Licensing of computer software –
warning to software developers.
The Supreme Court of Appeal recently
handed down a judgment in the case of Attachmate Corporation v Minister
of Water and Environmental Affairs (20 May 2015),
providing lessons for those involved in
the licensing of computer software.
Attachmate, a US company, signed a
software licence agreement authorising the Department of Water and
Environmental Affairs (DWE) to download certain software at a heavily
discounted rate, based on 300 computers on which the software was to be
installed.
DWE went to town and installed the
software on 1000’s more computers. DWE refused to pay Attachmate the regular
licence fee on the additional unauthorised copies, and Attachmate sued DWE to
pay Attachmate the “applicable licence fee” for unlicensed copies. The court had
to decide what compensation Attachmate was entitled to.
The judge found that the installation
of the extra, unauthorised software was “not that [DWE] was trying to avoid
payment of licence fees, but that its affairs were in such disarray that it
could not determine the number of unlicensed copies involved”.
Attachmate couldn’t prove the
existence of more than 1564 unlicensed copies. However, what was the “applicable
licence fee”?
The court found that Attachmate “…only
has itself to blame … if it wanted to stipulate for its list price or its
standard price or some other penalty in the situation contemplated by clause
11, I can think of nothing which prevented it from doing so.” The judge concluded that “... Once a licence
fee had been determined through negotiation between Attachmate and the licensee
involved, I do not think the fee applicable to that licensee can be determined
without any reference to the negotiated fee.”
Software companies must thus ensure
that if they want the non-compliant licensee to pay a penalty, they must
stipulate this in their contracts. Also, allow for audits, to determine the software
numbers downloaded.
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