Jenner & Block

Client Alert: “Attention SAP Customers: Are You Complying With Your License? Check Before SAP Brings You To Court”

For decades, SAP software has been a core information technology (“IT”) component in many companies. Recently, companies are using emerging technologies—such as cloud computing, robotic process automation, and artificial intelligence—to further leverage their SAP software in innovative ways.

But innovating can be costly, as one of SAP’s customers just discovered. SAP sued the customer in United Kingdom High Court, alleging that the company’s new cloud-based customer service solution violated SAP’s license. On February 16, 2017, the court awarded SAP up to £54 million in damages. The UK dispute involved a long-standing ambiguity in SAP licensing—a concept known as “indirect use.” SAP’s licenses do not typically address whether indirect use of SAP’s software is permissible. In the UK case, the defendant’s call center representatives initially accessed SAP’s software directly to manage customer orders. Later, however, the defendant shifted to a third-party cloud product that allowed customers to manage their own orders and, allegedly, to access SAP’s software indirectly. 

While the UK case is unlikely to be the last word on indirect use, the case highlights the substantial legal risks associated with indirect use. That is especially true as emerging technologies evolve and SAP’s legacy licenses are overlooked. Like the defendant in the UK dispute, companies are increasingly utilizing cloud solutions that may be indirectly linked with SAP’s software. Similarly, companies are increasingly deploying robotic process automation and artificial intelligence solutions, which may also be indirectly connected to SAP’s software. These innovations can raise new uncertainties as to SAP license compliance.