NicoElNino - Fotolia

The high price of not understanding how automation works with existing software licences

Businesses must check their software licences before they introduce robotic process automation or they risk breaking the rules

Robotic process automation has the potential to deliver significant cost efficiencies to many businesses, but those efficiencies could be wiped out – or worse – if the robots are not properly licensed to work with the organisation’s existing software estate.

Integrating robotics software into a software estate is very different from the usual methods of software implementation. For a start, the robots are usually interacting with existing software via a user interface as a human would, not via an application programming interface (API). This has big operational advantages, but also has the potential to result in very substantial, unexpected licensing and legal costs.

You need to understand whether licences currently in place in your software estate permit robotic, rather than human, users. Many will not.

Consider this recent expensive lesson for a big, sophisticated, corporate software licensee. Diageo had licensed software from SAP on a named user basis and Diageo paid a fee associated with the volume of each user type. Around 2011/2012, Diageo chose to integrate the SAP software with other software using a platform from SAP competitor Salesforce. Benefits of the integration included enabling Diageo’s customers to carry out certain actions online rather than via Diageo’s call centre, including placing orders.

When SAP found out in 2015, it claimed that Diageo did not have the necessary licences to do this, and owed additional licence fees on top of the £50m-plus Diageo had already paid. Diageo disagreed.

The case went to the UK High Court in late 2016. In February 2017, the court held that the implementation of the Salesforce solution and its integration with SAP’s software allowed Diageo’s customers and others to access the underlying SAP software indirectly, for which Diageo did not have enough licences. Diageo was liable for additional licence fees. The exact amount is still to be decided, but SAP has claimed that they total £54,503,578.

While SAP has been in the spotlight as a result of this case, there is nothing legally new in the judgment, or unusual about SAP’s licensing terms. The case came down to a matter of interpreting the licence agreement the parties had negotiated and agreed, and the court applied established principles to do this. 

Shows the way forward

But what is important about this case is that, although it did not consider specifically the implementation of robotics software, it shows the way forward for businesses looking to integrate software robotics within their existing software estates. That is because it focused on the use of existing software with new technologies not envisaged by the licence. 

The problem is that new software must interact with old software in ways that were not anticipated, and which perhaps did not even exist, when the original software licence was signed. The fact that Diageo disagreed that additional licence fees were due, and felt that its case was strong enough to incur the no doubt very considerable expenses of going to trial, shows that the SAP software licence was ambiguous in how to deal with new uses of the software.

Unfortunately, the interpretation of software licences in the context of robotics software will usually be even more complicated than in the case of the SAP licence. Robotic “users” were not anticipated until relatively recently, and very few software licences will expressly allow their use with the subject software.

Lesson: early in any software evaluation, corporate users must review their existing licences to check they can use existing software with robotics software and the processes implicit in running that robotics software.

So, how do you decide if your existing licences allow you to deploy software robotics within your current software estate? By applying the same established contract interpretation principles used in SAP v Diageo. 

Common themes

Although software licences vary widely, there are common themes that you should be aware of. A recurring issue is with software licensed on a user basis, where the licensee pays for a specified number of seats or named users. Where “user” is defined in those licences, it usually excludes a computer program by referring to a “person” or “individual”. These user licences nearly always include a statement that only the specified number of users or the named individuals can use the software. As a result, use by robotics software is more than likely to be a breach of the licence.

Software licensees will obviously be in a much stronger bargaining position if they identify any under-licensing before they start using the software without licence cover. Similarly, software licensors should encourage early engagement with customers, and recognise that traditional per-user pricing may no longer be fit for purpose, or that it may need to be augmented by pricing options for robot users.

Since the SAP v Diageo judgment, SAP has tried to play down fears among its customers about similar claims. In May 2017, it published a press release, Modern pricing for modern times, which explains changes to its licence terms, including a move away from user-based pricing for some software. SAP is also encouraging a dialogue with customers who think they may be under-licensed, by promising not to collect back maintenance payments if those customers raise their licensing issues with SAP – in effect, an amnesty. 

Although big licensors such as SAP are starting to reform their pricing to adapt to new uses of their technology, it will take most software suppliers years to implement new terms and licensing models that allow robotic users, and years more before those new terms are applied to all longstanding customers.

In the meantime, before implementing robotics software, businesses must check their current licence terms to ensure they are legally able to do so. And if there is any serious doubt about that, they must agree suitable changes to those terms. As the Diageo case shows, the benefits of introducing robotics software can be wiped out many times over if you get this wrong.     

And if a big, sophisticated user got it wrong, imagine the challenge for other businesses.

Louis Wihl is an associate in law firm Berwin Leighton Paisner’s commercial and technology team, specialising in IT, the implementation of new technologies and complex commercial contracts.

Read more on Artificial intelligence, automation and robotics