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User Licensing – Which is right for you?

There has been many questions on Concurrent Users vs Named Users licensing model. For example, Arbutus has both named users, and concurrent users, while Galvanize, licensed their analytics subscription with named user model only.

We have also been hearing from customers that the local Galvanize reseller shared that Galvanize named users licensing is the same as concurrent user model. This has created so much confusion, and we decided that it’s time to help our customers get clarity on what they are buying (or legal implications they may be getting into).

User Licensing:

A user license is a legal agreement between the software provider and the customer that establishes the client’s right to use the software and which features they can access. These are termed End User License Agreements (EULAs), and if this contract isn’t signed, the client can’t access the proprietary software at all. These licenses agreement generally stipulate how the software may be installed, used, and distributed within the company. Let’s drill deeper to understand the meaning of Concurrent Users, and Named Users. To simplify the explanation, I have created the table below:

Which License model is Right for You?

How a user license can best support a normal workday for a company is often the deciding factor when choosing between license types. In fact, with software companies like Arbutus Software provides several different types of user licenses, and allowing the customer to mix the types they own and utilize, making allocation very flexible.

A common question was: “What if I bought Galvanize software which is a named user licensing, and currently using the software as a concurrent user model based on what we gather from their reseller/distributor?”

We have hear of some companies who have bought a software under named user licensing model, but use it as concurrent license approach. E.g. Creating a generic email account, and share this account and password with the group.

To bring to reference, we take an example as stated in Galvanize’s Master Subscription Agreement point 5.1, “Sharing or pooling a Named User’s access among multiple individuals to allow for temporary use by multiple users, is strictly prohibited.

So whether this was done intentionally or unintentionally due to mislead info from the resellers, we need to bring the above action to your attention: THIS IS A VIOLATION OF LICENCING AGREEMENT!

Technically, this is an exploit of the system loophole from a named user licensing into a concurrent licensing. This is a violation of a licence and effectively means you are in breach of contract between the licensor and the licensee (yourself). And thru this approach, there is no audit trail of what have the logged-in user done to your audit analytics. So it’s going to be a lose-lose situation for you.

The remedies available to the licensor will depend on the extent of the breach, and the extent of the loss caused to the licensor as a result of the breach. Some or all of the following will apply:

  • The licensor will be entitled to whichever remedies the EULA specifies in the event of such a breach.

  • The licensor probably will be entitled to stop the licensee’s use of the licensed product; if the licensee does not stop, then the licensor may be able to obtain a court order prohibiting such use.

  • Furthermore, the licensor may be entitled to a court-ordered award of monetary damages.

  • In an extreme case, the breach may result in criminal liability.

While there may be financial liability for breaching software licensing, the bigger impact is brand reputation, which has been seen as one of the highest strategic risk area for many companies. This ranks above other high visibility factors like business model, competition, and the impact of economic trends.

The need for an impeccable and ethical reputation is paramount. If you know you are in breach, the best way to minimise your liability is to immediately stop whatever you are doing that is breaching the licence terms. How do you prevent or deal with software licensing non-compliance? Below are some of our recommendation steps:

  • Understand User Licensing Definitions

  • Be clear on contract terms and penalties

  • Maintain policies and procedures for compliant software usage

  • Keep detailed accurate records of licensing and usage (not just verbal. That’s what he said doesn’t count)

  • Establish a Single Source of Truth for Software License Compliance

  • Conduct Regular internal compliance audit

  • Bring in specialist help when required

Unsure about which user license type is best for your company, or not sure whether are you in breach of your licensing agreement with your technology vendor? You’re not alone in your confusion. We are just a phone call or email away from you, to discuss some of the biggest differences between your options and help you get more clarity.

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