Scott Technology Attorneys

Microsoft Audit


Injecting SPLA into Customer Agreements

A business providing products to its customers under the Microsoft Services Provider License Agreement (“SPLA”) should be aware of the End User Agreement (“EUA”) requirements and consider managing the requirements through its customer agreements. If a business fails to comply with the EUA requirements, then Microsoft can hold the business responsible for the unauthorized use by the business’s customers.

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Consider Microsoft’s Enterprise Cloud Suite with Eyes Wide Open

Companies licensing Microsoft software under Enterprise Agreements (EAs) likely have familiarity with the default requirement to true up EA Enterprise Products based on any increase either in the number of “Qualified Devices” (generally, workstations capable of running or accessing the licensed Microsoft products) or in the number of “Qualified Users” (employees who use Qualified Devices). While the EA incorporated user counts as a relevant licensing metric, it nevertheless has been a device-centric one that worked solely to Microsoft’s benefit (i.e., if the number of Qualified Devices remained stable while the number of Qualified Users grew, licensees still had to submit a true-up order).

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Innovative Solutions to Circumvent Burdensome SPLA Requirements

Many online service providers are well aware that Microsoft’s Services Provider License Agreement (SPLA) entails a licensing framework that can be difficult to manage. SPLA may be a great model for businesses seeking to “float” their license expenditures from month to month based on usage. However, what Microsoft considers “usage” and what most companies and individuals consider “usage” can be very different. The result is that monthly SPLA-reporting obligations can be very burdensome, especially for products licensed on a per-user basis under Subscriber Access Licenses (SALs).

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Customer Access Under Microsoft MSDN Developer Licenses

Microsoft’s MSDN subscription licenses often create license compliance problems. These problems arise because it is extremely easy to over deploy Microsoft software using MSDN media because it includes a vast array of Microsoft products with limited deployment controls. In addition, the licensing rules related to MSDN are often misunderstood. One often overlooked aspect of Microsoft MSDN licensing is customer access to development projects for purposes of testing, quality assurance, or feedback. 

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Windows Desktop Licensing Can Be As Perilous As Any Other Microsoft Product

In any software audit, there are two over-arching categories of information that must be collected: data regarding what products are deployed on a business’ computers and records demonstrating the licenses that the business has acquired to use those products. With regard to the entitlements, some kinds of licenses often are relatively easy to document. For example, in Microsoft audits, entitlement records for server applications like SQL Server or Exchange Server often do not require significant effort to locate, simply because they either were expensive (and, thus, were saved in the ordinary course of business with records regarding other significant purchases) or were acquired through one of Microsoft’s volume licensing channels, resulting in purchase records being available either from Microsoft or from the business’ reseller.

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Microsoft’s Auditors Are Not Infallible

Microsoft licensing is a complex, multi-faceted undertaking, with different rules and license metrics applying to different products. In the context of software audits initiated by Microsoft, it is important to keep in mind the fact that the auditors hired to perform those investigations are fallible human beings and that they can (and do) make mistakes in their audit analyses.

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SQL Server Licensing Strategies for SPLA

Licensing Microsoft server products in any environment can be a challenging undertaking, given the complexity of some of Microsoft’s licensing rules. However, licensing Microsoft products for commercial hosting environments under a Services Provider License Agreement (SPLA) can be especially daunting, due to the different use rights and license metrics available under that model. Licensing SQL Server is perhaps the best example.

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Microsoft SPLA Audit Look-Back Periods

In a typical Microsoft audit of software licensed under perpetual licenses, the auditors usually will compare installations of Microsoft products against licenses owned, and Microsoft will require the audited business to purchase additional licenses required to cover any gaps discovered by the auditors. An audit under a Services Provider License Agreement uses a similar framework, but the analysis is complicated by the fact that SPLA is a monthly, pay-as-you-go arrangement, where the audited company may have been reporting SPLA licenses to its reseller for many years.

