A COMPANY DELIBERATELY INSTALLED PIRATED (CRACKED) SOFTWARE ON ALL OF ITS COMPUTERS TO REDUCE OPERATING COSTS, RESULTING IN A MALWARE ATTACK AND THE DISCOVERY OF COPYRIGHT INFRINGEMENT BY THE COMPETENT AUTHORITIES. UNDER THE LAW ON INTELLECTUAL PROPERTY AND THE CRIMINAL CODE OF VIETNAM, HOW WILL THIS UNAUTHORIZED USE OF SOFTWARE BE DEALT WITH AND SANCTIONED?

1. Case Summary

Mr. M and Mr. K were not only next-door neighbors but also close friends who jointly established a startup business. In 2024, they founded TechDesign Engineering Design Company, specializing in 3D drafting and architectural design services. Mr. M served as the Chief Executive Officer (CEO), overseeing general management and the company’s IT infrastructure, while Mr. K acted as the Creative Director, managing the design team.

Seeking to minimize operating expenses during the startup phase and relying on their long-standing relationship, Mr. M decided against purchasing legitimate licenses for professional design software, which cost several hundred million Vietnamese dong annually. Instead, he hired an external technician to install pirated (cracked) versions of the software on all 20 computers within the company.

In early 2026, shortly after TechDesign secured a major contract with an overseas client, the legal representative of the software owner’s corporation conducted a system audit and discovered the unauthorized use of its copyrighted software. The copyright owner immediately issued a formal cease-and-desist notice, demanding that TechDesign terminate the infringing activities. At the same time, it initiated civil proceedings before the competent court, seeking damages for copyright infringement and requesting the suspension of the company’s operations.

Facing the prospect of costly litigation and substantial damages, TechDesign’s foreign business partner suspended the contract due to the company’s breach of contractual commitments regarding the use of legitimate software and compliant technology. Under immense pressure, Mr. M attempted to shift the blame to Mr. K, accusing him of failing to supervise employees and allowing confidential data to be leaked. Mr. K, who had never participated in the decision to install pirated software, became furious after finding himself exposed to the risk of losing his family’s entire investment. Their friendship and neighborly relationship completely collapsed, escalating into a violent confrontation during which both parties threw bricks at each other’s homes, damaging property and seriously disrupting public order. The local police subsequently intervened and prepared official administrative records for handling the incident.

2. Legal Perspective – A Strong Legal Shield

Disregarding potential administrative sanctions imposed by the State, from the perspectives of civil law and intellectual property law, the installation and use of cracked software on a company’s computer system constitutes copyright infringement and exposes the enterprise to substantial civil liability.

Special Protection of Computer Programs

Pursuant to Clause 1, Article 22 of the Law on Intellectual Property 2005 (as amended and supplemented in 2022), computer programs are protected as literary works regardless of whether they are expressed in source code or machine code.

A lawful user of a computer program may only make a single backup copy solely for replacement purposes in the event that the original copy is damaged or lost. The user is not legally entitled to reproduce or install the software on additional computer systems without the authorization of the copyright owner.

Accordingly, Mr. M’s unauthorized reproduction, circumvention of copyright protection measures (software cracking), and installation of the software on all 20 company computers without obtaining valid software licenses constitute a direct infringement of the exclusive economic rights of the copyright owner protected under Vietnamese intellectual property law.

Civil Liability for Copyright Infringement

Pursuant to Articles 198 and 202 of the Law on Intellectual Property 2005, the copyright owner is entitled to institute legal proceedings before the competent People’s Court, requesting TechDesign to remove all unauthorized software installations and restore the company’s information technology system to lawful compliance.

Furthermore, pursuant to Article 205 of the Law on Intellectual Property 2005, in conjunction with Article 584 of the Civil Code 2015, TechDesign may be held liable for compensating the copyright owner for actual material damages. Such damages may include the commercial value of all unlawfully used software licenses together with reasonable expenses incurred by the copyright owner in preventing, detecting, and addressing the infringement.

