Common pitfalls

Increasingly competitive marketplaces require companies to keep up to date with the latest trends in technology so they can operate efficiently and provide customers with high quality services. However, doing so without giving thought to your existing IT estate and its governing licence regime could leave you dangerously exposed.

We have seen the following common issues giving rise to disputes:

(a) Virtualisation can be a good way to improve efficiency in use of hardware but it can also result in software licensed on a per-CPU or per-core basis either running or being capable of running on a vastly increased number of CPU/cores, even if partitioning is in place.

(b) Implementing new front-end services cannot be considered in isolation, especially if they are integrated in a way that makes use of back-end software without the requisite licence.

(c) Legacy contracts licensing software on a named user, per-CPU or per-core basis may not be compatible with cloud solutions, where these numbers cannot easily be ascertained or where they may not be representative of the level of use.

The English courts have demonstrated that they will seek to interpret and apply existing licence agreements even where they may not expressly have anticipated a new technology. This can result in an order for payment of significant licence and/or maintenance fees.

Be prepared: design with the bigger picture in mind

When adopting a new system, consider in the design stage what impact it may have on the rest of your IT estate. In some cases the design can be adapted and optimised to limit exposure.

Where older software licences do not make the position clear, it is sensible to have them analysed by lawyers in advance of implementation rather than waiting until a dispute arises. Considering how a court might interpret your software licence could have a dramatic impact on the risk profile and cost/benefit analysis of implementation.

Customers can find themselves in a far better negotiating position if they identify the potential issue early and approach a supplier to purchase an additional licence to cover the new usage. Don't wait for a supplier to conduct an audit or otherwise discover the overuse, by which time your negotiation position is likely to be considerably weakened.