Study on Compensation for Software Infringement in Network Externality Environments

The compensation for software infringement is a challenge that the development of information technology and the Internet has been posing to the software management field. In the process of determining the software damages, network externalities should not be ignored. This paper focused on the ways in which software was licensed, the characteristics of software infringement, the principles behind compensation for software infringement in network externality environments and the determination of the amount of compensation, and built a new model for calculating the amount of compensation. On this basis, actual data were used to conduct an empirical analysis of this model. This paper showed that software infringement was covert and difficult to perceive, and it was easy for infringers to shirk liability. As a result, it is essential to impose punitive damages on infringers in most cases. In determining the amount of compensation, it is necessary to consider network externalities, the profits of software owners before and after infringement and the probability of software infringers´ assuming liability. When the software infringer is the end user for profits, it is also necessary to consider the total number of software users. The stronger network externalities are, the more significantly positive effect the software infringer will have on the software owner and the smaller the amount of compensation is.