How Does Your Carefully Negotiated Software License Become a Complete Waste of Time?

This topic is covered in-depth in The Institute's self-paced, online, professional development modules as part of our Competency-Based SAM Credentials. Institute Credentials are open source, with hundreds of Internet learning opportunities. We never limit you to a single training option.

Your negotiated software license is useless when it's been superseded by that shrinkwrap or clickwrap license your employees never read. We constantly warn professional software asset managers and their companies to steer clear of acquiring either shrinkwrap or clickwrap licenses for any purpose. (Let's call them SCLs.) Read on to discover just one more reason to avoid these common software license scams.

Shrinkwrap & Clickwrap are the most costly & onerous licenses your company can possibly buy or use. And the suppliers would dearly love it if you accidentally locked yourself into one—or more.

This brief review covers a little-known risk of SCLs. Below are the methods used to bind you to hidden clauses within the unread license—clauses that can spell disaster for your company. Even worse, the powerful lobbying interests of the software industry have managed to ensure that this SCL binds you to a license you were never able to read and it's 100% legal.

You should be feeling concerned…

Simple Answer to Our Title Question: Either of these licenses could easily void every previous license you own—including those that you invested a great deal of time and money in carefully negotiating beneficial terms and conditions.

Here's How They Get You: When one of your employees, or a contractor, or a consultant, or any other individual with access to your computers, decides to download an unauthorized product, they can immediately bind you—legally—to the unread virtual license. Within the SCL—the licenses that copyright holders are perfectly aware you will never read—is a clause that automatically voids all previous licenses when the SCL becomes active. The next several clauses in the license will further limit your use and rights in relation to the new product—even support & maintenance coverage—as well as all preceding releases or versions of the product.

Real World: For many software applications, every time you update, patch, or fix there is a carefully hidden check-box that installs a new software product. The default for the box is “accept”. Only by consciously denying that check-box can you eliminate the unauthorized download. Failure to do so places a literally invisible software audit threat on the device.

Instant Solutions: From today forward, EVERY license and agreement you make with every technology supplier must contain a clause that very specifically and very clearly states that the agreement will NOT be superseded by any subsequent agreement or license. You can permit future modifications but only upon activating a clearly written agreement that must be mutually approved and signed by both parties.

Next, you absolutely must ensure that anyone with access to any of your systems is well aware that they are not authorized to acquire and or install any products covered by shrinkwrap or clickwrap agreements—period. This includes the necessity of informing (in written form) all suppliers of software-related goods that THESE are your rules of engagement. If they choose not to comply, they should also be choosing not to provide goods and services to your company and will be removed from your vendor list.

Finally? Enforce the rules—now—and ensure that they continue to be enforced. No exceptions. Not you. Not your CIO. Not your mom. Nobody. Sorry folks, but this is business and you are a prime target for sharp practices that could cost you enormous sums of cold hard cash.

But don't listen to us. It's neither our job, nor our intent, to provide either legal or accounting advice. You pay good money to professionals in those fields. Our task is merely to make you aware of some of these costly little minor details so you can check them out.

If you need any additional information, let us know. The Institute for Technology Asset Management is here to help you cut the costs and risks of business technologies—not to ensure that you pay even more.

When consumers speak out about licensing sharp practices, we're belligerent. When the industry acts belligerently, they're justified?

Definition:  “Belligerence” - aggressive or warlike in nature.  

“…your belligerence is commendable…”

This discussion is a result of a LinkedIn post regarding a shortage in skilled SAM practitioners. Not sure how we moved to this topic but my reply was too in-depth for the LinkedIn word count.

Thanks, Paul!  Just so you understand, this has been an enjoyable interaction. I genuinely wish we could all sit down as a group & discuss these topics – without interference from the software industry players & their friends. Unfortunately, these groups have managed to divide the business technology consumers so that very little coordinated resolutions will be forthcoming anytime soon.

Let’s take your questions one at a time:

It never ceases to astound me how many people perceive anyone who pushes back at the predatory software industry enforcement groups as belligerent. A majority of licenses is specifically designed to be nearly impossible to comply with; license terms & conditions can be changed at will, as frequently as desired, and with little or no notification to the consumer; online licenses are intentionally designed to be nearly impossible to read as well as impossible to print and those of us who speak out against such sharp practices are belligerent? Gee… I guess that would be me, except I have spent years trying – and failing – at the “Renaissance man” approach. 

It’s beyond time that our IT execs & the CEOs/CFOs woke up to discover that it’ll be THEIR names on the non compliance settlement papers. Has anyone READ Sarbanes Oxley or related due diligence regulations? It is beyond time to haul our heads out of that fascinating hole and lead with intelligent awareness.

“…with your process how do you propose to deal with a CEO of an End User who is looking for compliance when his view follows the logic that he does not need to understand electricity to be able to turn a light on and off…”

My clear statement for over a decade has been to require the enforcement industry to publish their audit process, their audit results, and their audit records. As long as these people continue to intentionally hide audit activities – humorously entitling them as “educational”, our executives will never become well aware of the entire range of compliance issues.

