SAP UK Ltd v Diageo Great Britain Ltd [2017] EWHC 189 (TCC) is a judgment of the Technology and Construction Court in London, handed down by Mrs Justice O’Farrell on 16 February 2017. The court held that, under the software licence agreement between the parties, individuals who used or accessed SAP’s mySAP ERP software through two Salesforce-based systems, connected to ERP by the SAP Process Integration (SAP PI) engine, had to be licensed as Named Users, and that SAP was entitled to additional licence and maintenance fees for that use.[1] The hearing dealt with liability only; the amount payable was left for a later phase that has not produced a published judgment.[1][5] The case is widely cited in discussions of “indirect access”, the use of SAP ERP by people or systems that do not log in to it directly.
Background
On 28 May 2004 SAP and Diageo plc entered into a Software Licence and Maintenance Agreement, later amended several times and novated to Diageo Great Britain Limited on 20 November 2012 (paras 1–2, 12).[1] The licensed software was the mySAP Business Suite, and the case concerned mySAP ERP. Licence fees for mySAP ERP were calculated by the number of Named Users in categories set out in the agreement, and maintenance was charged annually as a percentage of the licence fee (paras 3–5). Diageo also licensed software engines, including SAP PI, for which it paid a separate fee based on the monthly volume of messages processed (para 6).
The agreement defined a Named User as an individual representative of the customer, a group company, an outsource provider or a supply chain third party “who is authorised to access the Software directly or indirectly (e.g. via the Internet or by means of a hand-held or third party device or system)” (para 28). Clause 3.19 required Diageo to generate usage information with SAP’s tools and send it to SAP at intervals, and clause 6.2 provided that additional licence and maintenance fees became payable if usage did not correspond to the licensed exhibit (paras 22–23).[2]
From about 2011 to 2012 Diageo introduced two systems built on a Salesforce platform: Gen2, used by sales and service representatives, and Connect, a portal through which Diageo’s business customers could place and review orders directly rather than through call centres (paras 7, 50–53). Both systems exchanged data with mySAP ERP through SAP PI (para 55).[1]
The dispute
SAP claimed that Gen2 and Connect users used or accessed mySAP ERP directly or indirectly, that it was entitled to additional licence and maintenance fees of £54,503,578 under the agreement or as damages, and that it should have an injunction requiring Diageo to give it access to verify usage (para 8).[1]
Diageo accepted that the two systems interacted with mySAP ERP through SAP PI, for which it paid by message volume, but denied that this amounted to use of or access to mySAP ERP requiring additional fees (para 9). It argued that the SAP PI licence was a “gatekeeper” licence covering processing in ERP triggered through the interface, and that SAP’s reading would require most people in the organisation to be Named Users, which it said made no commercial sense; it was common ground that Diageo had paid between £50 million and £61 million in licence and maintenance fees up to November 2015 (para 37). Diageo counterclaimed for declarations that neither it nor the users of Gen2 and Connect had infringed SAP’s copyright or other intellectual property rights (paras 9, 111).[1]
Decision
Applying the ordinary principles of contractual interpretation (para 38), the court made the following findings.[1]
- Only Named Users were authorised. The “plain and obvious meaning” of the agreement was that only Named Users were authorised to use or access mySAP ERP, and Named User pricing was the only basis on which it was licensed (paras 43–44, 49). The court rejected the “gatekeeper” argument: the exhibit priced SAP PI as an addition to, not an alternative to, Named User licences (para 45). Where the words were clear, there was no room for arguments based on commercial value or contra proferentem (para 48).
- Meaning of use and access. The agreement did not define the terms. The court held that “use” meant application or manipulation of the software, and “access” meant acquiring visibility of, or connection to, it (para 77).
- Connect customers. Logging in, simulating and placing orders, and retrieving order history each triggered messages to and responses from mySAP ERP through SAP PI, so Connect customers were using or accessing the software indirectly (para 79). The court did not accept that the position was the same as ordering through a call centre, because call-centre staff were themselves Named Users (para 80), and held that asynchronous processing made no difference (para 81). No existing Named User category fitted these customers, and they were not Professional Users; clause 6.2 nevertheless entitled SAP to fees based on its price list (paras 85–91).
