

U.S. Judge Orders RBS Unit Stop Using Software in Copyright Case - 001sky
http://www.nytimes.com/reuters/2014/05/09/business/09reuters-rbs-lawsuit.html?hp

======
dctoedt
1\. Sadly, this is a variation on an oft-told story. For example, in _Cincom
Sys. Inc. v. Novelis Corp._ , a customer ended up essentially having to re-buy
a half-million-dollar software license because it did a corporate
reorganization that technically resulted in an "assignment" of the license
without the consent of the vendor. See
[http://www.ca6.uscourts.gov/opinions.pdf/09a0346p-06.pdf](http://www.ca6.uscourts.gov/opinions.pdf/09a0346p-06.pdf)

Conceivably the software vendor in this case might come to regret having taken
such a hard line with its customer. That customer is highly unlikely ever to
buy _anything_ again from that vendor if there's an even remotely-comparable
alternative.

Of course, the vendor might be figuring that they're not likely to make any
additional sales from that customer anyway, so what the hell, squeeze out
whatever additional money they can.

For a discussion of the legal principles and more examples, along with
contract-clause language that can help customers avoid this problem, see
[http://www.CommonDraft.org/#AssmtConsentAddlCmt](http://www.CommonDraft.org/#AssmtConsentAddlCmt)
and
[http://www.CommonDraft.org/#AssmtConsentExceptAssetsCls](http://www.CommonDraft.org/#AssmtConsentExceptAssetsCls)
(a side project of mine).

2\. In theory the judge in the _ABN_ case might have been able to award the
vendor ABN's profits arising "indirectly" from the infringement --- which for
bank-transaction software could have been considerable. There is precedent for
that: In the 1980s, the MGM Grand Hotel was found liable for 2% of its hotel-
and casino profits because its floor show had infringed the copyright in a
Broadway musical, the Tony-award-winning _Kismet_. See
[http://www.oncontracts.com/a-better-way-to-handle-a-
breach-o...](http://www.oncontracts.com/a-better-way-to-handle-a-breach-of-
contract-at-least-in-some-cases/#MGMGrand) for more details (a blog post I did
a few years ago).

But in this case the judge apparently ruled that she was unable to compute the
damages to which the vendor was entitled.

~~~
dredmorbius
_software vendor in this case might come to regret having taken such a hard
line_

Reminds me of Ernie Ball:
[http://www.osv.org.au/index.cgi?tid=91](http://www.osv.org.au/index.cgi?tid=91)

[http://www.metafilter.com/30137/The-CEO-of-Ernie-Ball-
talks-...](http://www.metafilter.com/30137/The-CEO-of-Ernie-Ball-talks-about-
how-his-company-left-Microsoft-for-Linux-after-a-licensing-fiasco)

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ChuckMcM
Wow, I am surprised we haven't seen one of these[1] sooner. Also surprised
they got advice from counsel that they might be able to prevail here. From the
blurb in the Times it seems pretty cut and dried. And if the unit really does
make nearly half a billion dollars a year, it seems like throwing a few
million over the fence in licensing fees wouldn't be a huge burden. Of course,
it could be a bit more predatory than that, and RBS has been scrambling like
mad to replace this chunk while their lawyers fight a delaying action in the
courts.

[1] Major Corp getting screwed because some tricky licensing provision in
their tech stack bites them in the backside.

~~~
jamesaguilar
It doesn't seem that tricky to me. You have to have a license to use the
software. You sell the portion of your org that owns the license, you need to
buy another one to continue using the software.

~~~
ChuckMcM
That isn't the tricky bit, generally you have a large organization, it has
many moving parts, and general staff turnover. At some point there are parts
of the system that "just work" and nobody at the place really knows all the
various bits that go into the works. When one of those bits is carrying a
license that needs to be paid, negotiated, but you don't know it, it bites you
in the backside.

A more common example of this is a hard working engineer who, practicing DRY,
finds a perfectly serviceable piece of code on Github which he plugs into the
source tree with just a few small changes to hook up the plumbing. Never once
checking the license terms. Those things blow up when you get a demand letter
from the owner of the code. Most shops though have a license compliance
officer type person who is checking for such things.

~~~
cube13
If it's a core part of your technology strategy, as RBS/ABN say it is, then
your legal people need to make sure that you don't accidentally sell it away.

The problem seems to stem(from a ruling last year linked here:
[https://news.ycombinator.com/item?id=7722956](https://news.ycombinator.com/item?id=7722956))
from the fact that ANB didn't actually specify that the license was staying
with it instead of getting sold as a packaged part of one of their
subsidiaries.

For a core tech requirement, that's amazingly idiotic, no matter what size
organization you're in.

------
stuki
Just for clarification, wouldn't it appear that RBS was in violation of
licensing terms even when it owned LaSalle, by using the software corporation
wide, despite it only being licensed by a subsidiary?

Otherwise, you'd think there would be a huge market for tiny little companies
that happened to have a "site license" for some expensive software.

I still think the judge, or some other authority, should put a cap on the
price Complex Systems could charge, rather than leaving RBS completely at the
mercy of their vendor. Perhaps the appeals court will.

------
smackfu
Court ruling from last year, which has a pretty readable summary of the case:
[http://scholar.google.com/scholar_case?case=9145147889745759...](http://scholar.google.com/scholar_case?case=9145147889745759498&hl=en&as_sdt=6&as_vis=1&oi=scholarr)

------
driverdan
Why wouldn't they just buy another license? The company that owns the software
makes about $20 mil a year. A new license couldn't cost _that_ much.

~~~
smackfu
"Just buy a license" for something you are already infringing might end up in
a license at a high price, or it might end up in a lawsuit.

------
chiph
Seems pretty cut and dried. The software license went with the other part of
the firm, and not them.

~~~
cabalamat
It would appear so, although I'm surprised RBS and Complex Systems couldn't
come to an agreement given that (I presume) RBS wants to continue using the
software and Complex wants to get paid for people using it.

~~~
fiatmoney
It's likely that the injunction is being used as leverage by Complex Systems -
RBS now has what amounts to a hard deadline with a hard failure condition,
rather than being able to accumulate damages that will only potentially be
paid after an appeal, etc. while keeping their business up and running.

------
EGreg
I wonder, does FRAND apply to copyrights as well as patents? What if a company
simply wanted to revoke a copyright license to a major system component for
the fun of it? Or not renew it?

~~~
Dylan16807
That's what contracts are for. You don't build your business around something
without a guarantee it'll be available. Patents are different because it
covers the method, you can't use an alternative supplier.

