Who can audit?

9 Nov, 2009  3 Comments  audit, law

I posted the question on Twitter the other day: “How does the SPA have the authority to audit software license use?  In thousands of licenses I’ve never given them that right.”

I was looking for some insight that I might have missed.  In the world of contracts, your license actually will specifically state who has the ability to audit your license usage (if they have the right at all).  And in the world of law, the term “standing” is used to show who actually is allowed to raise a particular issue (via the courts, etc).  So the SPA/BSA/SIIA (SIIA is their current incarnation) (or any other third-party “enforcer”) wouldn’t have the legal right to ever come in and audit your software license use unless there’s language in the license that allows for such audit.

Even general audit language is probably safe to prevent the SIIA from knocking on your door one day.  Typical audit provisions include:

The result is that even with not-so-favorable audit language, I simply don’t see how the SIIA has any right to come and perform an audit, let alone try to sue a licensee for license violations (again, any license that has “no third-party beneficiary” language in it could be used to very clearly show that the SIIA doesn’t have any rights with respects to the license).

Additionally, it’s been suggested that there are two other routes to allow such an audit: the “source” (the licensee’s employee who reports a violation) and the potential for an assignment of audit rights.  As for the source person, unless they’re also the person in the company who can allow someone to come in, that individual probably doesn’t have internal authorization to allow the audit to happen – so I find this unlikely.  The assignment of audit rights potential does exist, and contracts that have poor assignment language could potentially allow the vendor to assign their rights to someone else (and, in fact, it appears that the SIIA attempts to use an assignment of rights in this manner).  So it’s conceivable, but I’ve never seen the language used in that way.

At the end of the day, the lesson is this:

  1. Have strong audit language which clearly states who can perform the audit, on what time basis they can audit and what the results would mean (ie: usually you don’t have to pay any form of penalty unless usage exceeds 10% of the licensed quantity – but you’ll always have to pay for the difference in usage).  Include notice provisions and be very clear about whether the vendor can outsource their auditing… many will use large auditors, which is fine, but you don’t want Andy’s Audit Shack to be performing the audit.  Lastly, if you’re maintaining any kind of uber-confidential information (like SSN’s, bank account numbers, etc), then I would also be clear about what kinds of auditing tools can be used to complete the audit, as many vendors like to install their own auditing software onto your network.
  2. Have clear assignment language which prevents EITHER party from assigning the agreement without the other party’s consent (not to be unreasonably withheld, if you so choose): “Neither party may assign or otherwise transfer this Agreement or any of the rights hereunder, without the prior written consent of the other, which consent will not be unreasonably withheld or delayed.”.

OK – so you’ve done the prior two things and the SIIA comes knocking (physically or with a letter requesting/demanding an audit).  What do you do?  Simple.  Deny them access – in writing.  They’ll threaten, similar to the Big Bad Wolf, to huff and puff and to blow your house down.  But if you’ve got things properly documented, the SIIA simply doesn’t have the legal right to audit.  It doesn’t matter whether the vendor they’re supposedly auditing for is a SIIA member.  It doesn’t matter if they claim to have permission.  (Oh, and interestingly enough, if they name names and tell you which vendor sent them to you, I would check your license agreement with that vendor because many vendors like to include confidentiality restrictions which prohibit either party from even identifying the other.)

Now, regardless of everything I’ve just told you, I also firmly believe that you should always be 100% compliant with your contractual obligations.  So use some form of license management tool to know that you’re only using what you’re licensed to use.

The Licensing Handbook Blog is the companion site to the Software Licensing Handbook. Covering licensing topics on a regular basis, Jeffrey Gordon attempts to offer advice, add humor and sometimes even a bit of wit to a practice that most people find abhorrent – namely, reading a contract from start to finish.  Follow me on Twitter if you want up-to-the-minute information on contracting, licensing, negotiation and the law.

Software Licensing Handbook now available as an eBook

6 Nov, 2009  Comments are off  book, lulu

I know, I know… welcome to the 20th Century, Jeff.  I was waiting for my publishing “house”, Lulu, to allow for an eBook edition, and we’ve finally got it.

