Avoiding the Pitfalls of the "Unlimited" License - Four questions you should ask

by Pillsbury Global Sourcing Practice
Contact

You're a CIO and a major software publisher proposes an "enterprise" or an "unlimited" license arrangement. Having made its way up the chain to your desk, you are told the deal looks promising. There can be pitfalls in any software deal. In "enterprise" or "unlimited" license arrangements the pitfalls can be devastating.

Asking yourself (and your staff) four basic questions may help you ferret out the risks and reduce your exposure to many of the big problems.

This is the first of four installments identifying and explaining each of these four questions. The first question is:

What does "enterprise" or "unlimited" really mean?

Every software license has limits, even those that purport to be enterprise-wide or unlimited. Misunderstanding the limits of what was touted as an "unlimited" license erodes the deal's value proposition and can be expensive as well as be embarrassing when justifying the additional expense necessary to pay for uncovered rights.

Without attempting to describe every limit, what follows are a few examples for your consideration and to demonstrate the need to understand what "enterprise" or "unlimited" really means when you are called upon to approve the deal.

It used to be, when publishers were more interested in knowing exactly who used their software, where it was used and on what machine, an "enterprise agreement" generally meant that anyone in the enterprise could use the product anywhere in the enterprise's geographic footprint so long as the software was only used on a specific machine. This seemed to work when IT was centralized. Today, however, some real difficulties can arise in the definition of the "enterprise" because of the decentralized fabric of an enterprise's IT operations. An enterprise may be defined in terms of usage by a specific company, a specific business unit within a company, or as a specific business footprint of a business unit, such as the "business footprint occupied by the XYZ business unit immediately prior to its integration into the ABC corporation" The reach of the enterprise definition might be further constrained by coupling one or more of these limitations with a limit on the geographic usage footprint.

Once you understand how the "enterprise" is defined, it is important to keep in mind that enterprise rights generally do not translate into unlimited usage or deployment rights. You must understand the specific usage and deployment rights as well. The license may permit anyone in your company to use the product across multiple geographies, but it may only allow use by a defined number of users (or processors, or a defined level of enterprise revenues). Your usage rights may be further constrained in other ways as well. For example, an enterprise license agreement may give you unlimited deployment rights for a product (e.g., a database), but only for a specific application or for a specific business process.

Once you understand how the "enterprise" is defined and whether or not you have "unlimited" deployment rights, there are still other seemingly elementary limitations you should explore and understand. Here are two examples of these elementary limitations.

  1. It is very unusual for unlimited usage rights to extend to every product offered by a publisher. Most unlimited license agreements will include a listing of the specific products to which unlimited deployment rights apply. It is important to understand the specific products that are included and socialize that list within your organization. A well-intentioned end-user or IT professional may assume that an unlimited database license covers all database products. However, if database products that are not listed in the license are deployed without first securing the additional license rights, the company could be responsible for additional (potentially significant) fees and/or be exposed to remedies for license violations. Unfortunately this is not uncommon and is, in part, the reason why vendors typically include an audit right in the license terms.
  2. In addition to the product listing, unlimited deployment rights are limited typically to a fixed term - usually three to five years. If it is your intent to purchase rights to cover the needs of an ongoing project or business function you should confirm that the deployment term covers the projected time frame for that project or initiative.

In summary, in an enterprise or unlimited license, it is very important that you understand exactly what usage rights are granted and how those rights match your needs. Like all purchases, ask enough questions to understand the full scope (and limitations) of the product before you procure it.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Pillsbury Global Sourcing Practice | Attorney Advertising

Written by:

Pillsbury Global Sourcing Practice
Contact
more
less

Pillsbury Global Sourcing Practice on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.