Under the Copyright, Designs and Patents (Offences and Enforcement) Act 2002, which amends the Copyrights Designs and Patents Act 1988, IT managers could face 10 years in jail for non-compliance.
What does the Act do?
The trade in illegally copied software is believed to be worth millions of pounds a year in the UK alone.
Previously police have targeted counterfeiters who sell copies of software to the public. Now they can obtain search-and-seize warrants against legitimate businesses which are using unlicensed products.
The change is a response to pressure from the software industry, and this is set to continue. A whistleblowers' hotline set up by the software industry-funded Federation Against Software Theft received more than 1,000 calls last year.
The new rules mean that it will be much easier for the police to act on them. This will mean that premises can be raided and the hardware upon which illegal programs are stored - including computers and servers - can be seized and forfeited.
Should you worry?
If a company is found guilty, then the buck is likely to stop with the individual who knew or should have known about the copying - the IT manager.
And under the amended penalty for infringement the maximum possible jail term for the crime has been increased from two years to 10.
What can you do?
A first step is an audit of all licensed products. The terms of each software licence need to be reviewed to ensure that they are not breached.
Of particular importance is the "permitted use" clause (the clause specifying what the licensee may or may not do with the software, such as the right to copy the software onto a designated server and the right to make a back-up copy).
At the same time all staff should be made aware of the dangers of infringing copyright, especially now that CD writers come as standard on many PCs.
The new legislation, which will come into force by 22 December, does not create any new offences in law, so if your house is already in order there is no need to worry.
However if it is not, then perhaps the prospect of a decade of prison food will provide an incentive to prioritise an IT health-check.
The authors are members of the technology and media department at D J Freeman Solicitors
This was first published in December 2002