Example: Even while “advertising” their $1,000,000 whistle-blower reward programs, the US enforcement groups are actually only handing out around $4,500 in rewards in less than a tenth of the audit action events. Very few people will actually read the fine print in the offer, or actually hear the whispered “up to” in the heavily published ads. In fact, sincewe began teaching SAMs to track enforcement industry press releases, those releases are becoming more & more difficult to locate. (I wonder why?)

I’m sorry but, if a CEO, or any C-suite executive of even a partially sophisticated enterprise is still unaware of at least the fringes of the license compliance environment, they do not belong in their position. At the next level of the org chart, if the IT people, or purchasing, or whoever is working with the licenses is not aware enough to communicate the issues to the C-suite, then THEY do not belong in their position. Let’s see… The real world demonstrates that license compliance & audit costs are serious business & ethical issues. One would reasonably believe that genuine leaders, not figureheads, should be aware of the topics by now.

Example: Any effective captain of a ship is trained & capable of a clear awareness of all aspects of operating & managing that ship. They even know better than to stick a screw driver into a live electrical outlet. That’s called leadership and it’s in rather short supply.

“Why over complicate an issue when we should be feeding the ‘need to be compliant’ story at the User end rather than creating confusion and complexity at the MSP end….”  

Precisely “who” is going to “feed” this information to the end users? I recognize that MSPs are relatively new on the scene but if they cannot fully define their industry perhaps they shouldn’t be in that industry in the first place. In order to sell in a managed service, shouldn’t a key performance indicator be to educate the buyers of root cause & critical underlying operational issues? We can bet the enforcement industry isn’t going to “educate” the end user – there’s WAY too much money to be made in conducting punitive audits for the auditing groups to deliver any thoroughly meaningful awareness campaign.

Example: SAM training programs that are managed by, or reliant upon, the software or enforcement industry players do not teach SAMs how to negotiate audit clauses OUT of licenses. Most of these same programs don’t even discuss negotiating agreements for more favorable terms. And THESE SAMs are the “qualified people” that IT Directors have to call upon for advice?

How many people are aware that the generations & industries who are responsible for a majority of incorrectly licensed products being used on systems are also the most “educated” generations on the planet. The average sixth grader probably knows more about piracy and copyright than our average executive? (Now THAT is scary.) Since the software industry, recording industry, video industry & general copyright enforcement industry began their “education” campaign, incorrectly licensed software & other copyright violation use has soared.

Example: These problems aren’t easy to resolve. However, when a clear majority of end users cannot understand the licenses, they are at minimal fault for not knowing how to behave.(Oh, wait. I nearly forgot. The compliance auditors are “letter of the law” people. Consumers are expected to have a fully legal understanding of all compliance issues.) When these same “end users” are intentionally confounded by shifting terms & conditions; shifting audit procedures; and clueless leaders, what is the logical result? Lots & lots of non compliant companies to audit?  Lots & lots of easy audit issues for levying fines & penalties?

As to an executive not needing to know how electricity works to be able to plug in a light; let’s see how well they learn when they short out the circuit by incorrectly inserting the plug. Don’t suppose someone had to teach them, somewhere, what the hazards of electric current could be… Go back to my knife in the socket analogy.

“If the IT Director has trained staff who are educated to remain compliant in the software deployed on his estate and also trained in the basics which enable the User to follow a path that ensures correct software usage ie not overspending, surely that is panacea? “

This is the key point I have been trying to make: A clear majority of IT Directors does NOT have a staff genuinely trained in compliance. Well over ¾ of existing SAMs have been trained & certified in literal “overnight” certification mills. An additional 70% – have been trained by the enforcement groups or software industry players themselves. Does anyone genuinely believe that these special interest groups are actually delivering the full SAM perspective in less than 12 hours of actual training?

Example: The Institute SCCA & SAM programs deliver over 29 individual online, on-demand, sessions that teach credential candidates the basics of over 42 different types of software licenses. We cover more than 30 specific key license clauses that SAMs must know & understand. We walk candidates through two actual audit scenarios to help them understand what they’ll need to know/do. We discuss how to negotiate many clauses that are onerous OUT of licenses as well as how to insert many clauses that are necessary but missing INTO the license. A majority of SAM certifications – including so-called “standards” – do not touch these topics…

“Are you stating that the ‘Just In Time’ process is not right for SAM?”

Anyone who is foolish enough to play a “just in time” license compliance game does not belong in our industry. Licensing begins when the enterprise identifies an initial need and continues until all products & derivative products relating to the original agreement have been eliminated from all enterprise systems. Compliance issues must also be carefully tracked & managed for as many as ten years after the last product or derivative has been removed.

Maybe you are correct. While I prefer to be labeled as “passionate” about these topics, maybe belligerence is the only method to gain the attention of people who are being robbed blind by an industry that has created the problem, continues to find new methods of enhancing the problem, and continues to conceal their actions behind self-righteous “educational woe is me” public relations campaigns. Anyone who has suffered through a conversation with an enforcement agency or software publisher auditor is well aware that this industry has declared war on its own consumers. My apologies if my “push back”, “know your rights”, and “openly proactive SAM training” frameworks are not gentle enough.