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Microsoft Audit Roadmap

Microsoft offers an array of software licensing options for its business customers. However, during an audit, the timing and course of the project typically follows a fairly well-worn path. 

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Changes for Microsoft Fail-Over and Disaster Recovery Rights

With the April 2014 versions of the Product Use Rights (PUR) (for volume licensees) and the Services Provider Use Rights (SPUR) (for services providers under SPLA), Microsoft has implemented significant changes to several usage rights associated with fail-over or disaster-recovery (DR) installations of its server products.

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Microsoft SPLA - Access Misunderstandings

As part of its Microsoft Service Provider License Agreement (“SPLA”) obligations, a SPLA provider must report monthly usage, however Microsoft and SPLA providers do not always agree on the interpretation of the contract language. The Service Provider User Rights (“SPUR”) includes language that is much broader than what the licensee may understand.  Below is an excerpt from the 2013 SPUR for a commonly licensed Microsoft Product, the Remote Desktop SAL.

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For Hosting Providers Running Microsoft Products, “Dedicated” Means “Dedicated”

As discussed previously, providers of software hosting services may deploy on their servers Microsoft products licensed by their customers under two different scenarios, one of those being where the hosting provider has dedicated a physical server for use by the customer providing the licenses. However, providers thinking of taking advantage of this option need to tread carefully.

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Hosting Providers Have Two Options For Customer-Supplied Licenses

Like any good business, many providers of hosted IT solutions prefer to demonstrate flexibility in offering services to their customers. For example, a company that offers hosted Exchange services may want to allow their customers to use perpetual licenses the customers purchased to support deployments on the service provider’s servers. While Microsoft’s licensing rules permit this under some circumstances, there are important restrictions on how the Microsoft software may be deployed that can result in severe penalties for the unwary.

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Avoid Ambiguity in Microsoft Licensing Agreements

CTOs who have read Microsoft’s volume license agreements and product use rights documentation know that Microsoft has a special place in its heart for contractual “grey area.” To some extent, that fact likely arises from the practical impossibility of trying to accurately capture all of the technical parameters that could affect license rights. Enterprise IT architectures are dynamic, incorporating constantly evolving technologies. A license agreement that is too tech-specific runs the risk of being difficult or impossible to enforce when the industry starts moving to new platforms. However, that does not explain everything when it comes to Microsoft’s contracts.

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Beware the Mandatory SAM Engagement

For several years now, Microsoft has offered some of its customers the “opportunity” to have third-party licensing consultants (selected by Microsoft) review those customers’ Microsoft product deployments and determine whether those customers have all of the licenses needed to support those deployments. Called Software Asset Management, or “SAM” engagements, the reviews are, in theory,optional, financed by Microsoft, and presented as a collaborative benefit to customers in order to maximize the efficiency of their licensing budget. In practice, however, SAM engagements typically are nothing but informal audits conducted by consultants whose loyalties lie with Microsoft.

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Running Windows Server in Clustered VMs Carries Risks

Many businesses running virtual servers with shared physical infrastructures have encountered significant audit exposure arising from the fact that, according to Microsoft, the physical machines in a clustered arrangement may be “running” any number of Windows Server instances at any time. Therefore, Microsoft historically has demanded that a number of server licenses be assigned to each physical host sufficient for all VMs running in the cluster.

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Client-Licensed Microsoft Software in Hosted Environments

Hosting services customers often want to use licenses that they have acquired to deploy Microsoft software on a service provider’s servers. Those customers need to be wary about such deployments, as applicable license terms may restrict their ability to deploy the products offsite. However, the service provider needs to be doubly cautious. After all, the software is sitting on the provider’s servers – not the customer’s – so the risk of exposure associated with improper licensing is higher.

