Punitive damages and the deliberate use of unlicensed software

I would like to push that diagnosis from a more concrete and, if you will, more uncomfortable angle: the insufficiency of Argentina's civil sanctions system when the infringement consists of the deliberate use of unlicensed software, because, put simply, today it is still too cheap to infringe.

Punitive damages in Argentina: a remedy almost confined to consumer law

In Argentine law, punitive damages were positively received in Article 52 bis of Law 24,240^[2], incorporated by Law 26,361. The provision empowers the judge to impose a civil fine in favor of the consumer when the supplier fails to meet its legal or contractual obligations. The function of that tool is well known: it does not seek only to repair an already-caused harm, but rather to punish particularly reprehensible conduct and discourage its repetition.

Judicial practice confirms it. Wherever the supplier engages in serious, persistent or particularly indifferent breaches of consumer rights, courts have used punitive damages as an exemplary response. Examples are increasingly common: deficient or discriminatory telephone services, improper bank charges sustained over time, repeated breaches in essential services, undignified treatment or systematic disregard of complaints. With nuances, the figure became associated with a fairly clear idea: there are behaviors that should not be neutral for the person who carries them out, because they affect not only an individual but the very functioning of the market and social trust.^[3]

That is precisely the point worth rescuing, since punitive damages are not explained only by the interest of the specific victim, but because the legal system recognizes that certain practices, if they are not punished with sufficient intensity, become economically rational, and when that happens infringement multiplies.

Outside the consumer microsystem, however, the situation changes drastically. Argentine law today does not have a general clause for punitive damages applicable to ordinary cases of civil liability or breach of contract. The Civil and Commercial Code did not adopt a general civil sanction of that nature. Hence, when the conflict leaves the consumer arena and enters other areas — among them, the violation of software licenses — judicial resistance grows immediately.

The problem in software matters

In the field of software, that limitation produces a worrying practical consequence: if a company decides to install unlicensed copies and later faces a claim from the right-holder, the discussion typically revolves around the value of the omitted licenses, interest and, eventually, some additional compensatory parameter — but rarely much more than that, since proving distinct damages is usually extremely difficult and, in many cases, almost impossible.

The economic consequence is evident: for the infringer the scenario is not dramatic — they use the software without paying when they need it, obtain the economic advantage of that use for some time and, if they ever receive a claim, face the risk of paying what they should have paid from the beginning, plus accessories. In terms of incentives, the message is dreadful, since complying on time and complying late may end up costing almost the same.

That fact explains much of the problem. Companies tend to budget seriously for furniture, salaries, physical equipment, rent and services. But when it comes to intangible goods, and particularly software, another logic often prevails: install first, regularize later, or simply do not regularize while no one complains. In many environments, the use of pirated copies is still perceived as a minor, almost administrative transgression rather than a serious violation of rights.

The equation is well known: the chances of being discovered are not always high, the eventual claim may take time, and the economic sanction, if it arrives, does not necessarily substantially alter the infringer's balance sheet. From that perspective, the use of unlicensed software becomes a reasonable business — and there lies the real legal problem, because a system that leaves that rationale open is a system that discourages the use of legal software.

The problem of sanction omission is evident, and unfortunate, in the courts. One of the structural causes of high litigation and excessive duration of proceedings in Argentina is precisely the lack of sanctions for breaches and reproachable conduct in the procedural sphere. In compensation claims for software piracy, this shortcoming is even more tangible. Many magistrates ignore the rules, omit their application and exercise a "Solomonic justice" in which they err grossly, indirectly promoting the infringement of copyright.

This is a deeply rooted behavior in the country, ranging from the photocopying of books in schools to the State itself, including municipalities and even the Judiciary, which uses programs without a license. This omission of sanctions not only encourages unlawful conduct and damages legitimate sources of work, but also generates enormous economic losses and deprives users of access to first-class technology. It is a priority to urge judges to apply the law and to provide sanctioning tools where the proof of unlawful conduct is sufficient, without making it dependent on the complex proof of the magnitude of the harm.

