Software Licensing Featured Articles

Microsoft Sues Ebix Over Software Licensing Violation

By Mae Kowalke, TMCnet Contributor

If you’re going to buy software on a volume basis using a pay-as-you-go model, you need to keep good records.

Microsoft (News - Alert) is suing software provider Ebix over copyright infringement and breach of contract for its poor accounting of the software licenses it uses, according to the Atlanta Journal-Constitution.

Ebix (News - Alert) provides software and e-commerce services to more than 100 companies in the life, annuity, health and property & casualty insurance markets. Ebix is enrolled in a Microsoft licensing program that allows it to license Microsoft software at a volume discount on a pay-as-you-go basis. The program gives master copies of Microsoft products and clients can make as many copies of the software they wish provided they order and pay for it promptly, according to the suit.

In the suit, Microsoft is arguing that Ebix refused to submit license orders monthly, refused to keep records of products it used and would not agree to be audited. All of these were terms of the agreement, according to Microsoft.

The company audited Ebix to verify its licensing compliance in January, 2012, but the audit was held up over data privacy and insurance concerns. Then when Ebix finally agreed to the audit, it said it was having technical difficulties and couldn’t conduct one.

Software licensing is becoming increasingly complex with usage-based models that include metrics such as device, user, processor/core, memory, etc. At the same time, software auditing is on the rise; a recent Gartner (News - Alert) study found that 65 percent of those surveyed had been audited at least once in the past year, up from 61 percent in 2010.

Particularly aggressive vendors who are auditing include giants IBM, Adobe (News - Alert), Microsoft, Oracle and SAP.

This is why license optimization tools that provide built-in knowledge of software agreements and vendor-specific product use rights are becoming essential to managing the complexity associated with software licensing.

“Gartner correctly points out that oftentimes, the people who are responsible for deploying the software and managing the IT environment, are not made aware of the licensing terms and conditions that have been negotiated with the vendor,” noted John Emmitt on the Flexera Software License Optimization Blog. “These must be communicated from IT procurement and software asset managers. It is critical to have a central repository for license and contract information that allows this sort of communication to take place much more readily.”

It is unclear whether Ebix knew they were violating the terms of their agreement with Microsoft. But if they had used software license optimization software, following the letter of their contract would not have been a problem at least.