- Gen2 users. Master data managers were Professional Users. Sales representatives used or accessed mySAP ERP when entering returned-keg tags, and were closest to the Mobile User category, which had no price in the exhibit, so fees would be calculated from SAP’s price list. There was no evidence that other Gen2 roles used or accessed the software (paras 98–102).
- Verification and remedies. Diageo had not concealed the integration and had supplied the usage reports required by clause 3.19, so SAP had not established a breach of that clause and was not entitled to access the Salesforce systems to verify usage (paras 103–107). SAP was entitled in principle to damages as an alternative, to an account of the additional fees, and to an order for payment of sums found due; contractual interest did not apply to disputed sums, although statutory interest could be awarded (paras 108–110).
- Counterclaim. SAP had not advanced any infringement claim in the proceedings, so the court declined to grant Diageo’s declarations of non-infringement, observing that any later claim of that kind would be likely to be an abuse of process (paras 112–116). A possible publicity order was left for further submissions (para 117).
The judgment did not fix a sum. As of 2026-09-30, neither BAILII nor the National Archives’ Find Case Law service lists any later judgment between the parties on quantum or on a publicity order, and no official statement by either party on how the claim concluded was found for this article.[2][5]
Significance for software licensing and SAM practice
The decision is a contract case. The court decided what one 2004 agreement, with its own definitions and exhibits, meant; it did not make a general ruling on SAP licensing or on copyright.[1] Points that follow from the judgment itself:
- Definitions govern. The outcome turned on a Named User definition that expressly covered indirect access “via … a … third party … system”, and on an exhibit that priced middleware engines separately from users (paras 28, 45, 79).
- Engine licences do not replace user licences unless the contract says so. Paying for SAP PI by message volume did not license the people whose actions generated the messages (para 45).
- Old metric categories and new channels. The court noted that the 2004 user categories did not anticipate cloud portals, and resolved the gap through the price-list mechanism in clause 6.2 rather than by treating the use as unlicensed or free (paras 84, 90).
- Measurement clauses. Providing the usage reports that the contract required satisfied the verification clause even though those reports did not capture the disputed use (paras 104–107).
For effective license position work, the case illustrates that an ELP for SAP ERP under a legacy Named User contract needs to count people who reach ERP through third-party front ends and integration middleware, and to map them to the contract’s own categories.
In April 2018 SAP published a document-based pricing model for “Indirect/Digital Access”, in which use of the digital core through non-SAP intermediaries is licensed by the creation of nine document types, and offered existing customers the options of keeping their contracts, exchanging licences or converting contracts, with back maintenance for indirect access waived for customers who engaged proactively.[3] At the same time SAP described its audit practice for legacy ERP contracts, including a decision tree under which, other than for SAP Business Warehouse, “indirect static read” does not require a separate licence.[4] These documents describe SAP’s policy; they do not amend individual contracts, and SAP states that they do not modify or supplement a customer’s agreement.[3][4]
Lessons learned
- Count indirect users. The court held that customers ordering through the Connect portal used or accessed mySAP ERP indirectly through SAP PI and needed licences (para 79).[1] A Named User position under a legacy contract should include people who reach ERP through third-party front ends and middleware.
- Engine licences are not user licences. Paying for SAP PI by message volume did not license the people whose actions generated the messages, because the exhibit priced the engine as an addition to Named Users (para 45).[1]
- Definitions decide the result. The outcome turned on a Named User definition that expressly covered access through a third-party system, and the court gave the clear words their plain meaning without regard to commercial value arguments (paras 28, 48).[1]
- New channels still have a price. Where no user category fitted the portal customers, the court applied the price-list mechanism in clause 6.2 rather than treating the use as free (paras 85 to 91).[1] Contracts should be checked for how they price access routes that did not exist when they were signed.