The Cost of Confidentiality in a BSA Settlement

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Confidentiality Costs in a BSA | Software Alliance Settlement

Part of negotiating a settlement for alleged software licensing violations with the Business Software Alliance (BSA) involves certain provisions that have far-reaching implications.  A key to understanding those provisions involves carefully reading and dissecting each subsection.

Often, one of the most important provisions, aside from the sections resolving a company’s alleged liability for copyright infringement, consists of language (if any) pertaining to confidentiality.  Unless a company requests a confidentiality provision to be included in the settlement agreement, the BSA often will issue a press release detailing the investigation of the company and the terms and cost of settlement.  Many businesses understandably seek to avoid this type of publicity.  If included in the settlement agreement, the confidentiality provision provides protection from the public release of information and prohibits the BSA from disclosing the terms of the settlement.  However, it is important to note that this provision does not protect against court-ordered subpoenas or against the release of information by the BSA to the software companies it represents.

It is also important to note that this provision often comes at a cost.  The BSA regularly significantly increases the settlement price if a company seeks confidentiality. Companies therefore often choose not to include a confidentiality provision, but they should be prepared for the press release detailing each alleged violation of licensing agreements and the amount paid to the BSA in fines. If the company chooses not to purchase confidentiality, the BSA often will allow the business to review a proposed release prior to publication and to provide a quote to include with the release.

Businesses negotiating the resolution of a BSA-initiated audit matter should carefully consider with counsel whether the benefits of a confidentiality provision outweigh its cost, in light of that business’ location, industry, market share, and financial situation.