The ruling of a Chancery Court judge at the end of last month suggests that it may no longer be possible to provide software maintenance under an SLA in respect of some licensed software but not all.
In October 2007, Marks & Spencer decided not to pay Data Direct Technologies Ltd for future maintenance under an SLA the parties had signed up to in 1997. The legality of this decision was the subject of a court case for which the judgment was given on 26 January 2009.
The disagreement as to whether money was owed under the terms of the SLA arose because of a paragraph in a Product Schedule to the SLA, which was drafted as follows:
"Maintenance shall be provided in accordance with the Agreement and the Maintenance Schedule appended to the Agreement. At the Customer's option, annual maintenance for the licence extension (including upgrade) contained herein for the period 26th October 2007 to 25th October 2008 shall be 17.5% of £750,000 i.e. of the licence fee paid subject to an annual RPI increase."
M&S tried to argue that, thanks to the words "at the Customer's option", it was only obliged to pay Data Direct if it exercised its option to purchase maintenance. Naturally, M&S said it had not exercised this option.
The judge wasn't swayed by this reasoning. He held that M&S was liable to pay for the maintenance of the licence extension as it had not given the notice required under the Maintenance Schedule to the SLA, which required M&S to give 30 days' written notice of any intention to cancel maintenance. It was common ground between the parties that notice of this nature had not been given by M&S prior to 26 October 2007. What had actually happened was that on 23 October 2007, M&S had sent an email to Data Direct saying that it had decided not to renew the maintenance for 2007-2008. Not a great move from the retail giant.
Although M&S appeared to have a point when it argued that if the intention had been to refer to the right to cancel maintenance words such as "subject to the right to cancel under clause X" would have been more apt than "at the Customer's option", the key point for the judge was that a reasonable person would not have thought that these provisions created an option to elect for maintenance in respect of the licence extension only.
This lawyer is somewhat surprised that the case made it all the way to court. Maybe an out-of-court settlement would have been reached if the other side had needed a few items from the new Per Una collection or a load of new underpants.
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