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Software licensing question

M

Mark R

Diamond Member
Just a question whether anyone has ever heard of anything like this before.

We have a very, very expensive enterprise app at work which we've licensed for a few years (approx $100k per user per year). We've decided not to renew and have changed to a new vendor.

The original vendor has now given us the terms of the end of contract, which is on June 30th. Essentially, they say that all servers, workstations, client software, and any other intellectual property must be completely removed by end of business on the last working day of June (which is the 28th). Not only that, but they've estimated that it will take their field engineers 2 weeks to verify that all servers, workstations, personal laptops, etc. have been cleaned, so they are turning up 2 weeks before end of contract to start un-installing their software.

My impression was that if you have paid for a license until date X, that you could continue using the software until the end of day X. Not have to abandon the system 2 weeks before X.

It's not catastrophic as the new system is in an running, but we've hit a few snags with moving data over to the new servers (we've found a few files that we can't copy off the original servers; the server process dies if you try to access the file), so we could really do with that 2 weeks to re-check that the data is safe.
 
sounds like a two week notice. You have until that day on X to have it completely off your infrastructure.
 
They can ask for that, but if you don't agree, what are they going to do?

If you're licensed until the last day of June, then you're entitled to use it until then. I'd be inclined to tell them they can come in to uninstall starting on July 1, and not a minute sooner. They'll have to be able to show that it was used after that date, to be entitled to any consideration beyond the contract termination date.

I am not a lawyer.
 
I'd let them know that your license is through June 30th and will not allow any uninstalls prior to agreed upon date.
 
Sounds crazy to me. All of this should be spelled out in your contract and/or licensing agreement. Consult legal if you're going to fight them on it.
 
I've never heard of anything like this and my company buys software that costs millions of dollars as well.

What are the names of the software vendors? I'm just curious.
 
If its a organization that can afford to spend 100k+ per year on a non-catastrophic software then I am sure they have a army of lawyers. I would say ask them to get on it...
 
Wow. We don't work with super high end software, but I'm surprised they have to send a team to remove it from your servers, that seems kinda excessive.
 
TwiceOver said:
Wow. We don't work with super high end software, but I'm surprised they have to send a team to remove it from your servers, that seems kinda excessive.
Click to expand...

They're billing us for the uninstall team @ $5k per man-day!
When we gave them notice of contract termination, that's what they sent in the "costs of termination" document.

The problem is our legal department can't do anything about it, because they don't have a copy of the contract! Basically, this is a typical government clusterfail. The contract with the vendor was made by a government department; effectively, this department bought the software for us, but we had to pay for it. However, we were not allowed to see the contract as it was "commercially confidential". The original department has now been disbanded, so another department has taken it over; but again, subject to the same confidentiality clause. Similarly, we have no negotiating power with the vendor as their contract isn't with us.
 
Mark R said:
Just a question whether anyone has ever heard of anything like this before.

We have a very, very expensive enterprise app at work which we've licensed for a few years (approx $100k per user per year). We've decided not to renew and have changed to a new vendor.

The original vendor has now given us the terms of the end of contract, which is on June 30th. Essentially, they say that all servers, workstations, client software, and any other intellectual property must be completely removed by end of business on the last working day of June (which is the 28th). Not only that, but they've estimated that it will take their field engineers 2 weeks to verify that all servers, workstations, personal laptops, etc. have been cleaned, so they are turning up 2 weeks before end of contract to start un-installing their software.

My impression was that if you have paid for a license until date X, that you could continue using the software until the end of day X. Not have to abandon the system 2 weeks before X.

It's not catastrophic as the new system is in an running, but we've hit a few snags with moving data over to the new servers (we've found a few files that we can't copy off the original servers; the server process dies if you try to access the file), so we could really do with that 2 weeks to re-check that the data is safe.
Click to expand...

<- I'm an IP Attorney, but I'm not your (or your company's attorney) and this is not legal advice.

