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Informatica, customer in legal fray over license audit

Informatica is demanding US$6.3 million from a hospital services provider following a software license audit

Data-integration vendor Informatica and a customer are embroiled in a legal dispute over US$6.3 million in license fees that Informatica says it is owed due to noncompliance.

Hospital Corporation of America's Information Technology and Services division filed a motion for injunctive relief against Informatica in December 2010, seeking to have the court absolve it of any wrongdoing or recompense. The case was continued repeatedly this year, with Informatica ultimately filing its response last month in U.S. District Court for the Middle District of Tennessee.

In October 2010, Informatica conducted a software license audit on HCA ITS' systems, and based on the results, claimed the organization was using its PowerCenter software in excess of its licensed rights, according to court filings.

In 2007, HCA ITS upgraded to version 8 of PowerCenter, according to its motion for relief. The license granted it "the right to one 'central repository' installed on a single host server that serves as a central point of connection for the PowerCenter CPUs."

HCA ITS also set up a series of what it called "repository services" for different lines of business. Informatica has argued that each of these services amounts to a separate repository, and requires its own license.

But HCA ITS maintains that the main repository and the services have a "parent-child" relationship, and its license agreement allows it to create an unlimited number of them "so long as they are installed on a single host server that has a single central connection to a PowerCenter Production CPU, i.e., one parent."

Moreover, at one point in 2007 Informatica inspected HCA ITS' infrastructure and confirmed its interpretation that multiple repository services were allowed within a single central repository, according to the complaint.

Informatica denies those claims.

HCA ITS does admit that in one instance, it "exceeded the scope of its license by using an additional source target," but that Informatica refused to provide an invoice for an additional source license so HCA ITS could make a payment. That sum would be "minimal" compared to Informatica's $6.3 million demand, it adds.

While Informatica terminated HCA ITS' license in February, it continues to use the software without authorization, Informatica said in a filing the companies made jointly last week on a proposed case schedule.

The two sides conducted settlement talks during the past several months "but reached an impasse," the joint filing added. "The parties believe that it is premature to schedule any settlement conference."

The case isn't the only recent example of a licensing audit dispute reaching the courts. Earlier this year, textiles manufacturer BMP America filed suit against ERP (enterprise resource planning) software vendor Infor, seeking a declaration that it did not owe some $150,000 in alleged additional fees turned up by an audit.

Overall, licensing audits are an ever-present fact of the IT industry, to the point where specialized consultancies, legal firms and even software packages have sprung up, aimed at helping customers prepare for one and minimizing any ill effects.

There are some general measures customers can take at the bargaining table in order to protect themselves down the road, said analyst Ray Wang, CEO of Constellation Research.

"When you look at software licensing agreements, you should consider more than just price per seat," he said. "The intrinsic factors are important. What happens when you change hardware, site location, merge or become acquired are equally or more important provisions to negotiate than just price alone. You have to consider the software ownership lifecycle or face these type of issues in lawsuits."

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com

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More about: CA Technologies, IDG, Informatica, Technology, Wang
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