AT&T Services, Inc. v. Broadcom Inc. was a breach-of-contract action filed on 29 August 2024 in the Commercial Division of the Supreme Court of the State of New York, New York County, under Index No. 654490/2024. AT&T asked the court to require Broadcom, as successor to VMware, to honour an option in a 2022 contract amendment that AT&T said let it renew support for perpetually licensed VMware software for up to two more one-year terms.[1] Broadcom and VMware opposed, relying on an “End of Availability” clause in the parties’ agreements.[2] The court made no ruling on the merits. As reported by TechTarget, the parties told the court in November 2024 that they had reached a settlement in principle, and reported the settlement to the court again in December 2024. The terms were not made public.[4][5]
Background
On 11 December 2023, after Broadcom completed its acquisition of VMware, VMware announced the end of sale of perpetual licences and the end of Support and Subscription (SnS) renewals for perpetual offerings. It restated the change in a January 2024 blog post.[3][2] The commercial background is covered in VMware perpetual licensing end of availability.
According to the filings, the parties’ relationship ran through a 2007 Master End User License Agreement (EULA), Enterprise License Agreements (ELAs) signed in 2013 and 2021, and Amendment No. 1 to the 2021 ELA, dated 3 August 2022. That amendment was the document in dispute.[2] The complaint quotes the amendment’s renewal clause (Exhibit D, Section II.B.2). It said that “at Customer’s sole option” AT&T could renew support for its “Pre-2022 ELA Installed Software” for “either up to three (3) additional one (1) year renewal terms or one additional three (3) year renewal term”, if it did so before 9 September 2023. The clause also let AT&T cut the annual support fee by no more than 10 percent a year, and said that if AT&T did not renew in time it could buy the offerings later “at the fees set forth on VMware’s then-current price list”.[1]
AT&T’s complaint says that on 8 September 2023 it issued a purchase order renewing support for one year, to 9 September 2024. It called this the first of the three one-year terms available under the clause.[1]
The dispute
AT&T’s claims
AT&T pleaded four things: breach of contract, breach of the implied covenant of good faith and fair dealing, a request for a declaratory judgment, and a request for injunctive relief.[1] According to the complaint, AT&T told Broadcom it was exercising its option to renew support for at least another year, and Broadcom refused. AT&T alleged that Broadcom would continue support only if AT&T bought bundled subscription software and services that AT&T said it did not want. The complaint put the cost of that purchase at “hundreds of millions of dollars”.[1]
AT&T alleged that without support it could not keep VMware software running reliably on about 8,600 servers. It said those servers supported emergency communications services and government customers, among others.[1] The complaint accepted that Broadcom could change VMware’s business model going forward. It argued that Broadcom could not “retroactively change existing VMware contracts” to match that strategy.[1] AT&T asked for a declaration that it could renew support for up to two more one-year periods, and for an injunction requiring the defendants to keep providing support.[1]
Broadcom and VMware’s position
Broadcom and VMware opposed AT&T’s motion for a preliminary injunction on 20 September 2024.[2] They argued that the EULA, and the online support terms the amendment incorporated, contained an End of Availability provision. They quoted it as follows: “VMware may, at its discretion, decide to retire Software and/or Services at any time (‘End of Availability’) upon notice.” On their reading, VMware could lawfully stop selling support for perpetual licences after giving notice.[2]
The defendants also said that AT&T “opted not to purchase” the support it was now seeking when it had to decide in 2023. They said AT&T had known of the move from perpetual to subscription licensing since at least the December 2023 announcement.[2] They argued that AT&T would suffer no irreparable harm, because money damages would be enough and because AT&T had written to VMware that it could “migrate away” from VMware software. They also said AT&T had turned down subscription proposals that the defendants described as offering well-below-market pricing.[2] The memorandum called AT&T’s “bullying tactics” and “price gouging” accusations “sensationalism”.[2]
The two sides therefore disagreed on two questions. The first was whether the one-year renewal in September 2023 kept two further annual renewals alive, or whether the option had to be fully exercised by the 2023 deadline. The second was whether a general End of Availability right could override a specific negotiated renewal option.
Decision or outcome
The court did not decide either question. As reported by TechTarget, lawyers for both companies wrote to the court on 21 November 2024 that they had reached a “settlement-in-principle” and asked for more time to file a joint letter. Justice Schecter granted the extension.[4] As also reported by TechTarget, on 13 December 2024 the parties filed a letter stating that they had “reached a settlement-in-principle”; the same report said AT&T indicated it would drop the suit. Neither company published the terms.[5]
Significance for software licensing and SAM practice
The case produced no judgment, so it set no precedent on how End of Availability clauses relate to negotiated renewal options. The filings still set out, in the parties’ own words, contract terms that SAM and procurement teams deal with when a vendor changes its commercial model:
- Renewal options. The disputed clause offered renewal “up to” a number of terms, either annually or as one multi-year block, with a deadline.[1] Each side read the effect of choosing the annual path differently. How an option like this is worded, and when it must be exercised, decides whether later renewals remain available.
- Retirement or End of Availability rights. Broadcom relied on a general right in the EULA and support policies to retire software and services on notice, incorporated into the amendment by reference.[2] Where terms incorporate online policies, the policy text in force can matter as much as the signed order.
- Perpetual licences and support are separate. Neither side disputed AT&T’s right to keep using its perpetual licences. The dispute was over the separate contract for support, patches and upgrades, which Broadcom documentation also treats as distinct (see VMware perpetual licensing end of availability).
- Entitlement records. Both sides relied on the purchase order dates, product schedules and amendment exhibits. Complete entitlement records underpin any license compliance or effective license position analysis, and they were the basis of the arguments here.
Other disputes over VMware support after the acquisition are covered in VMware LLC v. Siemens AG. General background is in software maintenance and support.
Lessons learned
- The wording and deadline of a support renewal option decide whether later renewals remain available. The disputed clause allowed renewal for up to three one-year terms or one three-year term if exercised by a deadline, and the parties disagreed on whether choosing the annual path kept later renewals alive.[1]
- General End of Availability or retirement rights in incorporated online policies can be invoked against negotiated renewal options. Broadcom relied on a EULA and support policy right to retire software and services on notice, incorporated into the amendment by reference, so the policy text in force mattered alongside the signed order.[2]
- Perpetual licence rights and support entitlements should be tracked as separate contracts. AT&T’s right to keep using its perpetual licences was not in dispute; the case concerned the separate contract for support, patches and upgrades.[1][2]
- Complete entitlement records are the basis of any argument over renewal rights. Both sides relied on purchase order dates, product schedules and amendment exhibits to support their positions.[1][2]