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SPLA-Audit Exposure Difficult to Estimate

One of the first steps we typically recommend to businesses facing software audits from any source is to try to estimate the financial exposure related to those audits. Doing so allows a company to allocate its resources more efficiently and to set aside reserves or make other financial preparations in advance of settlement, when auditors often demand quick action in order to secure more favorable terms.

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SPLA Road Map Outcomes

In a past entry, I mentioned the SPLA Qualification Road Map as a helpful document for companies to use when trying to determine the appropriate license model for Microsoft products deployed in connection with hosted services. Again, the road map takes the form of a flowchart, with each step consisting of a question that is relevant to the “commercial hosting” analysis.

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Defending SPLA Audits: Critical First Steps

Many businesses contact Scott & Scott, LLP regarding Services Provider License Agreement (SPLA) audits after providing extensive information to Microsoft’s auditors and receiving compliance demands that would be ruinous for their bottom lines, if paid in full. At that stage, it might be difficult to “un-ring the bell” with respect to the data allegedly underlying the compliance calculations, forcing an audited business to consider other options – including litigation – for reaching a resolution.

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SPLA Basics: Who Needs a SPLA?

We write extensively at this site about some of the finer points pertaining to licensing software under Microsoft’s Services Provider License Agreement (SPLA). However, some businesses new to the model often ask us much more basic questions, like: What is SPLA, and is it right for me?

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Significant Changes for External Client Licensing on Microsoft Products

With the release of the 2013 versions of Exchange Server, Lync Server and SharePoint Server, Microsoft is dispensing with the requirement that companies purchase client licensing for “external users.” External users are defined as “users that are not either your or your affiliates’ employees, or your or your affiliates’ onsite contractors or onsite agents.”

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SPLA Audits and Anonymous / Authenticated / Outsourced / Non-Outsourced Windows Server Licenses

Businesses that have endured audits initiated by Microsoft in connection with Services Provider License Agreements (SPLAs) are all too aware that Microsoft’s auditors spare no effort in identifying opportunities to increase the total amount of the compliance purchases demanded to resolve licensing discrepancies. For serviceproviders that have licensed Windows Server operating systems under SPLA for some time, one of the tactics used by Microsoft stems from  the confusing, bifurcated licensing regime that Microsoft previously applied to that product.

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Microsoft Releases First Full Offering of Hosted Office

On January 29, Microsoft announced the full release of its new, hosted, “Office 365 Home Premium,” service, which makes its popular suite of Office productivity products available to users over the Internet in return for a recurring subscription fee. Other editions in the Office 365 series also are available under “preview releases.”

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Proper Microsoft Licensing in Hosted Environments is a Two-Part Question

Businesses wanting to license Microsoft products for use in connection with solutions delivered to customers over the Internet need to remember proper licensing involves answering two questions:• Are users “accessing” the software?• Is that access “commercial hosting”?Many companies skip to question two, but the answer to question one may keep you from having to address it at all.

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What Is “Commercial Hosting” When It Comes To Microsoft Software?

Many companies using Microsoft products to deliver services to their customers are familiar with the “commercial hosting” prohibition included in most Microsoft license agreements:You may not host the products for commercial hosting services.Most CIOs reading that prohibition also are familiar with the feeling of deep confusion that can arise when they notice that Microsoft has utterly failed to include any definitions or guidance in its license agreements regarding what “host” or “commercial hosting services” means.

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Top Three Decisions for Microsoft Enrollment for Application Platform

An increasing number of enterprises are considering the value of Microsoft’s enterprise-level licensing models. The model with which companies are most familiar likely is the Enterprise Agreement (“EA”), under which a business licenses all of its desktops for Windows, Office and/or client access licenses, with the cost of those licenses being payable in three installments over the term of an EA enrollment (usually three years). During that term, the company can upgrade to the most current version of the licensed software and can deploy additional desktops without first purchasing licenses in advance, all subject to annual true-up orders.