So, if you have been waiting for the eBook version of the Software Licensing Handbook (I’m matching Amazon’s price for the paper version, so get it cheaply now), you can get it here.

The Licensing Handbook Blog is the companion site to the Software Licensing Handbook. Covering licensing topics on a regular basis, Jeffrey Gordon attempts to offer advice, add humor and sometimes even a bit of wit to a practice that most people find abhorrent – namely, reading a contract from start to finish.  Follow me on Twitter if you want up-to-the-minute information on contracting, licensing, negotiation and the law.

What Can’t You Not Do?

27 Oct, 2009  Comments are off  Five Fundamental Skills, negotiation

Over on her Ask a Manager blog, Alison Green today discussed those personality traits which force you into certain behaviors, resulting in career choices that are almost imperatives.  It’s an interesting thought – are there things that you MUST do to satisfy your own internal itch?  But then I started thinking about how that would affect the world of negotiation and it ties back into a conversation thread that’s been started many times: are certain people more predisposed to being better negotiators?  And, on the flip side, are there people who shouldn’t, under any circumstances, be the negotiator for your firm/organization/self?

Typical negotiation trainers (Karrass, for example) predicate their training materials on the belief that anyone can learn how to negotiate.  Even my favorite professional negotiator, Herb Cohen promises in his book that “You, too, can negotiate anything!”.  But don’t let the razzle-dazzle fool you.  The honest truth is that while everyone can learn techniques to increase their negotiation skills, not everyone can be a good negotiator.

“Wait!” you yell at me – “YOU offer negotiation training, too.  Aren’t you just taking people’s money like everyone else?”  Woah.  I’m not rendering judgment on the value of the service offered by negotiation trainers… lots of the material learned in these courses is excellent stuff.  Heck, even bad negotiators can improve by learning my Five Fundamental Skills for Effective Negotiation.  What I’m saying is that a prospective negotiator needs to be introspective enough to know whether they’re a good negotiator (and sometimes, it’s even case-specific).

So then, what makes someone NOT a good negotiator?  Well, as I just said, it can sometimes be case-specific – I, for example, shouldn’t negotiate the purchase of my own house or car… I’m too emotionally invested in the result.  But more generically, bad negotiators are:

What am I saying, then, if you have these tendencies?  Well – either alter your personality (which proves quite hard for the bulk of the population) or find someone else to do the negotiating.  Remember that bullying someone (which is what a lot of these traits manifest as during a negotiation) won’t get you what you desire and might leave you worse off than when you started.

Oh – you don’t like the implication that everyone can’t be a great negotiator?  Blast me in the comments.

The Licensing Handbook Blog is the companion site to the Software Licensing Handbook. Covering licensing topics on a regular basis, Jeffrey Gordon attempts to offer advice, add humor and sometimes even a bit of wit to a practice that most people find abhorrent – namely, reading a contract from start to finish.  Follow me on Twitter if you want up-to-the-minute information on contracting, licensing, negotiation and the law.

The Power (and Value) of “No”

16 Oct, 2009  Comments are off  Five Fundamental Skills, negotiation

Yes/No.  Yin/Yang. Right/Wrong.  It seems as if there are a lot of ways to say that in many decisions, we have two basic potential responses (and many other shades of gray in between).  Answering “Yes” almost always involves more work, more responsibility and more hassle.  So why don’t we choose “No” more often?

As human beings, there is research to suggest that we want to generally appease others at a very fundamental level.  This isn’t about conflict management, it’s simply about survival and the power that comes with “the return of the favor.”  It’s even got a political science term that sounds awfully legal: “social contract” – that the individual give up some flexibility of behavior in favor of the larger societal good.  But realize that there is a quid pro quo here, we expect something in return.

It’s important, however, to learn the power and value of saying “No.”

At your individual level, “No” might mean that you have more time to devote to your already-full plate of things you’ve said “yes” to. At the societal level, “No” means that you are recognizing participatory limitations – that you believe that you have already contributed (or are contributing) to the “group” (however you would like to define it at that particular moment). Without realizing it, you actually do a form of “hedonistic calculus” to determine the effect of saying No and formulate defenses in the event you’re challenged.

But it’s not wrong to say No – and there are a lot of benefits to saying “No” with compassion and clarity.