3. Psychological, Educational, and Corporate Governance Perspectives – The Human-Centered Solution

Psychological and Educational Perspective

Materialism and the “Free Software” Mindset

Mr. M was driven by short-term financial considerations and sought to minimize business expenses by taking an unlawful shortcut rather than paying for the intellectual efforts of software developers. The widespread misconception that “software available online is free to use” reflects a fundamental misunderstanding of digital property rights and demonstrates a lack of respect for intellectual labor, ultimately resulting in unethical business conduct.

Insufficient Awareness of Copyright Compliance

This case illustrates a common problem among many small and medium-sized enterprises in Vietnam transitioning from personal to corporate operations. Many business owners lack education regarding international standards of integrity and compliance, failing to recognize that producing commercial products through unlawfully obtained software inevitably damages the credibility and reputation of the enterprise itself.

Corporate Governance Perspective

Critical Failure in Legal Compliance and Technology Risk Management

Building an entire business operation and investing family assets upon an illegal software infrastructure represents a classic example of compliance risk. A single software compliance audit conducted by the copyright owner may trigger a legal crisis capable of destroying the company’s business value within a very short period.

Deficiencies in Cybersecurity Governance

TechDesign failed to establish an effective IT audit mechanism. A professionally managed technology company should maintain strict control over software installations across employee devices and prohibit the installation of unauthorized applications in order to safeguard confidential business information and maintain cybersecurity.

4. Comprehensive Recommendations from Expert Nguyen Huu Long

Step 1: Resolve the Neighborhood Conflict and Address the Legal Crisis (Short-term)

Mr. M and Mr. K should immediately cease all acts of violence and property damage in order to avoid administrative penalties for disturbing public order under Decree No. 144/2021/ND-CP.

As the executive responsible for the company’s technical infrastructure, Mr. M should proactively meet with Mr. K and his family, invite local community representatives to facilitate mediation, sincerely acknowledge his responsibility, and undertake to compensate for the resulting financial consequences in order to restore social harmony.

Simultaneously, TechDesign should submit a formal written response to the software owner, acknowledging deficiencies in its internal compliance management. Pursuant to the principles of voluntary settlement under the Civil Code 2015, the company should offer to immediately uninstall all pirated software and purchase an appropriate number of legitimate software licenses in exchange for a negotiated settlement and withdrawal of the civil lawsuit.

Step 2: Restructure Technology Governance and Human Resources Management (Medium-term)

TechDesign should adopt a comprehensive IT Policy by permanently removing all pirated software from its systems and implementing internal regulations prohibiting employees from installing any software without prior approval from the IT department.

Regular IT compliance audits should be conducted to ensure that all business operations are carried out exclusively on legitimate software platforms.

Where financial resources remain limited, Expert Nguyen Huu Long recommends adopting open-source software solutions or lower-cost licensed alternatives that enable lawful business operations while remaining fully compliant with intellectual property legislation.

Step 3: A Long-term Lesson on Separating Personal Relationships from Business Assets

One of the most important lessons for entrepreneurs is that intellectual assets can only be effectively protected when they are created using lawful technological tools.

Paying for legitimate software licenses from the outset should not be regarded as an unnecessary expense but rather as an essential investment in legal compliance. Such investment protects corporate reputation, safeguards personal assets, strengthens business sustainability, and preserves valuable personal relationships in today’s rapidly digitalizing economy.

EXPERT INSIGHT

This article has been developed based on the professional consultation and legal expertise of Mr. Nguyen Huu Long, LL.M., an expert in leadership, law, psychology, and education.

Through an interdisciplinary approach, we provide not only comprehensive legal protection but also integrated solutions in compliance management, risk governance, and psychological support, contributing to the sustainable development of individuals, businesses, and society.

If you or your organization are experiencing similar legal issues relating to intellectual property, land matters, education, or corporate governance, please contact us via our hotline or submit your inquiries through tuvanphapluattamlygiaoduc.vn or call (+84) 898 627 762 for timely professional assistance.