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IBM Strengthens Software Licensing Terms

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IBM Strengthens Software Licensing Terms

April 10, 2015
By Clayton Hamshar, Contributing Writer

Technology and consulting corporation IBM (News - Alert) recently made some quiet adjustments to the licensing terms of Passport Advantage, the company’s software license acquisition and management program. The language IBM uses in its standard license agreements is notoriously obfuscated; a perfect example being the fact that the company refers to these changes as “enhancements” despite not being in licensees’ best interests.


Passport Advantage and Passport Advantage Express — aimed at large and small/medium-size businesses, respectively — use a common set of agreements, processes and tools to provide customers with a way to acquire IBM software licenses as well as renew software subscription and support or fixed term licenses. Furthermore, the offering lets businesses subscribe to IBM Software as a Service (SaaS (News - Alert)) offerings, acquire IBM appliances and buy and renew technical support for select open source or non-warranted applications. Passport Advantage is intended to ensure smooth product deployments and upgrades with comprehensive support fully included, providing businesses with opportunities to obtain better pricing.

However, as mentioned previously IBM takes steps to make sure it maintains as much control over licensing terms and maneuverability as possible; the new version of its Passport Advantage Agreement (PAA) significantly broadens the scope of auditors’ inquiries to require more information. Under the old language auditors only needed to gather information “sufficient to provide auditable verification that Customer’s use of all Eligible Products is in compliance with the Passport Advantage Terms.” Now the language reads that licensees must provide information “reasonably necessary for IBM and its independent auditor to verify Client’s compliance with this Agreement.” This change clearly gives IBM more flexibility with each customer in determining just how much information is necessary to be collected.

Even more appalling is the company granting itself permission to perform audits without regard for the integrity of a licensee’s business operations. The clause “verification will be conducted in a manner that minimizes disruption to Customer’s business” or anything along those lines can no longer be found in the PAA terms, indicating the removal of one of IBM’s few self-imposed restrictions.

Customers must now be prepared for an IBM audit at any time and will be subject to more fees than ever before in the case of excess usage. The old language stipulated that customers failing to meet compliance requirements following an audit would be liable for the payment of software subscription and support “for the lesser of the duration of such excess use or two years.” The PAA terms now state that IBM’s charges “for any excess usage will include two years of associated maintenance and IBM Subscription and Support or Selected Support.” These additional fees are equivalent to 40 percent of the cost of the license itself.

IBM Passport Advantage customers now have even less legal rights in the case of audits and will have much more difficulty negotiating their way out of non-compliance situations. New licensees are encouraged to seek amendments to the standard terms in order to receive fairer treatment.




Edited by Maurice Nagle

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