Key Issues Software Asset Managers Should Consider Right Now

The COVID-19 pandemic and subsequent quarantines and protective measures present a wide variety of challenges to businesses—not the least among them being a shift to a remote-work model for many employees. The work-from-home landscape is changing every day and with it, the legal risks implicated by the work-from-home paradigm evolve.

Now more than ever, businesses rely on third-party software to support continuity of operations. Increased use, deployment, and reliance on software in the new work-from-home world raises increased risks for software licensors and licensees to consider. We are tracking these risks closely for our clients as they evolve. To that end, we have organized a short list of issues that individuals tasked with managing software license assets in distributed networking environments can consider in the near term as they craft strategies for managing and protecting their assets.

Software Licensees

In light of the shifting work-from-home landscape, this is an important time for individuals managing software license portfolios to conduct a focused review of key software license obligations, especially those pertaining to software that supports remote access, communication, e-commerce, and cloud functionality. A sudden suspension or termination of a software license supporting any of these key areas could significantly impact a licensee’s ability to conduct business.

Some key issues for software licensees to assess right now include:

• Consider the capacity and scalability of the software currently in use. Can you guarantee a quantifiable level of performance while employees work remotely?
• Review existing software license obligations for restrictions and terms, e.g., allowed users, allowed installations, and security requirements.
• Conduct an internal audit of deployed software. Assess both software usage and usage conditions and compare with existing license terms.
• Correct potential over-deployments or misuse of software.
• Implement enhanced procedures for advising team members of heightened cybersecurity risks associated with increased reliance on new and existing software.

Software Licensors

As more and more businesses shift to and rely upon a remote working model, licensors have an opportunity to increase and enhance support for customers while leveraging their software asset portfolios. Disputes with licensees during these unprecedented times could result in the nonpayment of fees and cash flow disruption. In addition, licensors could face a loss of critical operating revenue, encounter challenges recouping costs for development, or face restrictions on their ability to invest in critical development of new products and services. With this in mind, it is important that licensors take a fresh look at their software asset portfolios.

Some initial considerations for software licensors seeking to identify and mitigate risks right now include:

• Review software licenses and schedules for ambiguities and anticipate potential disputes that may arise in light of increases in remote access and cloud usage.
• Determine how to conduct audits in the new environment. Do the terms of the agreement call for audit conditions that are currently impracticable?
• Identify opportunities to support licensees and focus on supporting business continuity operations.
• Establish a flexible dispute resolution and escalation strategy with non-complying licensees.

Now, more than ever, it is important that software licensors and licensees understand software license terms covering the deployment of key infrastructure. Parties to a software license agreement often carefully negotiate terms, but no one can anticipate every risk—particularly in these extraordinary times. In the constantly changing landscape caused by COVID-19, it is important to be proactive.