5 ms·

U.S. Judge Orders RBS Unit Stop Using Software in Copyright Case

45 points by 001sky 12y ago

chiph 12y ago
Seems pretty cut and dried. The software license went with the other part of the firm, and not them.
- cabalamat 12y ago
  It would appear so, although I'm surprised RBS and Complex Systems couldn't come to an agreement given that (I presume) RBS wants to continue using the software and Complex wants to get paid for people using it.
  - fiatmoney 12y ago
    It's likely that the injunction is being used as leverage by Complex Systems - RBS now has what amounts to a hard deadline with a hard failure condition, rather than being able to accumulate damages that will only potentially be paid after an appeal, etc. while keeping their business up and running.
  - smackfu 12y ago
    It seems like the license was assignable at no cost to the parent company, they just didn't actually do that because they were in a rush to sell. RBS was arguing that no, they did assign it, because of reasons X, Y, and Z so they shouldn't have to pay anything.
- deleted 12y ago
  [deleted]
ChuckMcM 12y ago
Wow, I am surprised we haven't seen one of these[1] sooner. Also surprised they got advice from counsel that they might be able to prevail here. From the blurb in the Times it seems pretty cut and dried. And if the unit really does make nearly half a billion dollars a year, it seems like throwing a few million over the fence in licensing fees wouldn't be a huge burden. Of course, it could be a bit more predatory than that, and RBS has been scrambling like mad to replace this chunk while their lawyers fight a delaying action in the courts. [1] Major Corp getting screwed because some tricky licensing provision in their tech stack bites them in the backside.
- jamesaguilar 12y ago
  It doesn't seem that tricky to me. You have to have a license to use the software. You sell the portion of your org that owns the license, you need to buy another one to continue using the software.
  - rayiner 12y ago
    The takeover was hostile, and the sale happened in a rush because the target was hoping that divesting LaSalle Bank would make it a less attractive buy: http://www.washingtonpost.com/wp-dyn/content/article/2007/07/13/AR2007071300249.html http://www.washingtonpost.com/wp-dyn/content/article/2007/07....
  - ChuckMcM 12y ago
    That isn't the tricky bit, generally you have a large organization, it has many moving parts, and general staff turnover. At some point there are parts of the system that "just work" and nobody at the place really knows all the various bits that go into the works. When one of those bits is carrying a license that needs to be paid, negotiated, but you don't know it, it bites you in the backside. A more common example of this is a hard working engineer who, practicing DRY, finds a perfectly serviceable piece of code on Github which he plugs into the source tree with just a few small changes to hook up the plumbing. Never once checking the license terms. Those things blow up when you get a demand letter from the owner of the code. Most shops though have a license compliance officer type person who is checking for such things.
    - cube13 12y ago
      If it's a core part of your technology strategy, as RBS/ABN say it is, then your legal people need to make sure that you don't accidentally sell it away. The problem seems to stem(from a ruling last year linked here: https://news.ycombinator.com/item?id=7722956 https://news.ycombinator.com/item?id=7722956) from the fact that ANB didn't actually specify that the license was staying with it instead of getting sold as a packaged part of one of their subsidiaries. For a core tech requirement, that's amazingly idiotic, no matter what size organization you're in.
stuki 12y ago
Just for clarification, wouldn't it appear that RBS was in violation of licensing terms even when it owned LaSalle, by using the software corporation wide, despite it only being licensed by a subsidiary? Otherwise, you'd think there would be a huge market for tiny little companies that happened to have a "site license" for some expensive software. I still think the judge, or some other authority, should put a cap on the price Complex Systems could charge, rather than leaving RBS completely at the mercy of their vendor. Perhaps the appeals court will.
- deleted 12y ago
  [deleted]
driverdan 12y ago
Why wouldn't they just buy another license? The company that owns the software makes about $20 mil a year. A new license couldn't cost that much.
- smackfu 12y ago
  "Just buy a license" for something you are already infringing might end up in a license at a high price, or it might end up in a lawsuit.
smackfu 12y ago
Court ruling from last year, which has a pretty readable summary of the case: http://scholar.google.com/scholar_case?case=9145147889745759498&hl=en&as_sdt=6&as_vis=1&oi=scholarr http://scholar.google.com/scholar_case?case=9145147889745759...
dctoedt 12y ago
1. Sadly, this is a variation on an oft-told story. For example, in Cincom Sys. Inc. v. Novelis Corp., a customer ended up essentially having to re-buy a half-million-dollar software license because it did a corporate reorganization that technically resulted in an "assignment" of the license without the consent of the vendor. See http://www.ca6.uscourts.gov/opinions.pdf/09a0346p-06.pdf http://www.ca6.uscourts.gov/opinions.pdf/09a0346p-06.pdf Conceivably the software vendor in this case might come to regret having taken such a hard line with its customer. That customer is highly unlikely ever to buy anything again from that vendor if there's an even remotely-comparable alternative. Of course, the vendor might be figuring that they're not likely to make any additional sales from that customer anyway, so what the hell, squeeze out whatever additional money they can. For a discussion of the legal principles and more examples, along with contract-clause language that can help customers avoid this problem, see http://www.CommonDraft.org/#AssmtConsentAddlCmt http://www.CommonDraft.org/#AssmtConsentAddlCmt and http://www.CommonDraft.org/#AssmtConsentExceptAssetsCls http://www.CommonDraft.org/#AssmtConsentExceptAssetsCls (a side project of mine). 2. In theory the judge in the ABN case might have been able to award the vendor ABN's profits arising "indirectly" from the infringement --- which for bank-transaction software could have been considerable. There is precedent for that: In the 1980s, the MGM Grand Hotel was found liable for 2% of its hotel- and casino profits because its floor show had infringed the copyright in a Broadway musical, the Tony-award-winning Kismet. See http://www.oncontracts.com/a-better-way-to-handle-a-breach-of-contract-at-least-in-some-cases/#MGMGrand http://www.oncontracts.com/a-better-way-to-handle-a-breach-o... for more details (a blog post I did a few years ago). But in this case the judge apparently ruled that she was unable to compute the damages to which the vendor was entitled.
- dredmorbius 12y ago
  software vendor in this case might come to regret having taken such a hard line Reminds me of Ernie Ball: http://www.osv.org.au/index.cgi?tid=91 http://www.osv.org.au/index.cgi?tid=91 http://www.metafilter.com/30137/The-CEO-of-Ernie-Ball-talks-about-how-his-company-left-Microsoft-for-Linux-after-a-licensing-fiasco http://www.metafilter.com/30137/The-CEO-of-Ernie-Ball-talks-...
EGreg 12y ago
I wonder, does FRAND apply to copyrights as well as patents? What if a company simply wanted to revoke a copyright license to a major system component for the fun of it? Or not renew it?
- cbhl 12y ago
  I think the word you want is "fair use" and I'm pretty sure it doesn't apply here.
- Dylan16807 12y ago
  That's what contracts are for. You don't build your business around something without a guarantee it'll be available. Patents are different because it covers the method, you can't use an alternative supplier.