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Big Changes for Microsoft System Center Licensing

Business software buyers increasingly are aware of the significant changes that Microsoft will be implementing to the license metrics for SQL Server when version 2012 of the popular database solution is released this April. However, of potentially equal or even greater significance for some companies is the fact that Microsoft also is planning big changes for the license rules applicable to System Center when version 2012 of the network-management line of products is released, likely in April alongside SQL Server.

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Windows Server Licensing Under SPLA

Licensing under Microsoft’s Service Provider License Agreement (SPLA) often is not a simple process. There are monthly true-ups to process, user management policies to follow, and the specter of increasingly frequent audits looming large. To complicate things further, licensing rules for Microsoft server products vary significantly. Some products, such as Exchange, can only be licensed on a per user basis, while other products give the partner the choice of whether to license using a per-user or per-processor modelWindows Server Licensing Under SPLA

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Getting More Value from the Microsoft Enterprise Agreement - Top Five Amendments to Consider

The “off-the-shelf” Microsoft Enterprise Agreement provides considerable flexibility for both Microsoft and its customers to construct a deal that is a good fit for both parties. That being said, there are some fundamental limitations at the core of the agreement that may prevent the customer from extracting maximum value from the EA. Below is a list of five important revisions to make to the contractual language in the EA in order to unlock the potential value stored within its pages.

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Microsoft Enterprise Agreements - The Fine Print

Any Microsoft Enterprise Agreement (EA) negotiation should involve not only the organization’s IT budgeting, compliance, and forecasting groups, but also in-house or outside counsel for analysis of the legal and business risks that are not necessarily front-and-center during the negotiation process. A significant obstacle in the way of fully understanding the applicable rights and obligations under the EA is knowing which agreements apply, and in which order. Many times, decision makers review only a portion of the agreements during an EA negotiation and do not appreciate how the entire document set integrates to establish the parties’ respective rights and obligations.

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Server-Client Assessments in Microsoft Audits are Complex Undertakings

Microsoftaudits – especially for larger companies – often are resource-intensive andexhausting undertakings even for the most well prepared IT teams. However,certain aspects of such audits often present more challenges than others. Inour experience, the most difficult data to inventory and analyze accuratelyusually are those related to server clients.

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Microsoft Server Licensing Under Enrollments for Core Infrastructure

We have covered Microsoft enterprise licensing options in detail, but have yet to discuss the changes that Microsoft has made to the server-side of the Enterprise Agreement. The traditional Microsoft Enterprise Agreement focuses on enterprise-wide desktop deployments and does not address server platform licenses as comprehensively. To account for this, Microsoft introduced the Enrollment for Core Infrastructure (ECI) addition to the standard EA that provides customers with the flexibility available under the EA to deploy core server platform software across their organizations.

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Qualified Desktops and Industry Devices in Microsoft Enterprise Agreements

As we’ve discussed herebefore, Microsoft Enterprise Agreements ("EA") can offer significant opportunities for large companies to enjoy both IT asset and management cost savings. However, many enterprise-level customers that fit into the target market for an EA have complex corporate environments that make a single one-size-fits-all agreement difficult to squeeze into. One of the tightest fits that complex corporate customers experience is when attempting to apply the standard EA definitions of Qualified Devices and Industry Devices (also referred to as Line-of-Business Devices) to their organizations. Essentially, the standard EA requires a business to purchase the same licenses for every desktop computer in the organization, unless that desktop computer meets the narrow definition of an Industry Device.

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Attempts to Transfer Microsoft Licenses May be Ineffective

Like most software publishers, Microsoft includes terms in its standard license agreements to restrict a licensee’s ability to resell or otherwise assign to another party the right to install or use software. Increasing the level of difficulty for IT groups trying to manage their software assets, different types of Microsoft licenses come with different transfer restrictions. For retail off-the-shelf products, known as "full packaged product" or "FPP," and pre-installed software, called "original equipment manufacturer" or "OEM," licenses usually may be transferred without Microsoft’s consent, but these transfers are subject to limitations on the number of transfers (usually just one) and requirements that the transfer must be made along with the hardware on which it was originally installed. However, attempting to assign or transfer Microsoft software purchased under a volume license agreement often is considerably more difficult.