While you may be refusing someone something that they want, and as I reminded someone the other day, you’re no good to anyone (including yourself) if you’re not able to do what you have already committed to do.  Saying “No” is a defense mechanism and allows you the ability to regulate your workload.  But, it’s also a starting point (as pointed out by Jim Camp in “Start with No!”) in that only if you say “No” do you have a place to begin a conversation.

Which means that from a negotiation perspective, “No” is a wonderful way to begin when asked for any settlement.  Camp believes that it’s the ONLY starting point – and he says on his website that starting with no is to “gain control of the deal.”  Whether you believe that’s true (or even if you want control of the deal), he is right that without saying “No”, there isn’t a conversation or negotiation at all – saying “yes” is merely a statement of agreement.

Saying “No”, however, doesn’t have to be done in a mean spirited manner and doesn’t have to be used with force.  Rather, the manner in which you say “No” can convey almost any conceivable emotion and can even foster a reciprocal compassion for your need/desire to say “No.”  For example, I was asked the other day to complete some new work for an old client on a quick-turnaround basis.

I responded saying that while I wanted to complete their project, I didn’t have time to get it done on their schedule because I was going on a babymoon with my wife.  In other words, I said “No.”  But of course, I didn’t only say “No.”  My next sentence was to give them the option for me to complete the project upon my return.  When they learned that my wife and I were expecting and because they understood the desire to take a last vacation before the baby arrived, they were sympathetic to my reason for saying No – and in fact, their time schedule really wasn’t as inflexible as they first made it appear.  In the end, I will get to enjoy my babymoon, I will complete their work promptly upon my return and they’ll have their needs met as well. [By the way, the ability to say No is founded upon proper use of Information Gathering skills.]

By saying “No” I was actually able to get everyone what they wanted.  Try it yourself and let me know how it works in the comments!

The Licensing Handbook Blog is the companion site to the Software Licensing Handbook. Covering licensing topics on a regular basis, Jeffrey Gordon attempts to offer advice, add humor and sometimes even a bit of wit to a practice that most people find abhorrent – namely, reading a contract from start to finish.  Follow me on Twitter if you want up-to-the-minute information on contracting, licensing, negotiation and the law.

New Client Availability

13 Oct, 2009  Comments are off  contract management, negotiation

I have a single vacancy in my client list that I’m looking to fill.

My clients are typically organizations that fall into one of three obvious categories:

  1. small organizations who need a contract negotiator for individual large deals;
  2. medium-sized organizations seeking to create a contract management team; and,
  3. large organizations who can benefit from strategic advice to bolster their internal staff resources.

So, if you or your organization have been considering contract renegotiation strategies or mitigation work based on risk management assessments, now might be a perfect opportunity to take advantage of the current economic situation.  Additionally, I can provide a VMO-in-a-box (the creation of all things necessary for the implementation of a vendor management office) or simply act as a sounding board to make sure that you’re extracting all of the value possible from each deal.

Contact me today if you’d like to use my knowledge to your advantage.

The Licensing Handbook Blog is the companion site to the Software Licensing Handbook. Covering licensing topics on a regular basis, Jeffrey Gordon attempts to offer advice, add humor and sometimes even a bit of wit to a practice that most people find abhorrent – namely, reading a contract from start to finish.  Follow me on Twitter if you want up-to-the-minute information on contracting, licensing, negotiation and the law.

This Week on The Web 2009-10-11

11 Oct, 2009  Comments are off  communication, contract management, contract terms, contract types, current events, fun, law, negotiation, risk matrix, SL Ed Series, TWoTW

These are the discussions that happened around the web this week – maybe you already read about them, maybe you need to again.  Come join the party on twitter (follow me here and you’ll participate in the conversation live.)

I also realized that many of you might have no idea what you’re seeing below.  Sorry.  These are “tweets”, 140 maximum character messages sent via Twitter.  Within the Twitterverse individual users follow others and have followers (think of it like overlapping Venn diagram circles).  To read a tweet, you have to wade through a bit of jargon used to make the most of the 140 character limitation.  “RT” for example, is shorthand for “Re-tweet” and the @____ is the username of some other individual on Twitter.  Combined together, then, “RT @_____” means that someone else wrote a tweet that I found important and I now want to forward along to my followers.  The URL’s are then also shortened by shortening services like bit.ly to make the most of the character limitation, too.  Lastly, you might see “hash” identifiers “#______” which are ways to tag tweets of a particular flavor for easy searching later and “<” which means that I am commenting on what came before it.

