunately, Clackmannanshire Council persistently refused to co-operate with either Microsoft or BSA to rectify the situation. As a result, BSA was left without no alternative but to instigate proceedings against it."
According to the BSA, one in four pieces of software used in UK businesses is illegal. The BSA is currently investigating 500 companies across the UK for suspected under-licensing, six of which are government funded and 26 of which are in Scotland. It offers a reward of up to £10,000 for information that leads either to a successful settlement or prosecution.
