Software vendor audits can be extremely stressful, time-consuming and expensive. They are infinitely more painful when that disagreement between the vendor and the customer leads to litigation and the event becomes public. This is exactly where banking giant; Citibank NA finds itself as it fights legal action initiated by Uniface BV in the High Courts of London, UK.
Case Number: BL-2018-001981 (Uniface BV v. Citibank NA)
In September 2018, Uniface, which was formerly owned by Compuware Corp, filed a lawsuit that alleges that Citibank was in contractual breach of its license agreement by over-deploying its Uniface Virtual Machine and Uniface Polyserver (the “Software”) on 7 servers rather than the 3 servers it had a license for.
In defence, Citibank is claiming that Uniface was fully aware that the Software, which has been allocated to Citibank since the initial agreement between both parties in 1999 and was subject to an addendum in 2013.
Citigroup acknowledges deployment to 3 servers, and that the additional 4 servers were actually “testing, disaster recovery and support” servers, which do not usually require supplemental or full license purchases – according to conventional rules of typical software vendors. Citibank also claims that license keys for the additional servers were volunteered when, in 2017, it told Uniface about expanding deployment to its US, London & Singapore sites.
As a result of the alleged infringement & breach, Uniface NA is seeking a court order for Citibank to cease use of its software immediately. Damages are also being sought but cannot be determined as the full extent of incompliance is not known as Citibank has not provided access to its systems, nor disclosed the scale of installation.
Uniface writes “Pending disclosure by the defendant of the true nature and full extent of its unlicensed user of the Uniface software, the claimant is unable to quantify its loss and therefore seeks an enquiry as to damages,”. Since the relationship between both parties dates back to 1999, it is entirely possible that a contractual audit clause was not included in the agreement.
Uniface will also request recompense for backdated Support & Maintenance charges and given the costly nature of Uniface software and the fact that this case has ended up in litigation, it is reasonable to assume that potential settlement could be many millions of Dollars.
The resources committed to this action, by both Citibank and Uniface, will be substantial. This would include significant time of the technical teams, internal legal department, senior management and external counsel, with derived investment amounting to hundreds of thousands of Dollars – even before settlement.
Of course, this case will generate animosity between both parties and the reputational damage to the respective brands will also be considerable and continue increasing as the case unfolds.
This unsavoury situation is another example for ensuring that a strong SAM program exists in your organisation and the responsible Software Asset Managers have documented evidence related to license grants that may have been obtained via email or historically implied in any other way. The burden of proof of license always sits with the customer.
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