The National Consumer Council (the “NCC”) in a study reported here found that software licenses are confusing and have terms that protect the interests of the vendor over those of the end user.
To anyone that has reviewed or negotiated a software license these findings are hardly surprising. Signing a license without first having the agreement reviewed and modified by an experienced software attorney exposes your company to unnecessary risks, higher costs and increases the likelihood that you will inadvertently breach the software license.
Nearly all vendors will request that you sign their standard form agreement. As a preliminary matter the use of a vendor form should be avoided in favor of your own form. By using a vendor form you put yourself at a strategic disadvantage. Every provision in a vendor form – as the NCC study indicates – is drafted to the benefit of the vendor and to the detriment of the licensee.
Vendors are typically reluctant to use a customer form. They understand that using a customer form puts them at a strategic disadvantage and shifts the balance of power to the licensee. The typical vendor will argue that a customer form does not take into account their unique licensing model or that a customer form contains so many provisions that are contrary to the standard business practices of the vendor that using the customer form would simply be impractical.
At this point, creating doubt in the mind of the vendor about the fairness of the vendor form may help your argument that your form should be used. How do you do this? Given the unfair nature of vendor agreements, this is actually easier than it appears. A review of the vendor form that substantively comments on each provision in the vendor form, highlights the unreasonable nature of the language and proposes the language in your own form as a fair and reasonable alternative may work. The goal is to paint the vendor form as an impediment to getting the deal done.
Surprisingly, your sales representative may have a sympathetic ear. Within a software vendor there is usually friction between the goals of the legal department that is pushing the use of the vendor form and the needs of the sales force to close deals quickly and make numbers. Using this friction to your advantage – especially if you are not successful in getting the vendor to use your form – will positively impact your ability to successfully negotiate an agreement that protects your interests, reasonably addresses legitimate vendor issues and excludes language that is confusing or unfairly biased.