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Differing Interpretations of License Agreement Spawn $6.3 Million Legal Battle

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Warning to readers: this blog post, while inspired by a true story of a license agreement gone awry, is not really about license agreements. Rather, it’s a reflection on what an impressive living those attorneys in the business of writing legal contracts must make. While I don’t necessarily think there’s a global conspiracy, it’s no joke when they say that lawyers craft language in such a way as to guarantee their own job security. It takes a lawyer not only to draw up a license agreement in the first place, but another lawyer to interpret the agreement for the signing entity, and yet more lawyers to testify for, litigate against or defend parties who obviously didn’t hire the best lawyers to perform the previous two duties. Translating_Legalese

If I’d been aware of this brilliant ponzi-like scheme back in my early twenties, heck, I might have applied to law school to learn the fine art of “legalese” (lawyer-invented jargon that leads the average person to question their own intelligence or assume the caffeine hasn’t yet kicked in from their morning coffee). I mean, did someone really get paid to come up with this gem?:

“I am herewith returning the stipulation to dismiss in the above entitled matter; the same being duly executed by me.” [1] (Translation = I am dismissing the suit.)

(For more mind-bending examples of legal mumbo jumbo, and a very humorous piece comparing lawyers to, ironically, software developers, check out Steve Smith’s blog post here.)

But I digress. My inspiration was this article I read last week in PCWorld, about a software vendor, Informatica, who’s tangled up in a legal battle with its former customer, Hospital Corporation of America (HCA), who licensed Informatica’s data integration software, PowerCenter. Informatica accuses of HCA of software compliance violations to the tune of $6.3 million, while HCA maintains that their use of PowerCenter fell squarely within the provisions of their license agreement. According to the article, the agreement allowed for “the right to one ‘central repository’ installed on a single host server that serves as a central point of connection for the PowerCenter CPUs.”

At issue is HCA’s implementation of a set of “repository services” that, according to HCA, have a “parent-child” relationship with the central repository. HCA insists that its license agreement allows for the creation of an unlimited number of such repository services “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.”

Informatica, however, charges that each instance of such a “service” equates with an independent repository, each of which requires its own license. (Amusingly, at one point, even Informatica may have been confused by the language of the software contract; HCA claims Informatica inspected its infrastructure several years prior and signed off on its implementation of the product. Informatica, of course, denies this.).

So how could each party be convinced that their interpretation (or perhaps more accurately, their lawyer’s interpretation) of the license agreement is the correct one? Most specifically, why on earth wasn’t the agreement written in such a way as to avoid a multi-year $6.3 million dollar legal battle over product usage rights? Unfortunately, it’s yet another example of what one can only assume to be a poorly articulated software contract that leaves not only its terms, but also its intent open to misunderstanding and legal debate.

One might cynically wonder whether there’s a precedent for Informatica and HCA banding together, hiring yet another attorney, and suing the pants off the law firm responsible for writing the contract in the first place.

Better yet, perhaps we should ban words such as “heretofore”, “notwithstanding”, “aforesaid,” and “herein” from the English language.

Oh wait… darn it, I guess we’d need some lawyers for that, too.

[1] Compliments of the “Legalese Hall of Shame”