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The Enterprise System Spectator

Wednesday, February 25, 2009

Infor chases customer for fees on 20-year old software

Times must really be tough. According to a lawsuit filed by tool maker Vaughan & Bushnell, Infor is demanding that the company pay up on maintenance fees for software it first purchased in 1987.

According to Chris Kanaracus at IDG News Service:
Vaughan & Bushnell Manufacturing of Hebron, Illinois, paid SSA a one-time US$87,000 fee for the nine-module enterprise resource planning suite and used it "unmolested" for more than 20 years, according to a complaint the manufacturer filed earlier this month in US District Court, Northern District of Illinois, Eastern Division.

Vaughan & Bushnell, which makes hammers, pry bars and other hand tools, also received a software upgrade in October 1987. But since then, the company received no maintenance or installed upgrades from SSA and did not hear from Infor until last July, the complaint states.

The current dispute revolves around the hardware being used to run the software.

Initially, Vaughan & Bushnell installed the suite on an IBM System/38 minicomputer, which it replaced in 1993 with an AS/400. In 1999, it upgraded once more, to an IBM AS/400E, according to the filing.
Throughout this whole period, Vaughan & Bushnell paid nothing to Infor, claiming that its license agreement didn't require it to pay for moving the software (at the time, known as BPCS) to replacement hardware.

I contacted Infor for clarification on these questions. Although the company's policy is to not comment on active litigation matters, a spokesman said that generally, Infor's policies are not different than its competitors, other software vendors and other companies who have obligations to maintain and enforce their intellectual property. "Infor routinely canvasses its customers in order to validate license compliance," he wrote. "Every so often, Infor and a customer dispute whether there is a noncompliance."

He continued, "Infor can confirm that its practice of customer compliance validation has been ongoing for multiple years and is not a recent development." He also referred me to Infor's license management policy, which is publicly posted on its website.

My take: The story doesn't address some interesting questions. Was Vaughan & Bushnell's only "upgrade" a hardware upgrade? If the company was truly in violation of its original license agreement, why did SSA and now Infor wait 16 years before trying to collect?

Regardless of the details, it is noteworthy that Infor is chasing a 20 year old customer for an alleged violation that occurred in 1993. I had not heard of this case prior to a Spectator reader (another Infor customer) alerting me to the IDG article in Network World. It would be interesting to know if this is an isolated case, or whether Infor is chasing other old customers of its predecessor companies for back maintenance fees.

Infor customers are invited to contact me or leave a comment on this matter. I honor all requests for confidentiality.

Update, March 13: Jeff Gordon, an expert on software license contracts, has a great post analyzing this case. He believes that Vaughan & Bushnell has a 90% chance of prevailing.

Related posts
Infor reassures customers of financial viability

by Frank Scavo, 2/25/2009 06:22:00 AM | permalink | e-mail this!

 Reader Comments:

Infor is trying to squeeze every dollar from its install base
Although this will help Infor increasing income in the short term, it will prove a disaster for Infor to cross-sell products in the install base. How can you trust a software vendor who is focusing on claiming money from you, but not on improving their product and service?
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