Milestone Systems A/S v. On-Net Surveillance Systems Inc. was a proceeding in the United States District Court for the Southern District of New York. In it, Milestone Systems A/S, the developer of the XProtect video management software (VMS), sought to confirm arbitration awards against On-Net Surveillance Systems Inc. (OnSSI), a US video management software company. The petition was filed on 2016-07-18 under nature-of-suit code 896 (Arbitration) and assigned to Judge Jesse M. Furman. The court entered an order confirming the arbitration awards and a judgment on 2017-05-17, followed by a consent judgment on 2017-07-12.[1] According to Milestone’s counsel, the consent order barred OnSSI “from distributing or integrating Milestone’s software in the United States”.[3]
Background
The dispute arose from an agreement under which, in the words of Milestone’s counsel, Milestone allowed “the incorporation of Milestone’s software components in OnSSI’s own video management system”.[3] The court record identifies it as an “OEM Agreement”. In OnSSI’s own suit, the court ordered that Milestone’s motion to dismiss, “including the OEM Agreement and documents from the arbitration in Denmark”, be filed under seal.[2] The agreement’s terms are therefore not public. Milestone’s counsel states that, “Based on OnSSI’s subsequent breaches of the agreement”, Milestone started an arbitration before the Danish Institute of Arbitration (DIA), “which unanimously found in favor of Milestone and awarded damages and costs, as well as running interest”.[3] The nature of the breaches is not stated in the public docket.
Milestone’s current EULA still provides for “approved OEM versions” of XProtect products, for example in the XProtect Access and LPR terms.[4] OEM licensing remains part of how XProtect reaches end users.
The dispute
OnSSI’s suit (No. 1:16-cv-02381). On 2016-03-31 OnSSI filed a complaint against Milestone Systems, Inc., the US subsidiary of Milestone Systems A/S, in the Southern District of New York, with a jury demand.[2] Milestone’s counsel describes the claims as “a variety of contractual and business tort claims”.[3] On 2016-05-02 Milestone moved “to Dismiss or, in the Alternative, Stay or Dismiss in View of Arbitration”. On 2016-05-10 OnSSI filed a notice of voluntary dismissal without prejudice, which Judge Jed S. Rakoff so-ordered on 2016-05-11.[2]
Milestone’s petition (No. 1:16-cv-05724). On 2016-07-18 Milestone Systems A/S filed a petition to confirm the arbitration awards, together with a motion to seal.[1] According to its counsel, Milestone filed because “no payment was received following the arbitration”, and sought to confirm the awards and “enforce the ordered non-monetary relief against OnSSI”.[3] A memorandum of law in opposition was filed on 2016-08-15, followed by reply memoranda and letters, several under seal, through early 2017.[1]
Decision or outcome
The docket records an entry “Confirm Arbitration AND Judgment” on 2017-05-17 and a “Judgment - Consent” on 2017-07-12, the date the case was terminated.[1] The texts of these orders are not in the public RECAP archive. Milestone’s counsel states that once Milestone received the required payment, “the parties asked the court to issue a consent order barring OnSSI from distributing or integrating Milestone’s software in the United States, which the court granted”.[3] The sealed documents were retrieved and disposed of between December 2023 and January 2024.[1]
Significance for software licensing and SAM practice
The case is a supplier-side dispute, not a customer audit, but it shows a risk that licence managers rarely track: software embedded in another vendor’s product under an OEM licence. The end customer’s rights flow through the OEM. If the OEM agreement ends or the OEM is ordered to stop distributing the embedded software, as Milestone’s counsel describes here, new sales and integrations by that OEM stop.[3] The public record does not show how existing OnSSI customers were affected. The case also shows how international software agreements are enforced. The merits were decided in a Danish arbitration, and the US court’s role was limited to confirming the awards.[1]
Lessons learned
- Map embedded third-party software. Record which products contain another vendor’s components under an OEM licence. Here OnSSI’s video management system incorporated Milestone software components.[3]
- Read the dispute resolution clause. The dispute was decided by arbitration in Denmark, and OnSSI’s US lawsuit was dropped after Milestone moved to dismiss or stay it in view of that arbitration.[2]
- Track the OEM’s commercial obligations. Unpaid amounts led to the confirmation petition, and the relief included non-monetary terms on distribution.[3]
- Get continuity commitments in writing. Neither the docket nor counsel’s statement addresses licences already sold to end customers. Customers buying OEM-embedded software should ask the OEM what happens to their licences and support if the upstream agreement ends.[1]