Why the issue is not exhausted in the author's interest

The classic objection to any attempt to aggravate the civil consequences of piracy is usually formulated as follows: the conflict exists between the software right-holder and whoever used it without a license, and if the former recovers the economic value of what was omitted, the problem would be resolved. That view, at this point, is insufficient.

I agree with Dr. Christian Ameijeiras Biniat in his note on ARTI: copyright law protects the author not only to favor him patrimonially, but because intellectual works benefit society as a whole. Authorial protection, far from being a privilege, is a tool intended to sustain the development of new works, new solutions and new investments. If the system does not protect in real terms, the incentive to create diminishes. The loss, therefore, is not only that of the individual author but is collective: society as a whole is harmed.

In software matters, moreover, there is a fact that makes the problem even more serious and that for years was underestimated: cybersecurity. The use of pirated copies does not merely imply unauthorized exploitation of the work; it usually goes hand in hand with concrete technical risks, including malware, code alterations, security flaws, backdoors or exposure of sensitive information — a relationship that has long been highlighted by specialized studies and by IT-security organizations.^[4]

That changes the focus. The company that knowingly installs pirated software does not adopt a decision that will affect only itself and the right-holder. It also exposes its own information, that of its employees, that of its clients and that of all those whose data passes, in one way or another, through those systems. And not only that: an infected computer can become a platform for further attacks, a propagation node, a vehicle of anonymity for conduct that ends up harming third parties completely unrelated to the original decision.

That is why software piracy should not be treated as a simple bilateral breach: it has a clear social dimension. Just as in consumer law it is accepted that certain bad practices deserve an exemplary response because they injure the community and not only the individual consumer, here too there are solid reasons to step out of the strictly compensatory logic.

The need for a truly deterrent civil sanction

If the Argentine legislator rightly understood that punitive damages could be necessary to discourage abusive practices in consumer matters, it is hard to find a convincing reason to deny an analogous tool against the deliberate use of unlicensed software.

This is not about overdoing the punishment or blurring private-law guarantees, but about correcting an incentive problem. When someone, knowingly, decides to install and use unlicensed software, they are not merely leaving an unpaid patrimonial obligation; they are obtaining an undue advantage over those who do comply, harming the economic circuit that makes new developments possible and, in addition, introducing a technological risk factor that may project itself onto third parties.

In that context, a sanction limited to the late payment of the omitted licenses is weak: it does not prevent, does not exemplify, and does not alter the economic convenience of the conduct — in fact, it often confirms it.

It therefore seems inevitable to open the debate on a specific regulation enabling the application of punitive damages in matters of pirated software, when unlicensed use is deliberate and conscious. A figure of that nature would restore something elementary — that infringing should clearly cost more than complying — and would do so with a justification that visibly exceeds the individual author, because the use of pirated software also compromises security, privacy, system integrity and trust in the digital market.

A possible legislative agenda

There is no need to imagine a diffuse or uncontrollable category. A precise legal provision, with restrictive interpretation, aimed at cases of intentional use of unlicensed software, would suffice — especially in business or professional contexts where the decision to use cannot be presented as an innocent mistake.

The key would not lie in any infringement, but in one adopted knowingly, with economic exploitation and indifference toward the authorial and security consequences that the conduct projects, because Argentine law today has an empty zone whose existence, in practice, favors the infringer rather than the compliant party.

Closing

The deliberate use of unlicensed software remains, in many cases, an economically reasonable bet for whoever decides to infringe. That is the real difficulty. If detection does not always arrive, if the claim may be delayed and if the final consequence barely reproduces the cost that should have been assumed from the beginning, the system does not correct the conduct — it tolerates it. That is why the discussion should not be exhausted in how much an unpaid license is worth, but in what legal tools are needed for non-compliance to stop being good business. On that point, the debate that Christian Ameijeiras Biniat opened with regard to ARTI deserves continuity, because the problem is no longer only authorial nor purely patrimonial: it also compromises security, trust and the minimum conditions of fairness in the digital market.