Don't be soft on licensing

Independent software vendors should protect and enforce their rights by managing carefully the use of their products.

While the world watches Gartner advising end users not to play Oracle's software licensing game, there is a far greater injustice being perpetrated against independent software vendors (ISVs).

Take this example. An ISV licenses its billing system to company X. What X bought was the right to install a certain number of users on a particular operating system for itself as a legal entity and, as provided under law, for use by its majority-owned subsidiaries.

Many ISVs fail to realise that generally we all write software licences as non-transferable. This means that neither X's parent nor sister companies may use the software.

Similarly, nor could one of its subsidiaries if it was sold off to another company. The licence is neither an asset X may sell for any reason, let alone profit from, nor is it an agreement that X can transfer by any other means.

Then corporation Y buys X's assets and informs the ISV that it wants the system only for a few months while replacing it. However, it is prepared take out a six-month rental licence at a low cost.

The ISV is feeling vulnerable. A customer is about to be lost and it fears upsetting Y so is likely to allow it to take over the licence. But the software licence is non-transferable.

Company X bought the right to use the software, not the right to sell it on to the highest bidder. The ISV should stand firm and demand a new licence, as Y is infringing its copyright.

The law supports the ISV, but the original licence terms must be clear: the user may not transfer this licence to a third party.

ISVs should not lose out on licence revenue while others profit. In our example, the recommendation to the ISV was to negotiate a high-value software rental agreement on the understanding that, should it still be in use a year later, Y must pay new licence fees.

The ISV was surprised to find no difficulty in negotiating the deal, but 12 months later, guess who is still using the billing system? And guess who has picked up a six-figure licence deal?

Mark Gilliland is UK channel sales manager at Progress Software