South African companies paid almost R5.2 million in damages for using unlicensed software in 2017 – up from R3.6 million in 2016.
This is according to data from BSA/The Software Alliance, a non-profit, global trade association.
The significant increase in unlicensed software payments – which includes settlements as well as the cost of acquiring new software to become compliant – is the result of more accurate leads from informers, said Darren Olivier, Partner at Adams & Adams, legal counsel for BSA.
In 2017, BSA received 281 reports in South Africa alleging the use of unlicensed software products of BSA member companies – up considerably up from 230 leads in 2016.
“BSA’s recent social media campaign also helped to create awareness among local companies about the need to comply with existing legislation in order to avoid legal action,” Olivier said.
The result has been a 13% increase in settlements paid in 2017, with the settlements total reaching almost R2.5 million.
While the average settlement paid by companies in 2017 was around R36,094, in some cases the amount owed was far greater, as is evidenced by a print and design company based in Gauteng, which ended up paying a settlement amount of R260,000 last year in an out of court settlement.
The company’s case was in line with a broader trend, which saw the print and design industry as a whole rank among the top sectors plagued by unlicensed software.
Aside from settlements, companies also paid more than R2.6 million in licenses purchased to legalise their unlicensed software.
And the ramifications of software piracy extend beyond financial implications. “It also results in potential job losses and loss in tax revenue. This is not to mention the financial and reputational damage brought about by security breaches and lost data,” said Olivier.
As unlicensed software has not been updated with the latest security features, it leaves businesses vulnerable to cyberattack, he said.
This is a particular problem for companies operating in South Africa where economic crime has recently reached record levels, according to the Global Economic Crime Survey. Indeed, 77% of South African organisations have experienced some form of economic crime. What’s more, instances of cybercrime totalled 29% of economic crimes reported.
Olivier said he expects the percentage of unlicensed software on South African computers to have increased over the past year. “We received many more leads this year, which is an indicator that the amount of pirated software is greater than in previous years.”