What does the license with the original vendor say? If it says that the license runs from X date to Y date and provides no terms for actions to be taken pursuant to termination, the term runs until Y. They can't cut the term short without violating the terms of the contract. If they give you a bunch of flak, you may want to consider telling them to pound sand and to show up when the license has expired.
 
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Mark R said:
They're billing us for the uninstall team @ $5k per man-day!
When we gave them notice of contract termination, that's what they sent in the "costs of termination" document.

The problem is our legal department can't do anything about it, because they don't have a copy of the contract! Basically, this is a typical government clusterfail. The contract with the vendor was made by a government department; effectively, this department bought the software for us, but we had to pay for it. However, we were not allowed to see the contract as it was "commercially confidential". The original department has now been disbanded, so another department has taken it over; but again, subject to the same confidentiality clause. Similarly, we have no negotiating power with the vendor as their contract isn't with us.
Click to expand...

This makes 0 sense. Why is your company paying on a "contract" that it is not party to? The government might choose the vendor for software to be used in its projects, but that typically means that the selected contractor and the software vendor would enter into another contract to support the project. You seem to be saying that your company is in some f'ed up relationship where the government and the vendor are in a contract, and you are paying the government's bill. If so, your company must have a contract with the government somewhere that specifies the terms that apply. And if the terms simply state that you will abide by the terms of the governments contract with the vendor, you should have (or are entitled to) a copy of at least the material terms of that contract. Otherwise your company didn't know what it was agreeing to - that may be grounds for unenforceability of the contract between the government and your company, particularly if the government had aware that your company did not know the terms of the contract between it and the vendor, with which your company allegedly agreed to be bound..

As for the contract being business confidential, that is BS. The vendor cannot enforce a "contract" of unknown terms on your company. Tell them to redact the commercially sensitive portion of the "contract" (likely the pricing/bid given to the government) and send you the redacted document. The terms of uninstallation most certainly would not be business confidential.

Also, it is hard for me to understand how a "contract" that your company has no knowledge of and is not party to) is enforceable against your company. Generally at a minimum, the parties to a contract must have knowledge of what they are agreeing to. Without that, no contract is formed. At least not between your company and the vendor. If the vendor wants to seek restitution, they can look to the government (good luck with that)

That said, if the terms are as you state your company and the vendor may have a contract that is implied in fact. Regardless, there are a million red flags. E.g., if you are in a UCC (uniform commercial code) state, the UCC may control. Generally, UCC requires a written contract for sale of goods over a specified value, else its not enforceable.

As for them charging you $5k daily for un-installation, if there are no contractual terms that bear on the issue then I don't see how that number would be enforceable. I would be inclined to call the vendor's attorney and tell him that the vendor can try to charge anything they want, but that your company doesn't agree to the terms and will pay nothing or at most fair value for the uninstallation.

Again, the above is just my 2c, not legal advice. You rely on anything I say at your own risk. Only advice I have is get a real attorney with some knowledge of basic contracting principles.
 
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Mark R said:
They're billing us for the uninstall team @ $5k per man-day!
When we gave them notice of contract termination, that's what they sent in the "costs of termination" document.

The problem is our legal department can't do anything about it, because they don't have a copy of the contract! Basically, this is a typical government clusterfail. The contract with the vendor was made by a government department; effectively, this department bought the software for us, but we had to pay for it. However, we were not allowed to see the contract as it was "commercially confidential". The original department has now been disbanded, so another department has taken it over; but again, subject to the same confidentiality clause. Similarly, we have no negotiating power with the vendor as their contract isn't with us.
Click to expand...

I would consider this a "cost of audit". Costs of audits are never incurred by the customer, as the vendor can invoke audits at will.

Your legal department needs to get off their ass and send the vendor a notice that they no longer have access to your site for security reasons, and any attempt to gain access must be accompanied a court order. Then refuse them entry.

If they want to play hard ball, they will have to go to court.
 
OP are you asking because you are curious or do you have a direct hands on position with the question? If you are just curious than obviously dont act on it with any advice here. Its not your job to tell your company how to run its legal business matters.
 
