Software Licensing Problems, with an Outsourcing Twist

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It's no secret that traditional software licensing models are under pressure from a variety of newer options such as software-as-a-service and open source software. And that many vendors see such options as a competitive threat.


But here's a case with an outsourcing-influenced twist: Japanese automaker Nissan is suing Software AG because it objects to the hefty fees charged by the German vendor to make its applications available to Nissan's outsourcing partners.


Nissan in 1999 agreed to pay Software AG some $344,000 so that IBM could access the Software AG apps to fulfill its Nissan contract for application maintenance. But Nissan balked when Software AG asked for an additional $3 million after the automaker hired India's Satyam for development work in 2006, reports InformationWeek. Nissan says that Satyam's access should be covered by the earlier fee it paid to gain access for IBM.


Even worse, says Nissan in its court filing, Software AG has stepped up auditing of its customers in an effort to gain more fees. For instance, Software AG claims it is owed $2.5 million for software used by Nissan Canada and that Nissan and Infiniti dealers in the U.S. and Canada are using unlicensed Software AG software worth $4.9 million.


Nissan hopes the court will rule that it is not in violation of its software license agreements. The automaker is also seeking other, unspecified damages. Software AG did not comment on the lawsuit.


Interestingly, we just blogged yesterday about the Business Software Alliance (BSA), a vendor-backed group that goes after companies, especially SMBs, that violate software licensing agreements. Critics of the BSA contend that many licensing agreements are unnecessarily complex and that the industry does little to educate businesses about how to comply with them.