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Challenges of Microsoft Server-Client Licensing

The basic model for licensing Microsoft server software – both for operating systems and for applications – is to purchase a license permitting the installation of the software on a server and a number of client-access licenses (CALs) equal to the number of users or devices that will be accessing that software over a network. Most IT teams are familiar with the basic server + CAL model. However, there are a number of complicating factors to keep in mind when analyzing licensing needs for these products in order to ensure that licensing requirements are met without overspending.

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Non-SPLA Licensing for Hosted Microsoft Software

Most businesses seeking to license Microsoft software for the purpose of delivering hosted software solutions over the Internet turn first to the company’s Services Provider License Agreement (SPLA). SPLA is Microsoft’s flagship licensing model for commercial hosting services, and it offers the primary benefit of permitting a licensed hosting company to pay on a month-to-month basis only for the products ordered by its customers. For many businesses, that model may work fine, but others may not want to undertake the expense or hassle of entering into yet another contractual relationship with Microsoft. In those cases, businesses may want to consider the Self-Hosted Applications (SHA) rights that are available for certain products licensed under one of Microsoft’s several other, volume-licensing models (e.g., Open, Select, Enterprise). Some of the notable differences between SHA and SPLA include:

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Licensing Microsoft Applications in a Citrix Environment

Many organizations allow their users to access desktop applications like Microsoft Office through Citrix, which is often used to control the number of users who can access the software at any one time. These organizations need to carefully evaluate whether they are legally able to install applications on their network for remote-user access and also need to evaluate how many application licenses are required to ensure that all such access through Citrix is proper.

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Microsoft Enterprise Agreement - True-Up Timing

The Microsoft Enterprise Agreement (EA) provides large organizations with significant licensing and administrative cost savings over traditional off-the-shelf or OEM licenses. Under an EA, a company that has 250 or more desktops can license a standard image (or images, if you know what to ask for), that includes an operating system and productivity suite for every computer in the organization as well as server operating systems, databases, and other software platforms. One of the primary, administrative cost savings under an EA is the yearly true-up process for purchasing new licenses. The true-up process is intended to make it easy to deploy new software over the course of a year without the burden of purchasing the software as it is installed. However, there are differences in the timing of the true up that can complicate the process somewhat

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Client-Licensing Basics for Microsoft Server Products

Many businesses struggle with the task of determining what kinds and quantities of licenses are needed in order to deploy Microsoft operating systems and client-accessed applications on their servers. The first step in that process often is the most difficult: deciding whether to use “traditional” server + client access licenses (CALs), processor licenses or External Connector licenses (where available), or an appropriate licensing metric under a Services Provider License Agreement (SPLA). Here are some analytical questions to ask when seeking a solution to that question:

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Business Downturn Protections in Microsoft Enterprise Agreements

Many organizations take advantage of the volume discounts offered by software vendors in return for a commitment to purchase a pre-determined number of licenses. Microsoft typically offers these discounts through a number of different licensing programs, including Enterprise Agreement (EA), Enterprise Subscription (EAS), Select, and Services Provider License Agreements (SPLAs). The deepest discounts generally are available for those organizations that qualify for the EA and that and are willing to undertake the true-up requirements of that program. The EA also requires the licensee to maintain licenses at a minimum count regardless of need.

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Microsoft Volume Licensing - SPLA and Internal Use

Microsoft offers a number of volume license programs designed for use by organizations with more than 250 desktops. The Microsoft Enterprise Agreement (EA) and Enterprise Subscription (EAS) agreements are for organizations licensing products for internal use only. For companies that have the need to license software for use by their customers – say, for companies offering hosting services – Microsoft developed the Service Provider License Agreement, or SPLA. With the SPLA, organizations that are Microsoft Partners can provide access to Microsoft software by purchasing either Per-Processor or Subscriber-Access Licenses for a number of Microsoft titles. In addition, however, the SPLA also permits these Partners to deploy the software licensed under the SPLA for internal use.

