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General Software Licensing Strategies – Part 3: Policing Infringement

After the licensing agreement is signed and done, what do you do to police the infringement?  Many licensors have great difficulty in policing the terms of the licensing agreement and in detecting unauthorized use.  If there are many licensees, it is challenging to monitor the activities of each licensee.

Instead, many licensors, especially of software, apply self-help mechanisms.  These self-help mechanisms can be as invaluable as a detailed, well-written license.  For example, manufactures can mark and verify the authenticity of the goods in clever ways by applying holograms to labels.  Other companies encode electronic fingerprints on labels or other unique designs.

Software licensors can lace their software with code that monitors attempts to copy or with code that can identify the source of unauthorized use.  In addition, various security measures can be added to the code to assist in the detection of improper use.  In fact, some creative programmers can design the software to disable and destroy the licensed program in the event of any breach.  The licensor may even be able to retrieve its property and intellectual property without the use of litigation.  While these self-help mechanisms are often used without notice, commentators caution that if the mechanism is misused, it could greatly disrupt the licensee’s business and lead to damages incurred by the licensee.

Policing infringement is difficult, and sometimes litigation is necessary.  However, it is equally important to use any simple self-help mechanisms that may be available.

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