Micro Focus (US), Inc. v. Insurance Services Office, Inc. was a lawsuit in the United States District Court for the District of Delaware, filed on 20 March 2015, in which Micro Focus alleged that its customer Insurance Services Office, Inc. (ISO) had used Micro Focus Net Express COBOL development software to build applications and then supplied those applications to ISO’s own customers without buying the deployment licences the software required.[1][5] Judge Richard G. Andrews held that click-through end user licence agreements (EULAs) accepted when installing upgrades could bind ISO, and that a jury could find ISO had accepted them even if a lower-level IT employee had clicked “accept”.[3] The case was dismissed by stipulation in October 2022, after a three-day jury trial had been set for January 2023.[5]
OpenText closed its acquisition of Micro Focus International plc on 31 January 2023.[6]
Background
The court summarised the complaint as follows. Micro Focus licensed Net Express for developing COBOL applications, and licensed Application Server and Server for COBOL for deploying those applications. ISO, a risk assessment services provider, developed its Company Edit Packages (CEP) software with Net Express and its ClaimSearch Israel database with Net Express v5.1. Proper deployment of CEP depended on Application Server, and ClaimSearch Israel on Server for COBOL. ISO supplied CEP to its customers and gave its customers access to ClaimSearch Israel.[1]
Micro Focus claimed that ISO had exceeded its authorised use by providing copies of CEP to at least 250 customers without buying enough Application Server deployment licences, and by letting third parties access ClaimSearch Israel without Server for COBOL licences.[1] The record showed that ISO first bought Micro Focus software in 1999 and kept installing, updating and using it for years.[3]
The dispute
Micro Focus pleaded two breach-of-contract counts and one count of copyright infringement.[1] It relied on the EULA’s grant that the licensee “shall have the right to use the Micro Focus Software solely for its own internal use and benefit” and on the section covering deployment licences.[1]
ISO’s defences changed shape over the years, but centred on contract formation. It argued that a “generic software license accompanying a software upgrade” unilaterally imposed by the licensor was not a contract; that the EULAs offered several licensing options and the product orders that would identify which one applied had not been produced; that the wrong EULA versions had been asserted; that no authorised person had accepted them; and that unsigned EULAs failed the Statute of Frauds.[1][3]
Which EULA governed was itself contested. Micro Focus first attached the MF14 EULA to its complaints, then identified other versions in testimony and interrogatory answers after the close of fact discovery, finally relying on the G1 EULA for CEP and the MF13 EULA for ClaimSearch Israel. ISO moved to strike the late disclosures.[2]
Decision or outcome
Motion to dismiss (2015)
The court held that, because Micro Focus alleged that ISO used the upgraded Net Express v5.1, “it is reasonable to infer that ISO clicked the accept button”, and noted that ISO did not argue that click-to-accept agreements were unenforceable. Whether “internal use and benefit” covered providing the software to ISO’s own customers was “a question for another day”. The contract counts survived. The copyright count was dismissed as to Net Express, whose registration was still pending, but survived as to Application Server.[1]
Which EULA (2018)
The court refused to exclude the G1 and MF13 EULAs. It found no material differences between the EULA versions in the provisions on “restrictions on use, copying, deployment, and third-party access”, so Micro Focus had not raised new claims. It described Micro Focus as “careless” and not diligent in identifying the governing EULA, but found no bad faith, and ordered Micro Focus to pay the costs of the additional discovery that the late disclosure required.[2] In March 2021 the court granted Micro Focus’s own motion to dismiss the copyright count with prejudice, leaving only the contract claims.[5][3]
Summary judgment (2021)
The court denied ISO’s motion for summary judgment on every ground:[3]
| ISO argument | Ruling |
|---|---|
| No product orders, so no agreement on essential terms | A jury could find the EULAs and product orders were separate agreements and that years of continued installation, updating and use showed assent to the “Grant of License” sections |
| ISO never received or accepted the G1 EULA | A screenshot of an installed service pack, Micro Focus’s reinstallation from the matching CD, and a printed G1 EULA in ISO’s own files annotated “FROM COPY INSTALLED ON” a named machine with a 2002 date were enough for a jury |
| CSI used a later version governed by a different EULA | ISO’s own witness confirmed an update to Net Express 5.1 in 2008, and the installer required acceptance of the MF13 EULA |
| The person who clicked was not authorised | A jury could find authority, and “it is the duty of the company receiving the software to ensure that the employees who click to accept a licensing agreement are authorized to do so” |
| Statute of Frauds | A jury could find the EULAs were signed by click-wrap; installation could not proceed without clicking to accept |
The court denied ISO’s motion for reconsideration in April 2022.[5]
Standing and the end of the case (2022)
On ISO’s later motion, the court dismissed the UK subsidiary, Micro Focus IP Development Limited, which owned the software, because the EULAs were between ISO and the US distributor and nothing showed ISO intended the UK owner to benefit; that entity was incorporated only in 2010, after ISO allegedly accepted the EULAs. The court kept supplemental jurisdiction over the contract claims, noting the case had been before it for seven years, and continued it with Micro Focus (US), Inc. as sole plaintiff.[4] A three-day jury trial was set for 23 January 2023, but Micro Focus (US) filed a stipulation of dismissal on 31 October 2022 and the court closed the case the same day.[5] No settlement terms appear in the docket entries reviewed.
Significance for software licensing and SAM practice
The rulings are district court decisions on pre-trial motions and set no binding precedent, but they show how a long-standing customer relationship can be governed by EULAs that no one negotiated:
- Development tools versus deployment. The claim turned on the difference between licences to build applications with Net Express and separate licences to deploy them with runtime products when the applications were supplied to third parties.[1]
- Upgrades bring new terms. The vendor’s case rested on EULAs presented when ISO installed a service pack and a later major version, not on the agreement under which ISO first bought the software in 1999.[3]
- Who clicked. The court placed the risk of an unauthorised employee accepting licence terms on the customer, as the party better placed to control who installs software.[3]
- Vendor records matter too. The vendor’s own uncertainty about which EULA version applied delayed trial and cost it the expense of additional discovery.[2]
- Contracting entity. Only the Micro Focus entity that was party to the EULAs could sue on them; ownership of the copyright did not by itself give standing in contract.[4]
For current terms for former Micro Focus products, see OpenText licensing. A similar dispute over click-through terms accepted with a new version is described in Attachmate v. Health Net.
Lessons learned
- Click-to-accept licences presented when installing upgrades and service packs can be enforced against the company, even if a junior IT employee clicked. The court held that a jury could find acceptance by installation and that the receiving company must control who accepts licence terms.[3]
- Shipping applications built with a development tool to customers can require separate runtime or deployment licences. The vendor’s claim was that applications built with Net Express were supplied to more than 250 customers without matching deployment licences, and the court allowed it to proceed.[1]
- Keep copies of every EULA version accepted at installation, mapped to the installed version. Much of the litigation was about which of several EULA versions applied to which installed release, and a printed EULA kept in the customer’s own files became evidence of acceptance.[2][3]
- Missing order forms do not necessarily defeat a vendor’s claim under the licence grant. The court held that a jury could treat the EULA and product orders as separate agreements and enforce the grant of licence on its own.[3]