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Microsoft Enterprise Agreement vs. Enterprise Subscription

Microsoft has long offered the Enterprise Agreement (or, “EA”), a licensing scheme for organizations with 250 or more desktops that consists of a three-year term providing free software upgrades during the term of the agreement and a perpetual license for the software at the expiration of the agreement. In the past few years, Microsoft has added an additional licensing scheme – called the Enterprise Subscription – for organizations that do not necessarily need perpetual licenses. This agreement also has a three-year term and software upgrades, but includes a non-perpetual license that expires at the end of the term.

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Microsoft Company Store Restricts Terms of Use, Leads to Licensing Confusion

Microsoft offers its employees an opportunity to buy discounted software if they agree to restrictive usage terms when purchasing from the Microsoft Company Store. In addition to the online Microsoft Company Store, employees may go to one of a few different physical locations, including one near the Microsoft campus visitor center. The Microsoft Company Store is separate and distinct from the online Microsoft Store, which is aimed at the general public.

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Microsoft Enterprise Agreement – Understanding Qualified Desktops and Users

Software licensing for medium to large companies is complicated. Not only are the software license agreements often hard to read and understand, but the terms frequently change with little notification to the user. Deploying software across an entire enterprise, therefore, can be exceedingly complex, and it requires both technical expertise and a thorough understanding of the practical application of the terms and conditions of the licenses. Many organizations, relying on their senior IT professional to make software purchasing recommendations, fail to submit the licensing agreements to legal review. For those that do submit the licenses to legal, the lawyers reading the agreements often will understand the typical contract language—the indemnities and limitations of liabilities of the world—but they often will not fully appreciate the practical effect of the license on implementation, deployment, and compliance.

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Microsoft Server Licensing – Shared Resources for Internal and External Users

When it comes to Microsoft licensing, we are frequently asked how to license for a situation where a Microsoft server resource is to be accessed both by internal company employees and external non-employee affiliates. Our typical legalese answer to this perfectly reasonable question: “It depends.” The correct answer (read: most-cost-effective-while-still-being-compliant answer) requires an examination of the circumstances surrounding the required access (number of users, manner of access, specific server products implicated) and a grasp of company’s current licensing environment with Microsoft.

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Microsoft Certificates of Authenticity May Not Constitute Proof of Licensing

The Business Software Alliance (“BSA”) and Software Industry & Information Association (“SIIA”) work on behalf of their members (the lists of which include Microsoft (for the BSA), Adobe, and Autodesk, among others) to enforce copyrights and the terms of end user license agreements (“EULAs”) pertaining to those members’ software products. The BSA and SIIA typically initiate software audits against companies in a stated effort to determine whether the software installed on those companies’ computers is properly licensed according to the terms of the relevant EULAs.

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Renewal Grace Period in Microsoft Enterprise Agreements

The Microsoft Enterprise Agreement renewal process can be a difficult time for many large organizations. The process generally begins with a count of software products, processor cores, and virtualizations. All of these elements are necessary for a thorough evaluation of an organization’s true-up obligations under the EA. Next up is the process of evaluating future needs in order to determine whether the perpetual use rights associated with the licenses purchased under the original EA will satisfy the organization’s needs moving forward. Finally, all of these activities must be conducted under the looming specter of the EA’s expiration date and the associated non-stop communications from the company’s Microsoft account representative.

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Are Your Microsoft SQL Servers Properly Licensed?

