Introduction

This blog will discuss some of the important aspects of an Autodesk audit when your company receives what we refer to as the “love letter” demanding that a company submit to their software audit request, and typically, pay a hefty fine if the company is not found to be in compliance with the terms of the end-user license agreement (“EULA”).

For many years our IP law firm has handled hundreds of software audits brought by some of the largest software companies in the United States including Microsoft, Adobe, Vero/Hexagon, Siemens, Ansys, Solidworks/Dassault, Autodesk and others.

This blog will focus on what we refer to as the “Autodesk internal” which is an audit conducted by a small team of lawyers inside of Autodesk who seek to force companies to run scans, identify compliance issues, and they then seek settlements that can go as high as $50,000 or more.

Autodesk Internal Compliance Audits

These Audits can be “random” (which is perhaps the most intrusive, auditing companies without any probably cause that they are not compliant), or they can be based on infringement information such as “phone home” technology that alerts Autodesk of unlicensed software usage at an organization, or possibly an informant. Other times, if a company posts a job on (for example, on Indeed) seeking persons qualified in AutoCAD or Revit let’s say, but a review shows the company posting the advertisement has no licensed software.

Regardless, the audit reviews are based on section 21.5 of their EULA. This section notes:

21.5 Compliance

Autodesk has the right to verify the installation of, access to, and use of any Offerings by You and Your Authorized Users. As part of any such verification, Autodesk or its authorized representative has the right, on 15 days’ prior notice, to inspect Your records, systems and facilities, including machine IDs, serial numbers, Autodesk IDs, and other related information, on Your premises using an Autodesk approved verification tool. In addition to Autodesk’s right to perform a verification on Your premises, You shall within 15 days of such verification request, provide a report to Autodesk using an Autodesk approved verification tool, that contains information relating to the installation of, access to, and use by You and Your Authorized Users of any Offerings including machine IDs, serial numbers, Autodesk IDs, and other related information. If Autodesk determines that Your installation of, access to, or use is not in conformity with these Terms (including any Additional Agreement, Special Terms or other applicable terms), You will immediately purchase new subscriptions to remedy the noncompliance, and pay Autodesk’s reasonable costs of the verification. Autodesk reserves the right to seek any other remedies available at law or in equity. (emphasis added).

This paragraph says a few things:

1. If they seek an audit, your company must comply (we have even heard their attorneys go so far as to threaten shutoff of even licensed software at the company if you do not engage in the audit demand).
2. On 15 days’ notice, Autodesk can demand to come inspect your facilities. This is akin to a software raid, and while this draconian measure is possible, we have not seen Autodesk do this in practice, fortunately. If THEIR verification tool. It used to be called SCANWIN (which to me, meant you scan they win), but now the tool (apparently changed) is called AIT. It is important to question why Autodesk has switched the name of the scanning tool, or the mechanics of the tool itself. Did they have problems with SCANWIN? I would like to point out here that the tool required to be used is not named in section 21.5. If your business is facing an audit, I would ask Autodesk copyright counsel to indemnify your company if something goes wrong on your computer networks, or to your data through the implementation and use of their tool. Many clients have had problems running scans, and it is not 100% clear what their tool actually does, and if it does only what they say it does.
3. You will purchase software if you are found to be unlicensed (ex. installing cracked software), or the most irritating one of all, if your company inadvertently over-assigned licenses to too many users. Unfortunately, their software allows this to happen and I have not heard of any plans to fix this. To me, the reason is clear, this allows Autodesk to charge your company in the tens of thousands of dollars for simply assigning software to too many users, without the software notifying you of exceeding your licensing limitations. This aspect of the audits really upsets many customers, and a good number vow to stop using Autodesk products once the audit is over, and they are forced to make expensive purchases in a tough economy.
4. One of their internal agents will even threaten to raise your compliance fees 20-30% if you have the audacity to hire legal counsel to protect your interests in responding to the audit demand. You should not let this intimidate you, as noted, they have lawyers on their team working hard to get your hard-earned money into their pockets.

As noted above, their EULA allows them to shut off your software offerings for failure to honor the terms of the agreement. Section 20.5 notes:

20.5 Autodesk's right to suspend software services

If Autodesk believes in good faith that Your Content or Your conduct or failure to act (including the conduct or failure of Your Authorized Users) may (i) pose a security risk or otherwise adversely impact Offerings, systems or other users; (ii) constitute or enable tampering with, removing, disabling or otherwise limiting the effectiveness of any technical protections (including any mechanisms for managing, monitoring, controlling or analyzing the installation of, access or, or use of any Offerings or protections of Autodesk’s intellectual property rights); (iii) subject Autodesk, any reseller or any other user to liability; or (iv) not comply with these Terms (including any Additional Agreement, any Special Terms or any other applicable terms), including failure to pay any amounts owing with respect to any Offerings, Autodesk has the right, but not the obligation, to immediately disable or suspend Your access to and use of any Offerings and access to and use of Your Content. Unless Autodesk reasonably determines that immediate action is prudent, Autodesk will seek to notify You of the planned disabling or suspension before it takes effect. (emphasis added).

What to do if you receive a software audit demand letter.

1. Do not delete or destroy software, this can lead to more problems, and a confirmation that you knew you were doing something wrong (engaged in “willful” misconduct);
2. Do not race out to purchase new software to replace infringing software. They may not consider that to be a valid resolution and may terminate that purchase;
3. Seek a legal consultation with an experienced software audit defense law firm. In many cases, your corporate counsel will not be familiar with the audit process, and this can lead to creating more problems, and drawing the matter out needlessly.

Conclusion

The key to surviving these software disputes is knowing what to expect, and knowing what might be negotiable. Having handled hundreds of software audits, we can help you sort through the various issues, but make sure you do not throw the letter away, as this could lead to legal action in court wherein you risk significant public damage to reputation, damages as high as $150,000 per infringed title (ex. Inventor, Maya, Navisworks, etc.) and paying the other parties attorney fees. Staying out of court is usually the best option for most companies.