European Court of Justice: Under-licensing is IP Theft

Under-licensing of existing customers, often described as intentional or unintentional overuse, is an ongoing issue software suppliers around the world are facing.

The European Court of Justice just ruled that overuse by a customer can be a copyright infringement. This is related to a case between the French company IT Development and its customer Free Mobile. Full story on ComputerWeekly.

This is a win for software suppliers that struggle with enforcing their license terms. However, even if this case helps clarifying the legal side of the problem, there is another side to it, called the customer relationship. Meeting customers in court or pushing for a full audit often puts the relationship at risk and can create a long-term loss for a short-term gain.

Very often, the issues of overuse or disagreement on usage rights can be solved long before they become a problem. Transparency on usage rights and insight on what is actually being used will help in many cases.

Three tactics that help software companies prevent overuse while protecting the customer relationship

  1. Have a clear and unambiguous definition of license terms and use rights. Overuse will often happen unintentionally just because there is disagreement on what the license terms really mean. Examples are unclear usage policies, the use of software in testing or QA environments.
  2. Use technology to help report on usage and enforce the license terms. Both suppliers and their customers are often blindsided by compliance issues because the software does not use professional licensing technology. With a good licensing technology and configuration in place, suppliers can track overuse or even strictly enforce the terms if that is what’s needed.
  3. Use a common meter. With a clear licensing policy and the right technology to manage customer entitlements and licenses, suppliers can be more transparent and provide their customers with actual usage data, often done in self service portals. That helps customers stay in compliance and allows for a much easier discussion should overuse occur.

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