Depending on the size of your organization, Microsoft SQL Server licensing costs easily can be one of the biggest yearly expenditures for an IT department. As multi-core and virtualization technologies have taken hold in nearly every datacenter across the globe, SQL Server spends often consist not only of licensing the SQL Server instances, but also, in many cases, of over-licensing due to a lack of clear understanding of SQL Server licensing models and associated options. Proper licensing of SQL Server depends on, among other things, SQL Server use characterization, access characterization, and developer needs.

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Five Factors to Consider When Deciding Whether to Renew a Microsoft Enterprise Agreement

For organizations experiencing the resource drain that is the impending expiration of a Microsoft Enterprise Agreement (“EA”), the decision of whether to move forward with renewal is critical. These renewals easily can impart a seven-figure hit on an organization’s IT expenditure, and it is important to understand the full spectrum of the costs and benefits of renewal. Key factors to consider when making an EA renewal decision include the following:

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Licensing Old Microsoft Products

Businesses seeking to license older versions of Microsoft products may encounter challenges acquiring valid licenses.  This is a particular concern for some companies that utilize Microsoft products as the basis for their IT infrastructure and that want to avoid a costly migration to new software versions.

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Microsoft Accuses Mexican Drug Cartel of Software Piracy

Microsoft recently claimed that the “La Familia” Mexican drug cartel is peddling counterfeit Microsoft Office suite software in Mexico and using the profits of those sales to help fund its drug trade and other illegal activities. Microsoft claims it found the cartel’s “FMM” mark stamped on the counterfeit software packages. “Microsoft may struggle to prevent the duplication of copyrighted software in this instance, because Mexican officials have been engaged in a deadly, ongoing war with the cartels,” says Keli Johnson, an attorney with Scott & Scott, LLP. “Although the Mexican government likely is willing to work with U.S. officials to crack down on software piracy and copyright infringement, such enforcement efforts have taken a back seat to prevention of other criminal activities that have been ripping apart the country.” For more information, please contact Ms. Johnson at 800-596-6176 or KJohnson@scottandscottllp.com.

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Tech Industry Heavyweights Supporting Microsoft Against i4i

On February 2, Red Hat, Verizon, and Hewlett-Packard filed a joint amicus brief in the U.S. Supreme Court in support of Microsoft’s appeal against a patent-infringement injunction won in May 2009 by i4i, Inc. i4i had claimed that an XML feature in Microsoft’s Word software violated its patent rights, and the injunction, which took effect on January 11, 2010, required Microsoft to stop selling copies of Word that included the disputed technology. “The common concern among Microsoft and its supporters is the fact that software patents – like other kinds of patents – often are easier to obtain at the USPTO than they are to attack in litigation,” says Christopher Barnett, an attorney with Scott & Scott, LLP. “Many large, software- and tech-industry stakeholders have their eyes fixed on this case, because it gives the Supreme Court another opportunity to provide meaningful guidance on the proper way for trial courts to assess infringement claims pertaining to software patents.” For more information, contact Mr. Barnett at 800-596-6176 or cbarnett@scottandscottllp.com.

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Microsoft Atttempting to Halt Apple's Registration of APP STORE Trademark

 Microsoft and Apple are in the midst of a fight to determine whether Apple will be allowed to register APP STORE™ as a trademark with the U.S. Patent & Trademark Office. In a motion for summary judgment filed January 10 at the USPTO's Trademark Trial and Appeal Board, Microsoft alleged that the term is used widely to describe the entire category of marketplaces into which Apple's well-known App Store falls, rendering the term "generic" and ineligible for protection as a trademark. Apple disagrees, saying that the term merely describes its own store, rather than the whole class of such stores, and that the public has come to associate the term exclusively with Apple's store. "The line between a generic mark and a descriptive mark is rarely a bright one," says Christopher Barnett, a trademark attorney with Scott & Scott, LLP. "Apple clearly has an incredible incentive to fight Microsoft's motion, and I would not be surprised to see the TTAB deny Microsoft's motion and let the case play itself out, so that each side has a full opportunity to offer evidence in support of its position." For more information, please contact Mr. Barnett at 800-596-6176, or at cbarnett@scottandscottllp.com.

