Rima Fasteners v. Komexo and Mex Solutions was a Dutch summary proceeding over whether a customer that had cancelled the maintenance part of its agreement for Unit4 Multivers software still had to pay yearly fees to receive the licence codes it needed to run the software. The preliminary relief judge of the Gelderland District Court held on 1 September 2014 that the fees paid after the cancellation had most likely been paid without legal basis and ordered the two dealers that had invoiced them to repay them. The judge refused to order the dealers to supply licence codes, because Unit 4 Software B.V., not the dealers, was the customer’s contracting party and controlled the codes.[1]
Background
Rima Fasteners B.V. is a wholesaler and maker of bolts, screws and nuts. On 23 September 2004 it signed an agreement titled “Licence agreement standard software and maintenance agreement” with Mex Solutions B.V., which signed as dealer “on behalf of” Unit 4 Software B.V. The agreement licensed Unit 4 Multivers Extended Productie and the Unit 4 Multivers financial package.[1]
The judgment quotes these terms of the agreement (wiki translation):[1]
| Clause | Content |
|---|---|
| Article 2(1) | Unit 4 grants the licence to use the software. |
| Article 3(1) | The agreement is entered into for an indefinite period. |
| Article 3(2) | The user may cancel the maintenance part by registered letter at the end of a calendar month with three months’ notice, not earlier than one year after signature. “The user remains entitled to use the software, also after cancellation of the maintenance part.” |
| Article 9(1) | A one-time licence fee of EUR 14,500 for use of the standard software. |
| Article 9(2) | A yearly maintenance fee of 13% of the total gross purchase value of the software in use, payable to Unit 4 through the dealer and indexable. |
| Article 14(2) | After the agreement ends, by cancellation, dissolution or otherwise, the user may no longer use the software and must return it. |
Rima at first received yearly licence codes from Mex. From 2006 it received them from Komexo B.V., which obtained them from Licenties Isah B.V., then part of the Unit 4 organisation. One person was indirectly the director of both Komexo and Mex.[1]
The dispute
Rima pointed out in December 2011 that it had paid a one-time licence fee, while its invoices described the yearly charge sometimes as a right of use and sometimes as maintenance. By registered letter of 21 December 2011 it cancelled the maintenance part with effect from 1 April 2012 and stated that it could keep using the software. The dealer forwarded the letter to Unit 4, which replied that the customer had to keep to the agreement and that “cancelling a right of use/maintenance contract” was possible with three months’ notice, so that a cancellation received by 1 October 2012 would end the contract on 31 December 2012.[1]
Komexo then invoiced Rima for “right of use Unit 4 Multivers” and “periodic right-of-use fee” for 2012 and 2013, and Rima paid them. In a letter of 31 January 2013 Rima wrote that it had paid because it had been told it would otherwise not receive the codes needed to use the software, and that it received no updates and was offered a quotation whenever it asked a question. Komexo did not supply the licence code for 2014. In 2014 Rima claimed repayment of the 2012 and 2013 fees and an order to supply licence codes for an indefinite period. Without the codes it could not open the software, see what it had supplied to customers, or keep its production and financial records.[1]
Decision or outcome
- Fees after cancellation. The judge read the agreement as meaning that Rima could understand that, once it cancelled maintenance, it would no longer owe a fee for using the software, although it would lose updates and help with technical faults. This was all the more so because it had paid the one-time licence fee of EUR 14,500 at the start, and there was no indication it had received updates or support after its cancellation letter.[1]
- Repayment. It was sufficiently likely that a court in full proceedings would find the 2012 fees from 1 April and the 2013 fees had been paid without legal basis. Because the dealers had invoiced and collected them, even though as Unit 4’s representative, they were ordered jointly to repay EUR 5,735 (three quarters of the 2012 payments plus all of 2013), with statutory commercial interest, extrajudicial costs of EUR 662.65 and the costs of the proceedings.[1]
- Licence codes. The agreement had been concluded on behalf of Unit 4, which granted the right of use and supplied the codes each year, with the production module code coming from Isah (a point the agreement itself did not record). The dealers said they could not issue codes because Unit 4, as owner of the software, controlled them. Because the dealers acted only as intermediaries and Unit 4 was Rima’s contracting party, the claim against the dealers for the codes was rejected.[1]
Significance for software licensing and SAM practice
The case separates two things that are often bundled in on-premises business software: a perpetual right to use the software, paid once, and a maintenance service paid yearly. The agreement said expressly that use continued after maintenance ended, and the court gave that sentence effect against yearly invoices that described the fee as a right of use.[1]
It also shows the practical weight of licence keys. Rima’s right to use the software did not help it while no party in the proceedings could be ordered to issue the codes, because the codes came from the vendor’s organisation and the vendor was not a defendant.[1]
Lessons learned
- Check whether a perpetual licence survives the end of maintenance. Article 3(2) stated that use continued after maintenance was cancelled, which decided the fee question in the customer’s favour.[1]
- Make sure the party that generates licence codes is bound to keep issuing them. The court could not order the dealers to supply codes that only Unit 4 controlled.[1]
- Read invoice descriptions. Charges labelled as a right of use were treated as maintenance fees that were no longer owed.[1]
- Cancel maintenance in the form the agreement requires. Rima’s registered letter with three months’ notice fixed the date from which fees were refundable.[1]
- Know who your contracting party is. A dealer signing for the vendor could be ordered to repay what it collected, but not to perform the vendor’s obligations.[1]