The Licensing Handbook Blog is the companion site to the Software Licensing Handbook. Covering licensing topics on a regular basis, Jeffrey Gordon attempts to offer advice, add humor and sometimes even a bit of wit to a practice that most people find abhorrent – namely, reading a contract from start to finish.  Follow me on Twitter if you want up-to-the-minute information on contracting, licensing, negotiation and the law.

FTC Required Disclosure

6 Oct, 2009  Comments are off  blog, book, review

The FTC now requires bloggers to disclose what they’ve received for free.

I was about to say nothing when I remembered that I received a copy of H. Ward Classen’s A Practical Guide to Software Licensing for Licensees and Licensors.  It took me so long to read and review that Ward probably regretted even having a copy sent to me.  But I got it for free nonetheless.  Oh, and if you want to send me something for free… I love freebies.  Just remember that I’ll now disclose that I got it for free.

But I think the FTC’s missing a real opportunity for regulation.  I think people who send out free things should disclose from whom they’re attempting an endorsement or comment.  I’ll even go first because, frankly, I only send things to people I know and respect and who would actually have a use for what I’m sending.  This, by the way, is also a great list of folks that you should be following/reading (in alpha order):

The Licensing Handbook Blog is the companion site to the Software Licensing Handbook. Covering licensing topics on a regular basis, Jeffrey Gordon attempts to offer advice, add humor and sometimes even a bit of wit to a practice that most people find abhorrent – namely, reading a contract from start to finish.  Follow me on Twitter if you want up-to-the-minute information on contracting, licensing, negotiation and the law.

Announcing the Software Licensing Education Series on DVD

5 Oct, 2009  Comments are off  contract management, contract terms, SL Ed Series

The saying goes that you don’t appreciate someone else until you’ve walked a mile in their shoes. The same can be said for appreciating process. While it is still extremely easy to create new digital works in almost any medium, converting them – especially for sale – is still challenging.

So it gives me great pleasure to announce the availability of the Software Licensing Education Series on DVD.  While previously offered here as a digital download, I wanted to make these videos available to a much broader audience.  Teaming with CreateSpace has given me that opportunity.

The Software Licensing Education Series is video-based software licensing training.  Designed with even a novice in mind, the Series progressively moves from basic topics to those requiring more experience and background.  Built around a college-courseware format (100, 200, 300, 400 and 500 levels are available), the Software Licensing Education Series provides instruction in bite size pieces for optimal learning.

Pricing for the DVD set is $750 – significantly cheaper than the cost of most software licensing-related conferences and packed with way more instructional time (551 minutes… more than 9 hours of material).  The DVDs may be used in a business setting, too… and are re-usable over and over as needed.

Buy the Software Licensing Education Series now via DVD or digital download and start saving money and reducing risk today!  Oh, and get a 10% discount through the month of October on the DVD using discount code: 89YYH47X

The Licensing Handbook Blog is the companion site to the Software Licensing Handbook. Covering licensing topics on a regular basis, Jeffrey Gordon attempts to offer advice, add humor and sometimes even a bit of wit to a practice that most people find abhorrent – namely, reading a contract from start to finish.  Follow me on Twitter if you want up-to-the-minute information on contracting, licensing, negotiation and the law.

This Week on The Web 2009-10-04

4 Oct, 2009  Comments are off  confidentiality, copyright, dispute resolution, limitation of liability, negotiation, trademark, transfer, TWoTW

These are the discussions that happened around the web this week – maybe you already read about them, maybe you need to again.  Come join the party on twitter (follow me here and you’ll participate in the conversation live.)

