Zantaz Enterprise Archive Solutions v. MidMichigan Health is a United States federal lawsuit between the licensor of the NearPoint email-archiving software and MyMichigan Health, a non-profit health system. After MyMichigan reported in an audit inquiry that it was archiving 12,930 email accounts with 7,473 licences, Zantaz (formerly Capax Discovery) claimed payment for the 5,457 extra accounts at USD 40 each. In March 2024 the Eastern District of Michigan refused to dismiss the claim, holding that Zantaz had plausibly alleged both that the click-through end user licence agreement (EULA) was a contract and that each licence covered only one mailbox.[1]
Background
NearPoint was originally owned by Autonomy. In April 2014 MyMichigan, which then had 4,000 NearPoint licences, hired Capax to support them. In July 2014 Capax acquired the exclusive right to license NearPoint from Autonomy, together with Autonomy’s NearPoint support contracts. MyMichigan then bought more licences and support directly from Capax: 1,500 in September 2014, 1,000 more later, and 650 in March 2018, for a total of 7,150. In April 2019 it bought 323 more, bringing the total to 7,473, but did not renew support.[1]
Users downloading NearPoint had to accept the EULA before installing and activating it. The EULA provided that use “is limited to only as many computers, devices, number or users, and/or in such configurations or other restrictions as expressly permitted by [the licensor] as set forth in the applicable [Product Order Form]”. It also let the licensor “audit Licensee compliance with the Software license terms” and required the licensee to pay any underpayments an audit revealed. Zantaz alleged that once licensed, users could install and activate the software on further mailboxes by repeating the installation, so that only an audit would reveal over-use.[1]
The dispute
Zantaz alleged that it first believed MyMichigan was over-deployed in March 2019, when MyMichigan asked for the 323 additional licences as a “true-up”, and that it learned the extent in April 2021, when MyMichigan answered its audit inquiries by reporting 12,930 archived accounts. It demanded payment for 5,457 licences at USD 40 each. When MyMichigan did not pay, Zantaz sued in New York state court in September 2022 for breach of contract and, in the alternative, unjust enrichment. The case was removed to the Southern District of New York and transferred by stipulation to the Eastern District of Michigan in April 2023.[1]
MyMichigan moved to dismiss, arguing that the unsigned EULAs were not contracts, that nothing in them limited a licence to one mailbox, and that a four-year limitation period under the Uniform Commercial Code had expired.[1] The magistrate judge recommended dismissing the contract claim because no document cited by Zantaz said that one licence equalled one mailbox, while letting the unjust enrichment claim proceed.[2]
Decision or outcome
On 2024-03-26 District Judge Thomas L. Ludington sustained Zantaz’s objection and denied the motion to dismiss in its entirety.[1]
The licence metric. The court found the link in the EULA’s first section, which tied permitted use to the product order form. The September 2014 order form referred to “additional mbox licenses”, which plausibly meant that each licence covered one mailbox. The court said the connection was made “by the most modest of threads”, but that this was enough at the pleading stage, and that the parties’ course of dealing, including repeated bulk purchases and the 2019 “true-up”, corroborated it.[1]
Click-through assent. Under both New York and Michigan law, clickwrap agreements are enforceable where the user can read the terms and accepts them unambiguously. Zantaz alleged that users had to accept the EULA to complete installation, and MyMichigan’s own report of more than 12,000 archived mailboxes “plausibly suggests Defendants manifested their assent to the EULA’s terms over 12,000 times”.[1]
Limitation. Even if the four-year period for sales of goods applied, the record did not show when the first unlicensed use occurred, so dismissal was premature. In a footnote the court said New York’s six-year general period likely applied, because the EULAs governed the software’s use rather than its sale and stated that no title passed.[1]
Later proceedings. No later published decision was found. The public docket listing showed no termination date when checked on 2026-10-02.[3]
Significance for software licensing and SAM practice
The case illustrates a common gap in licence records: the EULA says use is limited to what the order form permits, and the order form gives the metric only in a product description such as “mbox licenses”. It also shows how a customer’s own statements, a true-up order and an audit response, can supply the evidence for an over-deployment claim, and how click-through acceptance by individual employees can be attributed to the organisation. The decision is at the pleading stage and does not decide what MyMichigan owed. See software licence audit and true-up.[1]
Lessons learned
- The licence metric may be defined only in order forms or invoices, not in the EULA; keep every order document with the licence record. The court found the per-mailbox limit plausibly stated in an order form for “additional mbox licenses”.[1]
- Click-through acceptance by employees during installation can bind the organisation, and repeated installations can be treated as repeated assent. The court treated each installation as a plausible manifestation of assent.[1]
- A true-up purchase can later be cited as evidence that the customer understood the metric and knew it was over-deployed. The 2019 “true-up” order was relied on as corroborating the metric and as the date the licensor first suspected over-use.[1]
- Answers given in an audit inquiry can become the basis of the vendor’s claim; verify counts before reporting them. The claim was calculated from MyMichigan’s own report of 12,930 archived accounts.[1]
- Dropping support does not end audit exposure for perpetual licences. MyMichigan did not renew support in 2019, and the audit inquiry and claim followed.[1]