Software is technical in nature, but its license terms need not be. On the contrary, it is a best practice that license agreements are clearly written and easy for customers to understand. Therefore, the first principle of fair software licensing principles is:License terms should be clear and easy to understand.”
Unclear licensing terms leave customers confused and vulnerable
Without clearly written licensing terms, cloud and on-premises customers are left vulnerable to hidden clauses, stealth or soft audits, and other predatory activities.
Hard-to-find or hard-to-decode license terms are more common than you might think. The Coalition for Fair Software Licensing has heard from customers who are experiencing problems with unclear or difficult to understand contract terms.Customers who have done the necessary due diligence prior to signing but are unaware of some of the most important clauses until the issue arises. Considering the fact that it was either buying a product without the
For example, Oracle customers who finance cloud purchases through Oracle Credit Corporation (“OCC”) are aware that standard financing agreements allow Oracle to assign financing agreements to third-party banks. may not. These customers – typically small businesses, including retailers and franchisees – are surprised to learn that third-party banks expect the full amount of their loans, even if Oracle itself fails completely. We offer his ERP solutions that are practical. These banks have recently filed a series of lawsuits against Oracle customers in connection with such allocation of OCC. Judge Layton of the Western District of Washington, who presided over such cases, said the arrangement most likely failed due to lack of consideration.
“[t]His clever arrangement appears to be designed to fragment the payment and performance aspects of his contract with Oracle. [its
licensee] This ensures payment even if Oracle fails to deliver promised services. The result is a disturbingly imbalanced transaction that sustains OCC’s ability to terminate. [licensee’s] Rights to Cloud Services in the event of non-payment and refusal [licensee] Same opportunity to avoid payment if Oracle violates. Unfortunately for Oracle, such arrangements are likely to be illusory or unconsidered.1 See WILLISTON ON CONTRACTS § 4:27 (4th edition) is an illusion that allows you to determine the nature and extent of its fulfillment). Key Equipment Finance v. Barrett Business Services, Inc.. , number. 3:19-cv-05122-RBL, 2019 WL 2491893, (Washington, WD June 14, 2019)”
The Coalition has also heard from customers who struggle to understand the terms and scope of use of licenses purchased from traditional providers. This includes customers who want to ensure compliance with their terms and conditions, but are surprised to learn what that means. Gartner, a world-renowned analyst, reports:[t]There are also restrictions on the use of Microsoft licenses within Azure itself, which are often not communicated to customers. For example, customers are not informed of the restriction rules under the Azure Hybrid Use Benefit in an Azure multi-tenant environment. “The company’s latest licensing changes have created new layers of complexity for both providers and customers, and introduced new but unclear and uncertain limits. Many customers are also experiencing unexpected costs and license term extensions. Customers are struggling to make sense of this latest change but another set is on the horizon There is a possibility.
These are known issues that customers are experiencing with their contracts and are well documented, but it’s worth noting a few other issues that haven’t received much coverage so far.
This is when some SAP customers are looking to purchase additional product seats to ensure compliance with existing contracts in light of new employees. What they consider to be a (relatively) simple process soon becomes an opportunity for SAP to force them to reupload their entire long-term master contract. These customers are in a catch-22 position. You remain compliant, but you are bound by a long-term relationship with SAP that limits your ability to select alternative vendors that are better suited to your future needs. compliance with their contract.
What makes this so interesting, if not disconcerting, is that we are dealing with increased maintenance fees for our products at a time when many customers are being forced to evaluate their long-term relationship with SAP. It is happening just as it should be. Understanding these issues is important in the context of recent calls by SAP user groups. “We are asking for a transparent, flexible and scalable cloud contract with corresponding metrics to provide a binding statement and roadmap for product strategy for cloud and on-premises solutions.”
One of the last issues we’ve heard from many experts the Coalition has raised in recent weeks is another possible change to Microsoft’s Licensing Mobility program, the means by which customers can redeem their licenses at listed providers. may eliminate Note that the companies included as Listed Providers happen to be Microsoft’s most important competitors. However, it did not clarify why those companies were included or whether other providers would be included in the future.
Microsoft’s inclusion of itself as a listed provider does not level the playing field. In fact, the Azure Hybrid Benefit essentially exempts Microsoft and its customers from the restrictions of the listed providers as long as the customer uses Azure. While it’s hard to talk about contractual changes that are purely speculative at this point, the current and potential implications for customers who are already managing the impact of changes made to licensing terms for essential software to date. emphasizes its importance and necessity. Clarity and predictability of both existing and future contracts.
Easy-to-understand license terms support all customers, especially small businesses
You can empower your customers by having clear and understandable license terms. This is especially true for small businesses with limited budgets for digital transformation strategies and no means to wage large-scale legal battles.
The threat of costly and resource-consuming litigation with traditional software providers terrifies even the most well-heeled enterprise customers. Unfortunately, most customers give in to unreasonable demands from these providers and end up paying more than they are due. Many customers even agree to buy products they don’t need to avoid legal action.
Small businesses are particularly vulnerable due to their reliance on software providers and their tight budgets. For example, Oracle used a non-contractual partitioning policy during an audit to uncover a large “shock number” for alleged non-compliance related to a customer’s use of his VMWare virtualization software, resulting in a final Present to customer in audit report. Oracle then generously agrees to waive audit penalties based on provisions not even in the contract. provided, however, that Customer agrees to enter into a new Unrestricted License Agreement (“ULA”) with its harmful Total Support Stream obligations. Customers pay more money for software they don’t need or want, with expensive ongoing maintenance and support obligations, just to settle audits based on inflated audit results increase. Such predatory audit practices are detailed in the First Amended Complaint. sunrise firefighter Securities class action lawsuit in the Northern District of California.
This is why the Coalition was formed. To provide strength in knowledge and numbers, and to advocate for common sense best practices that put customers, including small businesses, first.
Software Providers Must Adopt Fair Software Licensing Principles
Ensuring that license terms are clear and easy to understand is more than just common sense, customers need maximum contract clarity and cloud flexibility to manage the budget crisis caused by the recent recession. Essential when you need it. However, they are not as common as they should be. Customers should be able to easily access and understand the license terms in advance and easily determine license costs and obligations. You shouldn’t be forced to click through a series of hyperlinks just to understand a simple duty. Not to mention important terms related to non-service payments, compliance implications and mobility. software her provider puts herself in the shoes of the customer,
Fair Software License Principlesand encourage other software providers to follow suit.
The content of this article is intended to provide a general guide on the subject. You should seek professional advice for your particular situation.