I also realized that many of you might have no idea what you’re seeing below.  Sorry.  These are “tweets”, 140 maximum character messages sent via Twitter.  Within the Twitterverse individual users follow others and have followers (think of it like overlapping Venn diagram circles).  To read a tweet, you have to wade through a bit of jargon used to make the most of the 140 character limitation.  “RT” for example, is shorthand for “Re-tweet” and the @____ is the username of some other individual on Twitter.  Combined together, then, “RT @_____” means that someone else wrote a tweet that I found important and I now want to forward along to my followers.  The URL’s are then also shortened by shortening services like bit.ly to make the most of the character limitation, too.  Lastly, you might see “hash” identifiers “#______” which are ways to tag tweets of a particular flavor for easy searching later and “<” which means that I am commenting on what came before it.

The Licensing Handbook Blog is the companion site to the Software Licensing Handbook. Covering licensing topics on a regular basis, Jeffrey Gordon attempts to offer advice, add humor and sometimes even a bit of wit to a practice that most people find abhorrent – namely, reading a contract from start to finish.  Follow me on Twitter if you want up-to-the-minute information on contracting, licensing, negotiation and the law.

Response to 50 Tips

30 Sep, 2009  2 Comments  contract format, contract management, process

James Martin, an attorney in St. Petersburg, Florida has an article on his website regarding 50 tips for writing contracts that stay out of court.  Most of the suggestions are good… a few are a little dated.  This is my response to the dated things on his list:

3.  Ask your client for a similar contract. Huh?  If your client has a similar contract, they probably don’t really need you.  Now, I’m not advocating reinvention of the wheel.  If there’s a pre-existing solution to the problem, by all means, use it.  But I’m guessing that someone’s coming to you to draft the agreement because you have the skills.  More importantly, however, is that their template/sample probably contains a LOT of issues.  So it’s usually 110% easier to start from scratch (or from your form) and customize it to your client’s specific needs.

4.  Check the form books and treatises for a contract form. and  5.  Buy forms on disk or CD-ROM. I don’t know who first created form books, but they’re not as good as one might think… and they’re not necessarily battle tested, either.  You’d be better off getting a template from someone else you know if you don’t know where to start.  There are exceptions, of course, but still – be careful (see the second part of my advice for #3 above).

6.  Don’t let your client sign a letter of intent without this wording. Actually, my advice is to NEVER sign a letter of intent, regardless of the wording.  As I’ve said before, a Letter of Intent is usually just a poorly written contract.  Don’t get caught up in that mess.

9.  Identify the parties by nicknames. This isn’t a hard-and-fast rule.  Use nicknames only if it actually makes things easier to draft AND read.  Be careful about using descriptive terms as nicknames (customer, vendor, consultant, etc) because other forms of that word could appear in the agreement.  Use the “Find” feature of your word processor to discover if this is true.

12.  Include recitals to provide background. I know a lot of people love these.  But I hate them.  I hate reading them and I hate writing them.  On the other hand, for complex deals where the agreement could apply to many different things and you want to be clear on what the contract is really covering, this is the place.  But for a standard software agreement, the place to list the products is in a product schedule… that way you can use the same license and only add additional product schedules w/o having to amend the agreement itself to modify some “Now therefore, the parties agree to license Word Processing application.” type of language.

17.  Title it “Contract.” Actually, the better advice is to simply make sure that it doesn’t say “proposal” or some other transient contract type (like “letter”).  Granted, I like document titles “Software Licensing Agreement” or “Amendment to Master Services Agreement”.  But putting “Contract” in bold at the top of the first page is silly and WAY outdated.

24.  Write number as both words and numerals: ten (10). I agree with Ken Adams on this one.  Use the standard rules for numbers: words for zero through ten and numerals for 11 on up.

25.  When you write “including” consider adding “but not limited to.” Not worth adding.  Ever.

26.  Don’t rely on rules of grammar. WHAT!?!?! OK.  Look.  Use plain English wherever possible.  Write clearly.  Using superior grammatical skills.  If you don’t have such skills, don’t draft contracts.

29.  Be consistent in grammar and punctuation. Well, at least Mr. Martin shows consistency in his inconsistency regarding grammar.

30.  Consider including choice of law, venue selection, and attorneys fee clauses. Consider?  Absolutely include choice of law and attorney’s fee clauses (though in some cases attorney’s fees won’t ever be granted… but it doesn’t hurt to ask).  On the other hand, you’ll almost NEVER get venue if the other side understands it well enough to ask for a different location.  But if you’re both in the same location, it never hurts to add it in to make sure you won’t be dragged out of state.