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Microsoft Seeks to Add Additional Defendant to “Click-Fraud” Lawsuit

On December 10, 2010, Microsoft announced that it was seeking to add an additional defendant to its pending federal lawsuit against RedOrbit.com, a news and information website intended for space, science, health, and technology enthusiasts. In its lawsuit, Microsoft has alleged that RedOrbit and, now, Vertro Inc. (a web advertising network business) engaged in a scheme to generate fraudulent “clicks” on advertisements placed on RedOrbit.com through Microsoft’s adCenter platform (now called pubCenter).

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Is Your Affiliate Licensed Under Your Microsoft Agreements?

Entering into a Microsoft Enterprise or Select agreement can be an effective way for companies with large and predictable software needs to reduce IT costs.  However, Enterprise and Select agreements may include restrictions on an affiliate’s ability to use software licensed under those agreements. Additionally, the flow of documents over the course of a Microsoft agreement relationship may create confusion regarding the current terms of the agreements and may end up steering a company in the wrong direction relative to its software asset management objectives.

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Microsoft Sues Online Retailer over Bogus Server Software

On August 27, 2010, Microsoft filed suit against online retailer Jigantic.com alleging fraudulent software sales, copyright violations, trademark violations, and other claims.  The August 27th filling in the District of Connecticut also names 20 “John Does,” because the retailer allegedly went out of its way to mask its identity.

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Microsoft Introduces Rental Rights Licensing

For years, many businesses interested in renting computers running Microsoft software to third parties have faced a dilemma: either (1) commit to a complicated and potentially expensive Microsoft Services Provider License Agreement (SPLA), which until recently was the only license agreement under which Microsoft has allowed its software to be rented, (2) rent the computers outside a SPLA relationship and risk the exposure that such activity can entail in the form of an audit by Microsoft or by the Business Software Alliance (BSA), or (3) forego the revenue that might be realized from the rental business. Many other business owners have been unaware of the prohibition against renting in most Microsoft license agreements until discovering, in the context of a BSA audit, that the BSA typically treats a breached license as no license at all for the purpose of calculating the penalty to be paid to resolve a software audit. Worse, after paying that penalty to the BSA, affected businesses have been forced to enter into a SPLA in order to continue offering rental services, or else run the risk of losing the release from liability that they purchased with the settlement payment.

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Microsoft Licensing Considerations

 Generally when purchasing new software online, or upgrading existing software, a box pops up on the computer that says “Agree to Terms”.  Most people simply check the appropriate box and click next without reading the fine print.  This can be troublesome when the Business Software Alliance (BSA), which represents major software companies such as Microsoft, decides to conduct an audit of software licenses.

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Microsoft SQL Server, Processor Licensing, and Virtual Servers

Use terms of Microsoft server products can be complex and difficult to interpret.  Microsoft SQL Server licensing rules for use in virtual environments demonstrate that a careful review of the use terms is necessary to avoiding copyright or contract violations.

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Licensing Tips on Two Popular Microsoft Server Products

Microsoft Antigen Becomes Microsoft ForefrontMicrosoft’s server-level security product formerly known as Microsoft Antigen has been rebranded as Microsoft Forefront.Complying with Microsoft Server CAL and Terminal Server CAL Licensing RulesThough Terminal Services functionality is included with a Windows Server license, each user or device that creates a session on a Windows server and engages the Terminal Services of the Server must have a TS CAL.

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Microsoft SAM – An Audit by Another Name

When I heard a Microsoft executive recently explain its new approach to software license compliance enforcement, I couldn’t believe my ears. Statements like, “Microsoft does not endorse audits,” and “Microsoft believes that most of its customers want to be in compliance, they just need help with tool deployment and reconciliation,” sounded to good to be true. In reality and not surprisingly, the program was not playing out as presented. 

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