In Australia, where businesses increasingly rely on digital tools, software licensing compliance is more than an IT concern — it’s a legal necessity. Despite widespread awareness of intellectual property laws, many companies still unknowingly allow pirated or unlicensed software to operate within their systems.
But when an employee installs or uses pirated software at work, the question arises: Is the employer liable? In many cases, the answer is yes.
Understanding Software Piracy and Copyright Law in Australia
Under the Copyright Act 1968 (Cth), software is protected as a form of literary work (see section 10(1)). This means any unauthorised reproduction, installation, distribution, or use of software can constitute an act of copyright infringement.
Key provisions:
- Section 31(1)(a)(i) grants the copyright owner the exclusive right to reproduce the work in a material form.
- Section 36(1) provides that “the copyright in a literary work is infringed when a person who is not the copyright owner does, or authorises the doing of, any act comprised in the copyright.”
This applies to:
- Use of cracked or counterfeit software
- Use beyond the scope of the licence (e.g., installing one licence on multiple machines)
- Continued use after licence expiry
Employer Liability Under Australian Copyright Law
Vicarious Liability
While the Copyright Act doesn’t use the phrase “vicarious liability,” Australian courts have accepted that companies can be held civilly liable for infringing acts done by employees during the course of employment — particularly where the company benefited from the conduct or failed to prevent it.
Authorisation of Infringement — Section 36(1)
Employers may be found liable not just for direct infringement, but also for authorising copyright infringement. Courts look at factors such as:
- Whether the employer had control over the person committing the infringement
- Whether there were reasonable steps taken to prevent or detect infringement
- The relationship between the employer and the device/environment used
This principle was illustrated in cases such as University of New South Wales v Moorhouse (1975) 133 CLR 1, where the High Court found that failure to take reasonable steps to prevent infringement can amount to authorisation.
Consequences for Australian Businesses
If found liable for software copyright infringement, a business may face:
- Injunctions under section 115(2) restraining further use
- Damages or account of profits under section 115(2)–(3), including additional damages in cases of flagrant infringement
- Orders for delivery or destruction of infringing copies
- Costly audits by software vendors or enforcement bodies
Ultimately, software licensing compliance is not just about ticking a legal box — it’s a critical component of risk management and corporate governance. Under the Copyright Act 1968 (Cth), employers can be held liable for unauthorised software use within their organisation, even if the infringement originates from an individual employee.
In today’s digital-first business environment, proactive compliance demonstrates more than legal prudence — it signals operational maturity, builds trust with stakeholders, and safeguards your business from reputational and financial harm.
At MCLP Lawyers, we help Australian businesses navigate software compliance issues confidently — whether you’re responding to an audit, resolving a dispute, or building internal policies to prevent future exposure. Reach out to our team to ensure your digital operations are secure, compliant, and future-ready.