RELX Inc. v. Informatica Corp. was a lawsuit in the United States District Court for the Southern District of New York, filed in December 2016 by RELX, the parent of LexisNexis, after Informatica audited its use of Informatica’s B2B Data Exchange software, claimed more than USD 7.7 million for historical overdeployment measured in CPU cores, and served a notice of default threatening to terminate all of RELX’s Informatica licences.[1][2] RELX sought declarations that it had not infringed or defaulted, arguing that Informatica’s own consultant had installed the software on the servers found to be over-licensed. Informatica counterclaimed for breach of contract, copyright infringement and unjust enrichment, and terminated the licence agreement in May 2017.[2] Judge Alvin K. Hellerstein suspended the effect of the termination while the dispute was heard, then denied both sides’ motions for summary judgment because there were material issues of fact on all claims.[3][4] In 2019 the parties filed stipulations of dismissal with prejudice, and the court dismissed the case on a suggestion of settlement.[5]
Background
On 28 May 2010 Reed Elsevier Group plc (later RELX Group plc) signed a Master Software License Agreement (MSLA) with Informatica, with the products licensed to its LexisNexis division. LexisNexis used Informatica software to normalise document formats, processing on average 80 million documents a month.[1] The MSLA licensed B2B Data Exchange on 16 “Production CPU cores”. The parties disagreed about how cores were defined. RELX alleged that “CPU cores” was not defined in the agreement or its amendments. Informatica pleaded that the custom Informatica Product Description Schedule, attached as Exhibit F, defined “Production CPU-cores” as “the total number of CPU-cores licensed to support one (1) or more Software Application Services in a production environment” and defined single-core and multi-core processors.[1][2]
The licence count changed several times, according to Informatica’s counterclaims: 4 more cores in December 2011 (20 in total); a June 2012 amendment that “Upgraded” the licences and brought the total to 72 Production CPU cores; and a February 2015 amendment that retired 16 cores, reducing the count to 56, with a partial refund of prepaid support fees.[2] RELX said the 2012 amendment moved the licences to an undefined “Informatica Environment licensing model”, that it paid more than USD 3.5 million for that increase, and that it reduced its licences in 2015 on the advice of an Informatica consultant who calculated that it used no more than 56 cores.[1]
That consultant was central to RELX’s case. RELX alleged that, under statements of work requiring him to install Informatica products and validate “proper use of Informatica in solution design”, he installed B2B Data Exchange on one server in November 2012 and two more in March 2013, bringing the total to seven, which RELX said was unnecessary because three or fewer servers could handle its volume.[1]
The dispute
The audit
Section 4.3 of the MSLA required RELX to keep books and records and allowed Informatica to review them if it had “a reasonable basis to proceed”. It also obliged the customer “to immediately remit to Informatica any shortfall in payment disclosed by Informatica’s examination”.[1][2] Informatica notified RELX of an audit on 24 February 2016. RELX said Informatica had asked it to run Informatica’s utility tool, and that RELX cooperated even with requests beyond what Section 4.3 allowed. Informatica said RELX delayed for months and removed the software from several servers during the delay.[1][2]
Informatica’s audit report of 7 October 2016 found RELX compliant at the time of the audit but over-deployed in the past. Informatica pleaded that B2B Data Exchange ran on 104 Production CPU cores from 31 March 2013, against 72 licensed until February 2015 and 56 after, and on 32 cores between October 2011 and June 2012 when 16, then 20, were licensed. It relied on a March 2013 internal RELX email that counted five servers with “2 sockets * 4 cores/socket” and two new servers with “4 sockets * 8 cores/socket”. It put the shortfall at more than USD 7.7 million.[2] RELX’s complaint gave the claim as USD 7,715,520 in licence fees, maintenance and back maintenance, and objected that Informatica charged the highest historical installed count while crediting only the lowest entitlement during the period (56 cores rather than 92).[1]
Default and termination
On 29 November 2016 Informatica served a notice of default under Section 10.2, which allowed a party to terminate if the other “materially defaults” and fails to cure within 30 days. On termination, the licences “shall terminate” and the customer must “destroy the Informatica Products” within 30 days.[1][2] RELX pointed out that this would also end perpetual licences, costing more than USD 1.3 million, for products with no adverse audit findings.[1] Informatica sent notice of termination on 9 May 2017 and alleged that every later launch of the software made an unlicensed copy in memory.[2]
Claims
RELX sought declaratory judgments that it had not copied the software (because Informatica’s staff installed it) and that it was not in default, together with further claims, and a temporary restraining order against termination.[1] Informatica counterclaimed for breach of the MSLA, copyright infringement of its registered B2B Data Exchange works and unjust enrichment, seeking an injunction, damages and attorneys’ fees.[2]
Decision or outcome
| Date | Ruling |
|---|---|
| 2017-05-16 | After a hearing on RELX’s application for a temporary restraining order, the court ordered that Informatica’s termination letter of 9 May 2017 “shall have no effect” until its motion for a preliminary injunction was resolved, and that Section 10.3 of the MSLA (the destruction obligation) likewise had no effect until then.[3] |
| 2017-10-17 | After oral argument, the court denied both sides’ motions for summary judgment: “There are material issues of fact as to all claims.” It dismissed the pending preliminary injunction motion as moot, with leave to renew.[4] |
| 2019 | Expert discovery and motions to exclude experts followed in 2018. In April and May 2019 the parties filed stipulations of voluntary dismissal with prejudice. The court declined to “So Order” the dismissal or keep jurisdiction unless the settlement agreement was made public or a reason was given, and on 3 June 2019 dismissed the case on a suggestion of settlement.[5] |
No settlement terms were filed, and no court decided whether RELX had over-deployed, how CPU cores should have been counted, or whether Informatica’s role in the installations was a defence.
Significance for software licensing and SAM practice
- Historical overdeployment. The audit found RELX compliant on the audit date but claimed for peaks in earlier years, which is why both sides argued about which historical entitlement and deployment figures to compare.[1][2]
- Vendor-led deployment. As in Quest Software v. DirecTV, the customer argued that the vendor’s own staff created the deployment it was being charged for. Here the court left that question for trial.[4]
- Termination as leverage. The termination clause reached every product under the MSLA. The court suspended it pending the dispute, but only by interim order.[3]
- Core counting. Informatica’s current agreements still count on-premises software by CPU-core; see Informatica licensing and processor and core licensing.
Lessons learned
- An audit can look back years and price the highest historical deployment, not the position on the audit date. Informatica’s claim covered periods from 2011 to 2016 although RELX was compliant when audited.[1][2] Keep dated records of both entitlements and deployments.
- Reducing licence counts without reducing deployment turns a cost saving into an audit finding. Informatica pleaded that RELX retired 16 cores in 2015 but “made no attempt to reduce the deployment”.[2]
- Installation and licensing advice from the vendor’s own consultants does not shift compliance responsibility unless the contract says so. RELX’s defence rested on the consultant’s installations and advice, and it was still facing trial on the facts.[1][4] Get licensing advice in writing and in the statement of work.
- A termination clause that requires destroying all copies gives the vendor leverage over undisputed perpetual licences too. RELX needed a court order to keep using its software while the dispute continued.[1][3] Negotiate termination rights that are limited to the products in breach.
- Define the metric in the contract; a court found disputed facts even on what CPU cores meant here. The parties disagreed on whether the term was defined, and the court found material issues of fact on all claims.[1][2][4]