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Software Law

In recent years, software publishers have increased the number of “license audits”.

These audits are triggered by contractual clauses and, it has to be said, avoid the procedure of infringement seizure for both the publisher and its client. An infringement seizure is always a possibility (especially if the client refuses to apply the audit clause), is costly and cumbersome for the publisher who has to bring the matter before the court and, above all, it has the major disadvantage of seriously putting the publisher’s relationship with its client at risk.

With an audit and a good dose of marketing, on the other hand… the publisher will – necessarily – assist its client in the management of their “assets” constituted by their rights to use the software (SAM = Software Asset Management).

Several factors can lead a publisher to audit one of its clients: statistical control, discrepancies between the number of licenses taken out and the maintenance ordered, repeated external growth operations, the desire to switch the client to new software or a new invoicing method… and also, for example, denunciation by a (former) dissatisfied employee.

For their part, clients are not always blameless: complete failure to manage their software assets, failure to use a license management tool, systematic deployment of software on all workstations, or even deliberate unwillingness to pay the publisher for a license.

Moreover, such situations often lead companies to pay for licenses or even maintenance and support services for software that they no longer use or do not use in the proportions they pay for.

To make matters more complex than they already are, the contracts submitted by publishers very often contain legal concepts that are not at all or poorly adapted from their Anglo-Saxon origin, obscure clauses, cascading definitions that make their contracts impossible to understand from a legal perspective and licensing models that are sometimes counterintuitive.

Of course, non-compliance with the contract entitles the publisher, on the one hand, to apply the price that should have been paid for the licences and also, on the other hand, to apply the price which should have been paid for maintenance and support.

Even if negotiations are entered into, it should be remembered that such non-compliance is analysed as infringement (Article L335-3 of the Intellectual Property Code), which is punishable by three years’ imprisonment and a fine of € 300,000 (in addition to damages).

It should be noted, on the one hand, that pursuant to Article L 335-9 of the Intellectual Property Code, if the perpetrator of the offence of infringement is or has been bound by an agreement with the aggrieved party, the penalties incurred are doubled and, on the other hand, that pursuant to Article 131-38 of the Criminal Code, the maximum amount of the fine applicable to legal persons is five times that of natural persons. The additional penalties provided in Article 131-39 of the Criminal Code are also applicable.

This results in a sufficiently strong constraint on the client to accept the principle of negotiating with the publisher, but not necessarily the amounts proposed by the publisher…

With our 19 years of experience in Information Technology, we assist businesses and groups:

  • applying a preventive approach, with conducting an audit of their software licences;
  • that are undergoing an audit of their software licenses by a publisher,
  • with the negotiations that most often follow such audit.

Contact: Frédéric Guénin