Legal Affairs in Software Asset Management


Yesterday I had a meeting with a member of the Legal Department in our organization to discuss a number of issues in a (purchase) contract software. It struck me that the colleague had a good eye for all legal snags in the contracts when it comes to penalty clauses.

In general, within a legal department it is all about mitigating contractual risks in contracts in HR or buildingcontracts. However, when it comes to the legal consequences of accepting EULAs and licensing models, then understanding this department is less.

In this case the software manufacturer proposed contractual provisions with a penalty because the manufacturer would deliver the software without any technical protection mechanisms. The manufacturer normally delivers the software with a dongle. However, the infrastructure of the organization is fully virtualized, and a (hardware) dongle does not apply and therefore not accepted.

For the sake of protection of intellectual property the manufacturer therefore proposed to include penalty clauses in the license agreement. In itself this is understandable, but if the determination is not limited, and also applies when the software is installed by a 3rd party deviant to the license model , the customer would also have to pay fines.

In addition, an audit clause and the requirement that the software should never be transferred to another party was discussed in the meeting. The latter is in contrast to the decision of the European Court in the UsedSoft vs. Oracle case. The department was unfamiliar with the ruling. Also, the possibility of using an audit protocol and a NDA in audits was not thought of.

All of the above makes it clear once again how necessary it is to involve the legal department of the organization when implementing software asset management and to make them fully aware of the different clauses regarding the use of licenses and license audits.

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