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June 09, 2015


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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