32.  Define a word by capitalizing it and putting it in quotes. and 33.  Define words when first used. No and No.  Define words in a definitions section up front.  Unless you only have an average of one defined term per section.  Then you can define “in line”.  Otherwise it just gets too ornery to try to make sure you define the term the FIRST time you use it.  This is especially true when definitions end up getting used in the definition of other defined terms.

34.  Explain technical terms and concepts. If you’re using terms that laypeople can understand, the only technical terms that should appear should be in a statement of work or other descriptive document regarding the work.  As such, it should be written so as to be understandable by the people that have to abide by the contract.  Judges and lawyers can find technical people to explain technical terms.  The only time you should explain technical terms is if there’s a reasonable disagreement in the technically-educated community as to the usage of the term.

35.  All contracts should come with a cover letter. Not necessary.  If your contract is so difficult as to not be able to understand how to sign it, you’ve got a problem.  The best thing I’ve seen so far?  “Sign Here” tape flags that you put on the side of the document they’re supposed to sign for each signature line.  Then paperclip your business card to the front with a post-it note attached thanking them for their help and asking them to sign and return one of the two originals.

38.  Use your word processor’s spelling and grammar checker. Yes, but don’t rely on it.  Two, to, too, toe.  Their, there, they’re.  Through, thorough.  Notice anything?  They are all real words and spelled correctly.  Spell checker isn’t going to flag any of these.  Grammar checker is no better: “A parakeet is not a bluebird.” is grammatically correct.  But if you intended to say that a parakeet isn’t blue, the prior sentence is not correct but won’t be flagged.

42.  Save the drafts as multiple files on your computer. Yes, but not how it was recommended.  Unfortunately, using periods in your filename is still problematic for some operating systems.  Weird abbreviations for drafts, comparisons, etc are also hard to decipher.  Instead, try this:  “filename vX date initials.doc”.  So if you have a file called MasterService and it’s the 4th iteration being saved on September 29, 2009 by Jeffrey I. Gordon, the filename would be:  “MasterService v4 092909jig.doc”  Why do I do it this way?  Well: a) it keeps the files in draft order in virtually all file systems (Windows, Mac, Linux); b) it notes which version it is (saves on confusion about which document is the latest); c) notes the date it was created; d) notes who created the draft.  Sometimes I’ll substitute my company’s TLA instead of my name… but usually, I like my initials better to let me know that I was the author of that version of the document.  When I get the last version that becomes the final, I change my initials to FINAL – so the name would now be: “MasterService v10 101509FINAL.doc”.  This lets me know that v10 was the final and which version was signed.

44.  Print the contract on 24 pound bond paper instead of 20 pound copier paper. Not worth the cost of paper.  Especially if you want the other side to sign first – ask them to print two originals, sign both and send to you… you can’t control the paper it’s printed on.  Besides, if you’re using a contract management system, you’re going to scan and forever more look only at the digital version, so the paper is irrelevant and not worth the added expense.

47.  Initial every page of the contract. Wholly unnecessary unless you don’t trust the other side and you’re signing first.  But as I’ve said before, if you don’t trust the other side, you shouldn’t be doing the deal in the first place.

48.  Identify the parties and witnesses who sign by providing blank lines below their signature lines for their printed names and addresses. and 50.  Add a notary clause that complies with the notary law. Witnesses and notaries aren’t necessary unless required by law for the specific type of contract you’re closing (usually for real property, but I’m not sure it’s required for any other type… anyone know for sure?).  Many businesses have a notary on staff, but unless the document is required to be signed “under seal”, this also is usually not a requirement and is an added expense to some (and added time/effort for everyone).

The Licensing Handbook Blog is the companion site to the Software Licensing Handbook. Covering licensing topics on a regular basis, Jeffrey Gordon attempts to offer advice, add humor and sometimes even a bit of wit to a practice that most people find abhorrent – namely, reading a contract from start to finish.  Follow me on Twitter if you want up-to-the-minute information on contracting, licensing, negotiation and the law.

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