Delay in Acting

Frank Scavo over at the Enterprise System Spectator noted an interesting situation brewing between Vaughan & Bushnell and Infor (the latest incarnation of a company originally called SSA Global), first reported in NetworkWork.

The situation isn’t uncommon.  V&B licensed software from SSA in 1987.  That same year, it received an upgrade of the product.  V&B had the software installed on a specific IBM minicomputer and, through the years, upgraded the hardware.  V&B alleges that their license allowed them to do so without paying any upgrade fees (for those playing at home, some software vendors tie the software to the specific hardware used to run it).  Now Infor is claiming that V&B owes upgrade fees for the change in hardware.

I’m about 90% sure that V&B is going to win this one.  Let’s discuss why.

First are the slam-dunk defenses to an increase in fees:

  • if V&B has a license agreement that doesn’t tie the software to the specific hardware; or
  • if V&B has a license agreement that ties the software to the hardware but states that changes to the hardware are OK.

Second are the next-best defenses (so, even if V&B should’ve paid the upgrade fee in 1993):

  • Waiver: Infor didn’t respond to V&B’s failure to pay – counts as a waiver of their intent to be paid; and/or
  • Statute of Limitations:  Infor probably had a set amount of time (set by state law or in the contract – usually no more than 3 years) to file a claim to obtain payment.

So this is why I’m 90% sure that V&B is going to be successful.  Even if they owed the money as a result of the upgrade, Infor has both waived the payment through inaction, and have also passed any time limits which would have allowed them to take action to collect.

Lesson?  Draft your contracts carefully – and if you’re the vendor, do regular audits and followup appropriately.

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