45 points by 001sky 12y ago

chiph 12y ago

Seems pretty cut and dried. The software license went with the other part of the firm, and not them.

cabalamat 12y ago
It would appear so, although I'm surprised RBS and Complex Systems couldn't come to an agreement given that (I presume) RBS wants to continue using the software and Complex wants to get paid for people using it.
- fiatmoney 12y ago
  It's likely that the injunction is being used as leverage by Complex Systems - RBS now has what amounts to a hard deadline with a hard failure condition, rather than being able to accumulate damages that will only potentially be paid after an appeal, etc. while keeping their business up and running.
- smackfu 12y ago
  It seems like the license was assignable at no cost to the parent company, they just didn't actually do that because they were in a rush to sell. RBS was arguing that no, they did assign it, because of reasons X, Y, and Z so they shouldn't have to pay anything.
deleted 12y ago
[deleted]

ChuckMcM 12y ago

Wow, I am surprised we haven't seen one of these[1] sooner. Also surprised they got advice from counsel that they might be able to prevail here. From the blurb in the Times it seems pretty cut and dried. And if the unit really does make nearly half a billion dollars a year, it seems like throwing a few million over the fence in licensing fees wouldn't be a huge burden. Of course, it could be a bit more predatory than that, and RBS has been scrambling like mad to replace this chunk while their lawyers fight a delaying action in the courts. [1] Major Corp getting screwed because some tricky licensing provision in their tech stack bites them in the backside.

jamesaguilar 12y ago
It doesn't seem that tricky to me. You have to have a license to use the software. You sell the portion of your org that owns the license, you need to buy another one to continue using the software.
- rayiner 12y ago
  The takeover was hostile, and the sale happened in a rush because the target was hoping that divesting LaSalle Bank would make it a less attractive buy: http://www.washingtonpost.com/wp-dyn/content/article/2007/07/13/AR2007071300249.html http://www.washingtonpost.com/wp-dyn/content/article/2007/07....
- ChuckMcM 12y ago
  That isn't the tricky bit, generally you have a large organization, it has many moving parts, and general staff turnover. At some point there are parts of the system that "just work" and nobody at the place really knows all the various bits that go into the works. When one of those bits is carrying a license that needs to be paid, negotiated, but you don't know it, it bites you in the backside. A more common example of this is a hard working engineer who, practicing DRY, finds a perfectly serviceable piece of code on Github which he plugs into the source tree with just a few small changes to hook up the plumbing. Never once checking the license terms. Those things blow up when you get a demand letter from the owner of the code. Most shops though have a license compliance officer type person who is checking for such things.
  - cube13 12y ago
    If it's a core part of your technology strategy, as RBS/ABN say it is, then your legal people need to make sure that you don't accidentally sell it away. The problem seems to stem(from a ruling last year linked here: https://news.ycombinator.com/item?id=7722956 https://news.ycombinator.com/item?id=7722956) from the fact that ANB didn't actually specify that the license was staying with it instead of getting sold as a packaged part of one of their subsidiaries. For a core tech requirement, that's amazingly idiotic, no matter what size organization you're in.

