Micro Focus (U.S.), Inc. v. Express Scripts, Inc. was a lawsuit in the United States District Court for the District of Maryland, filed in April 2016, in which Micro Focus claimed that the pharmacy benefits manager Express Scripts had over-deployed its Rumba terminal emulation software. A 2015 audit found that Express had made Rumba available through Citrix to all 35,236 of its employees under a 2010 order for “10000 Authorized User License”. Micro Focus said that it had sold 10,000 Workstation Licenses; Express said that it had bought an enterprise licence that covered Citrix.[1][2] Judge Paula Xinis dismissed the copyright claim because the plaintiff did not own the copyright, and sent the meaning of “authorized user” to a jury.[1] After a nine-day trial in May 2019 the jury found that the parties had not agreed to buy and sell 10,000 Workstation Licenses, and judgment was entered for Express. The court denied Micro Focus’s motion for a new trial in January 2020.[2]
OpenText closed its acquisition of Micro Focus on 31 January 2023.[4]
Background
Express used Rumba to connect employees to the mainframe holding patient and prescription data. Logging on to the mainframe also required credentials under a security package called Resource Access Control Facility (RACF), which only some employees had; without them, an employee could start Rumba but could not reach mainframe data. From 2006 Express moved from desktop (“thick client”) installations to a Citrix terminal server environment, where Rumba ran on the server. Micro Focus acquired the customer relationship when it bought NetManage in 2008; at that time Express held 955 concurrent user licences for Rumba and 8,975 licences for OnWeb Web-to-Host.[1][2]
In early 2010 a competitor, Rocket Software, offered Express an “all you can eat” licence with no user limit. Express asked Micro Focus for a counter-offer. On 12 May 2010 a Micro Focus sales manager offered “an enterprise license”, “[u]p to but not to exceed 10,000 Rumba and/or Onweb Web to Host site license for the benefit of Express Scripts users”, for USD 250,000 including the first year of support. The offer matched an internal promotion called “Footprints”, which Micro Focus described as an “‘all you can eat’ enterprise license” initiative under which customers would not have to count installations.[1][2]
The product order described “RUMBA Enterprise v. 8.3.0 … for 10000 Authorized User License” and said that the Micro Focus end user licence agreement (EULA) applied except as otherwise specified or agreed in writing. The click-through EULA set out seven licence models, including a Workstation License (one copy on a standalone workstation, not on a server used by more than one person), a Concurrent User License and a Named User License. It did not define an “Authorized User” or “Enterprise” licence.[1][2]
The dispute
In a 2015 “software license verification” audit, Express reported that all 35,236 users could access Rumba through Citrix but only 4,932 had mainframe credentials. Micro Focus treated every employee who could access the software as a user and said that Express was far over its 10,000 licences.[1] The trial evidence was that Rumba was also installed on 14,945 individual computers, and that about 7,500 employees had RACF credentials.[2]
Micro Focus sued for copyright infringement, breach of contract and unjust enrichment. Express counterclaimed and raised affirmative defences.[1][3] Micro Focus relied on internal Express documents: in 2013 Express staff wrote that they might “need to change some of the Rumba licenses to include Citrix” and that “[w]e are technically out of compliance with our current licensing model of giving everyone or [sic] Level 1 Citrix access for Rumba”.[1]
Decision or outcome
Summary judgment (February 2019)
- What the contract was. The product order and the EULA together formed the contract, but they were ambiguous about the licence sold, because the EULA did not define “authorized user”. The court admitted evidence of how both sides performed the contract, including Express’s 2013 and 2015 statements, and left the meaning to the jury.[1]
- No reading against the drafter yet. The EULA was not a contract of adhesion, since Express was a large company that could negotiate or reject it, and the rule that ambiguities are read against the drafter applies only when extrinsic evidence cannot resolve them.[1]
- Copyright. Micro Focus IP Development Limited, not the US plaintiff, owned the copyright. Being listed for “rights and permissions” on the registration did not give standing, and the court refused to substitute the owner late in the case because Micro Focus had ignored discovery requests on ownership. The copyright claim was dismissed.[1]
- Damages. Under the EULA, use beyond the licence was payable at “the then current license and maintenance fees”. Micro Focus agreed that damages would be measured by “the total number of users who may access and use the Licensed Software at any given time”, the EULA’s concurrent user definition. Whether access through Citrix without mainframe credentials counted as access and use was left for trial.[1]
- Other claims. The unjust enrichment claim was dismissed because a contract existed. Express’s counterclaims failed, but it kept its “bait and switch” theory as a defence.[1]
Trial and verdict (May 2019)
Micro Focus argued throughout that “authorized user” meant Workstation License and that Express owed for every installation beyond 10,000. Express argued that it had bought an enterprise licence that was not in the EULA, pointing to the “enterprise license” offer email, internal records of “a 10,000 license Enterprise agreement” covering thin and thick clients, and 2010 vendor questionnaires in which Micro Focus described the licence type as “named user”.[2]
The court refused Micro Focus’s request to let the jury find, in the alternative, that the parties had agreed to Named User Licenses, because no evidence showed that either side had agreed to that. The jury found that the parties had made a contract in 2010, but that they had not agreed to buy and sell 10,000 Workstation Licenses as defined in the EULA, so it did not reach damages. The court entered judgment for Express.[2][3]
New trial denied (January 2020)
The court held that its instructions were correct: contract formation requires mutual assent, and a party cannot argue that it sold one licence type and, if that fails, that the buyer must have agreed to another. It denied the motion for a new trial and stayed Express’s motion for attorneys’ fees pending any appeal.[2] No appellate decision was found in the court records reviewed.
Significance for software licensing and SAM practice
The rulings are district court decisions on Maryland contract law and are not binding precedent. They show the risk of a licence metric that appears on an order but not in the licence terms:
- Undefined metrics. “Authorized User” and “Enterprise” were on the order but not in the EULA, so the dispute turned on emails, sales promotions, questionnaires and internal notes from both sides.[1][2]
- Published applications. Making software available to every user of a terminal server can be counted as deployment to all of them. The court treated the difference between access and use as a question of fact about how the software was installed and launched.[1]
- Licence migration. Moving from desktop to Citrix deployment was the change that led to the claim, while both sides had different views of what the 2010 licence covered.[1]
Other Micro Focus licence cases on this wiki include Micro Focus v. Insurance Services Office and Attachmate v. Health Net. Current OpenText terms are covered in OpenText licensing.
Lessons learned
- A licence metric named on an order form but not defined in the EULA is ambiguous, and both sides’ emails and conduct become evidence. The court admitted evidence of how both parties performed the contract to interpret “authorized user”.[1] Have the metric defined in the order or an amendment before signing.
- A vendor that sues on one licence theory may not be allowed to switch to another at trial. Micro Focus was held to its Workstation License theory and could not argue Named User Licenses in the alternative.[2]
- Internal notes admitting non-compliance can be used against the customer, even when it later wins. Express’s 2013 statement that it was “technically out of compliance” helped keep the contract claim alive past summary judgment.[1]
- Whether users who can reach software but cannot log in to the back-end system count as users is a live question; record who can actually use it. Express relied on RACF credentials to show that far fewer employees could use Rumba than could see it.[1][2]
- Only the copyright owner, or an exclusive licensee, can sue for infringement; check which group entity owns the rights. The copyright claim failed because a different Micro Focus company owned the copyright.[1]