Warning: IBM Casts a Wide Net Targeting Customers in Software Compliance Audits

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IBM has undertaken what may be the most comprehensive software audit program in history. “I understand that IBM is planning to audit all of its customers.” says Robert J. Scott, Managing Partner of Scott & Scott, LLP.

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Our clients have begun receiving letters from IBM Software Compliance demanding cooperation with a ’routine assessment’ of the client’s deployment of IBM software. While most major publishers have compliance programs, I am not aware of any initiatives involving all customers without prior suspicion of software licensing noncompliance.

IBM has begun what appears to be the most comprehensive software compliance initiative in history. According to Robert J. Scott, Managing Partner, of Scott & Scott, LLP, says: “Our clients have begun receiving letters from IBM Software Compliance demanding cooperation with a ’routine assessment’ of the client’s deployment of IBM software. While most major publishers have compliance programs, I am not aware of any initiatives involving all customers without prior suspicion of software licensing noncompliance.”

According to Scott, IBM employs the services of Deloitte, LLP to conduct the audit and states that it is performing these audits to:

“confirm licensing requirements, determine actual deployment and usage, verify compliance with IBM applicable agreements and enhance IBM’s understandings of the challenges… in managing their IBM software deployments.”

Software audits can entail significant financial exposure, and the software products at issue are mission critical and involve high switching costs. “In IBM software audits, the dollars involved can become very significant when considering that IBM may seek compensation for any unlicensed software discovered as well as back maintenance on that software for up to two years.”Scott said.

Scott recommends that a company targeted by an audit of this type should seek experienced counsel to indentify and defend its rights under the software license agreements. There may be significant rights pertaining to the audit contained within licensing agreements that could strengthen the target company’s position throughout the audit process.

About Scott & Scott, LLP (http://www.scottandscottllp.com) (http://www.softwareaudit.com) is a leading law and technology services firm representing businesses in matters involving software licensing. Scott & Scott’s legal and technology professionals provide software audit defense and software compliance solutions, all protected by attorney-client and work-product privileges.

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Anita Scott
Scott and Scott LLP
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