Last week, the Borland community Web site was flooded with e-mails and news articles submitted by users who are angry about an audit clause that had been inserted into Borland's software licensing agreements. Borland customers used this forum as a place to express dissatisfaction with the clause, and concerns about its privacy implications.
The terms of the audit clause state:
During the term of this license and for one (1) year thereafter, upon reasonable notice and during normal business hours, Borland or its outside auditors will have the right to enter your premises and access your records and computer systems to verify that you have paid to Borland the correct amounts owed under this License and determine whether the Products are being used in accordance with the terms of the License. You will provide reasonable assistance to Borland in connection with this provision. You will agree to pay the cost of audit if any underpayments during the period covered by the audit amount to more than five percent of the fees actually owed for that period.
The initial furore has settled down to a mild hum, as Borland publicly admitted to a licensing mistake, that saw the audit clause erroneously inserted into single-user licensing agreements.
A statement issued by Borland in response to the issue claimed: "The new end user license agreement mistakenly contains language that is specific to enterprise volume customers. This language is industry standard boilerplate for enterprise licenses, but it should not have been included in the individual product licenses."
While single-user customers have been comforted by this knowledge, IT professionals have continued to express reservations about the clause.
Dale Fuller, Borland's global CEO, has rushed to address these concerns and clear-up some remaining confusion.
-The goal of Borland is not to be draconian," Fuller told ZDNet Australia.
"Borland does not intend to enter into developers homes and access their computers", rather it intends to "ensure companies have the correct [audit] mechanisms in place" and to maximise the customer's "ability to use products while remaining compliant" with Borland's licensing terms, according to Fuller.
Targeting corporate pirates
Compliance reduces the amount of illegal or pirated copies of Borland software in the market, a factor which makes the job of the Business Software Association of Australia (BSAA) a little easier, according to its chairman, Jim McNamara.
McNamara believes the audit clause could assist in reducing piracy, explaining that it is a way "the company can check if they have the right number of licenses".
According to McNamara, the clause is one "we will see more of" in licensing agreements, because piracy is still at high levels in Australian companies.
"The largest area of piracy is still corporate piracy...where companies, intentionally, or by accident, use or copy more software than they have licenses for," says McNamara.
The audit clause acts as a preventative measure for companies intentionally creating pirated software copies, and is a helpful checking mechanism for those who do not have an auditing system of their own in place, according to McNamara.
Borland's Fuller agrees, explaining that the audit clause is mainly a preventative measure. During the three years itâ€"or a version of itâ€"has been in place, Borland has only enforced the clause on one occasion.
Referring to the single case, in which Borland found it necessary to visit the premises of a customer for auditing purposes, Fuller says: "We absolutely knew they were pirating the software". Upon entering the enterprise, the auditors "found stuff" and the enterprise was forced to "pay up", says Fuller.
BSAA's McNamara claims that licensing agreements such as Borland's, can often be "helpful" for companies lacking strict auditing systems.
"Our preference would be if companies did their own [auditing], unfortunately they don't, so you will see more companies like Borland having audit clauses in their licensing agreements," says McNamara.
Standard industry language
The initial outrage concerning the audit clause caused some confusion for Fuller, who defends it as "standard industry language."
Fuller maintains that many other organisations trading with enterprise customers already have similar clauses negotiated into their licensing agreements.
"We do the same thing with most Australian companies that provide us with software that we bundle, or that we use internally.... Companies like Telstra provide this; they actually demand it," says Fuller.
Fuller accredits much of the initial and remaining controversy surrounding the audit clause to single-license customers who are responding to the licensing mistake, made by Borland. He claims that enterprise clients, for whom the clause is intended, are aware of, and accept, the audit clause as part of their licensing agreements.
According to Fuller, Borland does "not expect to lose any customers" as a result of the insertion of the clause.
Fuller says that the clause is not found in every enterprise licensing agreement, but is negotiated on a 'per case' basis. "Some [companies] refuse, and that is part of the negotiation process...And there are some that we refuse to sell to, unless they sign."
Not a privacy issue
Complaints that have centred around the potential privacy implications of the audit clause have been dismissed in part by the Office of the Federal Privay Commissioner.
The Office issued a formal response, which did not raise or validate any privacy concerns. The response merely highlighted the need for Borland to comply with existing privacy legislation.
"I would...encourage Borland, its Licensees and auditors assure themselves that they meet all the requirements of the Privacy Act 1988," said Malcolm Crompton, Federal Privacy Commissioner.
