Software Licensing & Master Service Agreements : Chicago Software Licensing Lawyer & Attorney : Sam Conforti Law Firm : Master Service Agreements, Negotiations, Outsourcing : Cook County, Illinois

In May of this year Microsoft sued Salesforce for infringement of nine Microsoft patents. Last week Salesforce counter-sued Microsoft claiming Microsoft has infringed on five of its patents. Salesforce has asked for treble damages (i.e. three ‘3’ times the amount of harm caused), an injunction of Microsoft’s use of the patents in question, and attorneys’ fees and court costs. Hanging in the balance is the future of cloud computing for enterprises and consumers alike. For more on this matter see Stuart J. Johnston’s article in eCRM Guide.com entitled Salesforce Suit Clouds Microsoft’s Patent Attack.

The Microsoft products affected by the Salesforce claim of patent infringement are as follows:

·         SharePoint Server and related products

·         Windows Server AppFabric

·         Windows 7 error reporting system

·         Windows Server 2008 R2

·         Microsoft’s .NET development platform

·         Windows Live delegated authentication system

The outcome of this law suit could have a tremendous consequence on Microsoft’s cloud computing initiatives.

So what are the chances that young upstart Salesforce can defeat the mighty Goliath Microsoft in any legal action? Well I would not count my chickens before they are hatched. Salesforce has hired David Boies as legal counsel for this litigation. For those of you not familiar with Mr. Boies or any of his notable cases you can find a brief synopsis of his career here. Just to whet your appetite here is a list of some of his more notable cases:

Notable cases

• At Cravath, Boies assisted top litigator Thomas D. Barr in defending IBM in the 13-year antitrust cases brought by the Justice Department and many private competitors.
• Also at Cravath, he represented the Justice Department in the United States v. Microsoft case. Boies won at trial and the verdict was upheld on appeal. The appellate court overturned the relief ordered (breakup of the company) back to the trial court for further proceedings. Thereafter, the George W. Bush administration settled the case. Bill Gates said Boies was "out to destroy Microsoft."
• Boies represented New York Yankees owner George Steinbrenner in a suit against Major League Baseball. This involved an action against all the teams. The Atlanta Braves were owned by Time Warner, a longtime Cravath client, who objected to his representation of the Yankees.
• He defended CBS in the action brought by General William Westmoreland. The general abandoned his case during the trial.
• Following the 2000 U.S. presidential election, he represented Vice President Al Gore in Bush v. Gore.
• Boies defended Napster when the company was sued by the RIAA for facilitating copyright infringement.
• In November 2003, he represented Andrew Fastow, deposed Chief Financial Officer of Enron.
• Boies has been retained by the SCO Group in their pursuit of alleged infringement of their rights to the Unix intellectual properties.
• He negotiated on behalf of American Express two of the highest civil antitrust settlements ever for an individual company: $2.25 billion from Visa, and $1.8 billion from MasterCard.

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I have been a member of LinkedIn, the Professional Networking Site, for some time. I have joined several groups that compliment my background and/or can increase my understanding in my particular area of practice. I have found one group, Software Licensing Professionals, to be particularly helpful. There is one relatively new discussion started by Michelle Nerlinger,Sr. Product Marketing Manager, SRM Solutions at SafeNet, Inc., entitled SaaS v Software: Their Licensing Needs to be Integrated. I was very impressed by the comments from all the discussion participants. Their comments are evidence of each person’s vast experience in this area and the trials and tribulations they have experienced while we all take this journey into the world of SaaS. The one overriding issue in this series of comments, as well as in my many readings on the topic, is pricing. The concept of pay-as-you-go just hasn’t crystallized and many vendors have resorted to a sort of subscription model, if the customer can indeed make use of the model. I came across one very informative comment by one of the discussion participants and I want to share it with you. I want to give full credit to its author David Ochroch, Information Technology Strategic Sourcing Consultant and Manager. His comments on SaaS pricing are as follows:

“Most pricing for SaaS follows a per-user model because that tracks directly to web-based access rights. A number of on-premise apps can price per-user...and as long as the software is a true user-based application, a per-user model works well as a value indicator. The per-user pricing model starts to break down in (at least) two cases: 1) where the app can't readily define or track users; and 2) where the app is used very rarely or primarily during peak times. Software with those latter attributes are usually sold on some other basis (per server, per processor, etc.). From my experience, software with those attributes (e.g., databases, middleware, security monitoring, transaction processing) often resides on-premise for performance reasons -- and I don't see SaaS being widely used in those areas for some time. I'm suggesting that there won't be a one-size-fits-all licensing model for either SaaS or on-premise but there should be commonality in the licensing metrics between the same SaaS and on-premise software versions.”

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