This is completely lame. If their license was so valuable that they had to do this work to remove it, they would have the license on USB key or serial key or server that needed to be updated anually. When your license expires, it's expired and you can't use the software.

Blame your client for losing the contract, I guess.

Heck, if you have no contract, just stop using their software and stop paying?
 
Mark, update with more details when you get a chance please. Also, I really think you should release names, but that's just my opinion obviously.
 
jaedaliu said:
This is completely lame. If their license was so valuable that they had to do this work to remove it, they would have the license on USB key or serial key or server that needed to be updated anually. When your license expires, it's expired and you can't use the software.

Heck, if you have no contract, just stop using their software and stop paying?
Click to expand...

The contract is paid up-front annually. Believe me, we'd like to stop paying.

However, the new vendor has been very helpful, helping us "sneakernet" our data off the servers managed by the original vendor (the contract didn't permit us to directly access the SAN to take files off or to modify the server configuration in any way *). The new system is about 11ty billion times better, and about 20% of the price.

The new vendor has even said, that as we're stuck with the original license till 30 June, they're not going to start billing for their solution until 1 July, even though the system has been installed and is now running as our primary software solution.


[*] We had a termination of contract planning meeting with the original vendor at the time we gave 6 months notice (which they billed us 1 man-day for). They immediately started with a sales patter, about how if we wanted our commercial data, they would be willing to procure us a new SAN, and they would have some field engineers perform a snapshot of their SAN, and then they would sell us the SAN with the data on it (the contract required that the drives in the original SAN be shredded), they could then sell us some consultancy services to develop some scripts to convert the files from their proprietary format to the industry standard format for the new vendor. We interrupted them, and advised them that we already had a complete copy of the data in industry-standard format. They were like, WTF? You should have seen their faces.
 
Mark R said:
However, the new vendor has been very helpful, helping us "sneakernet" our data off the servers managed by the original vendor (the contract didn't permit us to directly access the SAN to take files off or to modify the server configuration in any way *). The new system is about 11ty billion times better, and about 20% of the price.

The new vendor has even said, that as we're stuck with the original license till 30 June, they're not going to start billing for their solution until 1 July, even though the system has been installed and is now running as our primary software solution.
Click to expand...

New company = smart, flexible, and definitely sounds like a huge success. This is the type of company that I would gladly pay.

[*] We had a termination of contract planning meeting with the original vendor at the time we gave 6 months notice (which they billed us 1 man-day for). They immediately started with a sales patter, about how if we wanted our commercial data, they would be willing to procure us a new SAN, and they would have some field engineers perform a snapshot of their SAN, and then they would sell us the SAN with the data on it (the contract required that the drives in the original SAN be shredded), they could then sell us some consultancy services to develop some scripts to convert the files from their proprietary format to the industry standard format for the new vendor. We interrupted them, and advised them that we already had a complete copy of the data in industry-standard format. They were like, WTF? You should have seen their faces.
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Old company = unbelievable douchebags. Wow.

Would it be cheaper to shred your hard drives and then buy new ones instead of paying their uninstall team for two weeks? How many guys are they sending to uninstall the software? It sounds like it costs 5k * 10 days = 50k per person. If they send two guys, throw away your computers and buy new ones.
 
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$100k/user/year?! 😱 It better allow you to conquer the world for that price!

I'm very curious to know who this vendor is and what exactly the software does (and what makes it cost so much)
 
Mixolydian said:
$100k/user/year?! 😱 It better allow you to conquer the world for that price!

I'm very curious to know who this vendor is and what exactly the software does (and what makes it cost so much)
Click to expand...

I'm trying to imagine a use case where its required to pay $100k/per person/per year. I'm then thinking how much this person makes yearly where he has to use a software that costs $100k to license alone.
 
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gamefreakgcb said:
I'm trying to imagine a use case where its required to pay $100k/per person/per year. I'm then thinking how much this person makes yearly where he has to use a software that costs $100k to license
Click to expand...

Toll booth operators make minimum wage and they operate expensive equipment.

I use software that costs over one million per license, but that says nothing about my salary.
 
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