“Pirated” software in the workplace: company directors can be held liable too

Directors or employees: who is liable for the use of unauthorised software?

The judgment of the Genoa Court (Business Division, Judgment No. 334/2025) did not merely impose liability on the three companies that had used CATIA without a licence. The individual directors, who were members of the boards of the companies concerned, were also held liable. The Court stressed that, given the relatively small organisational size of the businesses, the unlawful use of expensive and highly specialised software such as CATIA could hardly have gone unnoticed.

“[…] the small size of the defendant companies and the activities they carry out – which inevitably require the use of software such as that unlawfully used – make it scarcely credible that the director was unaware of the use of the software in question, not least because of the inevitable cost savings thereby obtained.”

The directors’ liability, however, was not limited to actual knowledge. It also extended to omissions, including the failure to monitor software licences and the failure to implement appropriate technical safeguards:

“[…] the director would be liable even if his actual knowledge could not be established, since the direct damage suffered by the companies holding the rights in the software would also arise from an omission, namely the failure to check the licences for the software used by employees and the failure to adopt appropriate technical measures to prevent the installation of unlicensed software.” (Genoa Court, Business Division, Judgment No. 334/2025)

The employees, at least in these proceedings, were neither sued nor held liable, although they played a decisive role: the computers assigned to them contained the unlawful copies of the software, and it was precisely those installations that made it possible to establish the infringement.

Nevertheless, legal liability remained with the senior management, jointly and severally with the companies, an important point for any business using high-value digital tools.

Once liability has been established, including that of the directors, another question arises: how much is the resulting damage worth, and how is it calculated?

How are damages for the use of pirated software calculated?

The judgment provides a clear warning to businesses, particularly smaller companies: the apparent saving obtained by using “pirated” software may result in very substantial legal exposure, even where no specific profit deriving from use of the software can be demonstrated.

The case decided by the Genoa Court (Judgment No. 334/2025) is particularly striking because of the very high amount of economic damage involved, which reflected the nature of the software concerned. “CATIA” is a highly sophisticated industrial design tool whose market value can amount to millions of euros for a single licence.

The unlawfully installed versions were found to correspond to two “premium” licences (AL3) and two “standard” licences (AL2), with an overall value of €6,524,151.20. The Court assessed the economic loss using the “hypothetical licence fee” criterion, provided for by Article 158(2) of the Italian Copyright Act, which allows a court to:

“assess damages on a lump-sum basis by reference, at a minimum, to the amount of the royalties or fees that would have been payable if the infringer had sought authorisation from the rights holder to use the right.”

The claimant also sought an additional increase in damages based on any unlawful profits obtained by the defendant companies. The Court, however, rejected that claim, clarifying an important legal point: Italian copyright law does not provide for the automatic disgorgement of profits, unlike Article 125 of the Italian Industrial Property Code.

The Court expressly referred to Italian Supreme Court Judgment No. 21832/2021, which explains that, in the field of copyright, the legislature opted for a more flexible and less punitive system of damages than that applicable to industrial property rights:

“[…] it was not considered appropriate to introduce into the system of remedies for infringement of copyright and related rights the more drastic restitutionary remedy which was instead considered appropriate in the field of industrial property rights […].”

The same principle was reaffirmed by Italian Supreme Court Judgment No. 39762/2021, according to which the profits obtained by the infringer may constitute an additional factor in assessing damages, but do not give rise to an automatic obligation to surrender those profits.

The law therefore allows the court to choose between two approaches: actual loss, where this can be proved, or a lump-sum assessment based on the value of the licence. In the absence of accounting evidence, the latter provides an objective and legally sufficient basis for assessing damages.

The figures set out in the judgment were as follows:

• Two AL3 licences — CATIA All in One Marketing, for a total licence and maintenance cost of €3,376,335.60
• Two AL2 licences — CATIA, for a total of €3,147,815.60
• Total economic damages: €6,524,151.20

The real significance of the decision, however, goes far beyond the individual case. The “hypothetical licence fee” criterion is not limited to elite or highly specialised software: it is a general principle applicable to any computer program used without authorisation in a business environment, regardless of its value.

Even where the software concerned is an inexpensive business-management or office program, unauthorised use constitutes copyright infringement and may result in damages at least equal to the market value of a legitimate licence.

It is worth remembering that professional software is one of the sectors most heavily affected by digital piracy. According to data collected by EUIPO and reported in Italy by Canella Camaiora, the phenomenon continues to pose a significant threat to intellectual property and fair market competition. Infringements occur particularly frequently in business and technical environments, where pirated software is often used systematically rather than occasionally.

But there is more. As we will see below, Article 158 of the Italian Copyright Act also provides for compensation for non-pecuniary damage.

What about non-pecuniary damages?

In addition to compensation for economic loss, Italian copyright law allows — where certain conditions are met — the award of damages for non-pecuniary loss. This form of compensation covers moral, reputational or symbolic harm and is based on Article 158(3) of the Italian Copyright Act, read in conjunction with Article 2059 of the Italian Civil Code and Article 185 of the Italian Criminal Code.

The Genoa Court applied this principle in the case under consideration, stating that:

“the claim for compensation for non-pecuniary damage referred to in the final paragraph of Article 158 of the Italian Copyright Act must be upheld”, and that the provision “allows compensation for non-pecuniary damage pursuant to Article 2059 of the Civil Code, which, in turn, expressly provides for compensation for such damage in the cases determined by law.”

The “case determined by law” in this context was the commission of a criminal offence, since — as the judgment pointed out — the unauthorised possession and use of CATIA software by the defendant companies also constituted a criminal offence under Article 171-bis of the Italian Copyright Act. It is precisely this criminal characterisation of the infringement that also justifies an award of non-pecuniary damages.

The amount was assessed on an equitable basis, as permitted by law, and by reference to the economic loss already established. The Court considered it fair to award €500,000 in non-pecuniary damages, including monetary revaluation and statutory interest from the date of the judgment.

Non-pecuniary damage is therefore not merely a symbolic addition to the award, but a genuine and significant component of the damages payable where an infringement affects intangible interests such as business reputation, perceived commercial reliability or confidence in the market. In a context in which software constitutes a strategic asset, the loss of control over its unauthorised use by third parties may itself cause serious non-pecuniary harm.

In conclusion, the existence of a criminal offence not only strengthens the rights holder’s position, but also significantly increases the overall amount of damages that may be awarded. This is precisely when the infringement “weighs more heavily” — both financially and in terms of non-pecuniary harm.