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Interpretation of a software licence: access a use-ful decision

Jason Rix

What do the terms “use” and “access”, common in software licence agreements, actually mean in context? The High Court has recently considered this question in SAP UK v Diageo.

SAP had licensed to Diageo a software package providing centralised management of several business functions (operations, HR, etc.). The licence fee payable was calculated by reference to usage levels of the system by “named users” (being those who were authorised to access the software). Diageo, together with a rival of SAP, had developed further software which communicated with the underlying database using the communications layer of the software package. Diageo therefore argued that its own software only “interact[ed]” with, and did not “use” or “access” (directly or indirectly), SAP’s software.

The terms in dispute were not defined under the licence. The court therefore applied the familiar principles of interpretation to determine their meaning. The court found that the plain and obvious meaning of the words (in their documentary, factual and commercial context) was, in the case of “use”, to apply or manipulate the software and, in the case of “access”, to acquire visibility of or connection to the software. Diageo users had done both of these things by use of the further software, so Diageo was in breach of the terms of the licence. SAP was entitled to additional licence fees or, alternatively, damages for breach of contract (subject to proof of loss).

It does not seem that the court was asked to consider this issue on anything other than a contractual basis. It is interesting to ponder whether Diageo would have gained any traction by arguing the relevant terms should be interpreted with an eye on the relevant copyright legislation, and whether Diageo would have in fact infringed SAP’s copyright if outside the scope of the software licence.

Comments published on Compact Contract do not necessarily reflect the views of Allen & Overy or its clients.

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