stuki 12y ago

Just for clarification, wouldn't it appear that RBS was in violation of licensing terms even when it owned LaSalle, by using the software corporation wide, despite it only being licensed by a subsidiary? Otherwise, you'd think there would be a huge market for tiny little companies that happened to have a "site license" for some expensive software. I still think the judge, or some other authority, should put a cap on the price Complex Systems could charge, rather than leaving RBS completely at the mercy of their vendor. Perhaps the appeals court will.

deleted 12y ago
[deleted]

driverdan 12y ago

Why wouldn't they just buy another license? The company that owns the software makes about $20 mil a year. A new license couldn't cost that much.

smackfu 12y ago
"Just buy a license" for something you are already infringing might end up in a license at a high price, or it might end up in a lawsuit.

smackfu 12y ago

Court ruling from last year, which has a pretty readable summary of the case: http://scholar.google.com/scholar_case?case=9145147889745759498&hl=en&as_sdt=6&as_vis=1&oi=scholarr http://scholar.google.com/scholar_case?case=9145147889745759...

dctoedt 12y ago

1. Sadly, this is a variation on an oft-told story. For example, in Cincom Sys. Inc. v. Novelis Corp., a customer ended up essentially having to re-buy a half-million-dollar software license because it did a corporate reorganization that technically resulted in an "assignment" of the license without the consent of the vendor. See http://www.ca6.uscourts.gov/opinions.pdf/09a0346p-06.pdf http://www.ca6.uscourts.gov/opinions.pdf/09a0346p-06.pdf Conceivably the software vendor in this case might come to regret having taken such a hard line with its customer. That customer is highly unlikely ever to buy anything again from that vendor if there's an even remotely-comparable alternative. Of course, the vendor might be figuring that they're not likely to make any additional sales from that customer anyway, so what the hell, squeeze out whatever additional money they can. For a discussion of the legal principles and more examples, along with contract-clause language that can help customers avoid this problem, see http://www.CommonDraft.org/#AssmtConsentAddlCmt http://www.CommonDraft.org/#AssmtConsentAddlCmt and http://www.CommonDraft.org/#AssmtConsentExceptAssetsCls http://www.CommonDraft.org/#AssmtConsentExceptAssetsCls (a side project of mine). 2. In theory the judge in the ABN case might have been able to award the vendor ABN's profits arising "indirectly" from the infringement --- which for bank-transaction software could have been considerable. There is precedent for that: In the 1980s, the MGM Grand Hotel was found liable for 2% of its hotel- and casino profits because its floor show had infringed the copyright in a Broadway musical, the Tony-award-winning Kismet. See http://www.oncontracts.com/a-better-way-to-handle-a-breach-of-contract-at-least-in-some-cases/#MGMGrand http://www.oncontracts.com/a-better-way-to-handle-a-breach-o... for more details (a blog post I did a few years ago). But in this case the judge apparently ruled that she was unable to compute the damages to which the vendor was entitled.

dredmorbius 12y ago
software vendor in this case might come to regret having taken such a hard line Reminds me of Ernie Ball: http://www.osv.org.au/index.cgi?tid=91 http://www.osv.org.au/index.cgi?tid=91 http://www.metafilter.com/30137/The-CEO-of-Ernie-Ball-talks-about-how-his-company-left-Microsoft-for-Linux-after-a-licensing-fiasco http://www.metafilter.com/30137/The-CEO-of-Ernie-Ball-talks-...

EGreg 12y ago

I wonder, does FRAND apply to copyrights as well as patents? What if a company simply wanted to revoke a copyright license to a major system component for the fun of it? Or not renew it?

cbhl 12y ago
I think the word you want is "fair use" and I'm pretty sure it doesn't apply here.
Dylan16807 12y ago
That's what contracts are for. You don't build your business around something without a guarantee it'll be available. Patents are different because it covers the method, you can't use an alternative supplier.