The American Express Co. has been sued for $14 million by a software company that claims AmEx exceeded the scope of its license.
Micro Focus (US) Inc. sued AmEx for copyright infringement, saying that the credit card company continued to use Micro Focus’s Server Express software after Micro’s license to AmEx expired in 2009.
According to the complaint, Identex, a British company, created a standardization and verification application called IACE using Server Express. Micro allowed Identex to grant licenses to IACE users to use Server Express as well.
AmEx acquired a license to use IACE and Server Express from 2004 to 2009. In 2009, IACE was discontinued.
AmEx then allegedly used IACE as a platform to develop its own software, incorporating Micro’s code. However, AmEx allegedly had no license to use the Micro code after the Identex license expired.
Micro also claims that AmEx used the software on more than the licensed number of computers. Server Express was licensed for a single server but Amex used the software on more than one server, according to the complaint.
Software license agreements normally limit the:
- number of copies of the software that can be made,
- number of computers the software can run on,
- location of computers on which the software can be used,
- number of users who can use the software (in total or at a given time), and/or
- purposes for which the software may be used.
For example, software may be licensed for use only on a single server (as alleged in the AmEx case), on the number of computers specified in the license, at one or more specified facilities, only on computers running specific operating systems, and/or only on specific hardware platforms.
Software is normally licensed for “internal use only,” so that a licensee cannot become a service bureau offering processing services to third parties.
Legal complications can ensue where, for example, a company’s IT department upgrades hardware or an operating system without checking with the legal department whether this is permitted for all the software running in that environment.
It’s not clear from news reports how Micro discovered the alleged violation of the license terms.
As we recently discussed, violations of software licensing terms are sometimes discovered via a software licensing audit – a process to check whether a customer is running more than the licensed number of copies of a program or otherwise violating the license terms.
Companies can avoid getting involved in litigation like the AmEx-Micro case by performing their own internal software audits on a regular basis.
