Quest Software are suing Nike, according to court documents filed on April 24, 2018. This is another case of an audit shortfall dispute making its way to the courtroom.
Quest Software are perhaps best known for their Toad database management tools. Founded in 1987, the company became Dell Software in 2012 – but this entity was then sold in 2016, to Francisco Partners and Elliott Management, and rebranded as Quest Software.
Francisco Partners are a Private Equity firm that focuses on the technology sector – and were involved with Attachmate until the MicroFocus acquisition in 2014. Attachmate have a reputation for aggressive auditing practices.
In January 2017, Quest audited Nike and found they had deployed software “far in excess of the scope allowed” – both in terms of devices with Quest software installed locally and also devices where Nike “provided the ability to access or use” the software.
Additionally, Quest determined that Nike “had used pirated keys to bypass the Quest License Key System and made unauthorized copies of certain Quest Software Products”.
Quest claim that “customers must affirmatively seek out and obtain pirated keys on download sites known to traffic in counterfeit or illegally downloaded intellectual property, such as BitTorrent” – putting forward that this can’t have been an accident.
The court documents state that “Nike has refused to purchase the additional licenses necessary to bring its deployments of the Quest Software Products into compliance”.
Quest are claiming relief for:
Quest allege that Nike have installed too many copies of the software and have also allowed too many devices to access Quest software. Nike’s refusal to pay for the shortfall is taken to be a continued breach of the agreement signed in 2001.
Quest claim that Nike “made unauthorized copies, installations and distributions of Quest Software Products”, that the infringement was wilful and that the “remedy at law” itself is not “adequate to compensate Quest” for injuries inflicted by Nike. This suggests Quest believe that money alone will not be adequate payment and could seek an order of specific performance too – perhaps an order that Nike stop using Quest software.
The Digital Millennium Copyright Act (DMCA) states that “no person shall circumvent a technological measure that effectively controls access to a copyrighted work” – and Quest claim that Nike, by using pirated keys, circumvented the Quest License Key System.
Conversations in the ITAM Review forum show there can be confusion when it comes to Quest keys:
“The details held within the license keys themselves can be inaccurate, a large number just show “Toad for Oracle”, but do not correctly show edition/ add-ons etc.”
Additionally, Quest keys need to be reclaimed from old devices prior to being re-used – meaning record-keeping and proper hardware asset management are key. If this re-harvesting hasn’t been policed properly over the past 17 years, this could lead to several installations being classed as illegitimate by Quest…however, I’m sure Nike would disagree that they need to re-purchase licenses.
The forum post also says:
“Beware trial keys, many turn out to be pirate”
Perhaps this is where part of the issue is to be found? It may be that trials installed in this way have been left in place beyond their 30-day limit and are being viewed as full installations during the audit.
It seems unlikely that a company of Nike’s size and stature would purposefully seek out illegal copies of software. Could it be that a rogue (or naïve) user with admin rights has brought much of this to bear? Is this situation perhaps down to a combination of poor records, a lack of hardware asset management and lax policies around trial software?
If Nike are refusing to purchase licenses to settle the shortfall, they must have a reason. Is it that they believe they are already fully licensed and this shortfall is based on errors in Quest’s records – will the Dell acquisition, and subsequent sale, have had a detrimental impact on the vendor’s historical records since 2001? Perhaps Nike have taken umbrage with what they feel are Quest’s unfair policies around keys and dormant trial software?
Is this a case of a vendor using court proceedings to intimidate a customer and push for a settlement on the shortfall? It will be interesting to see how this case progresses – but it seems there are others. From what I can see, at least 3 other similar cases are underway between Quest and their customers:
Does this suggest the start of a more aggressive audit strategy from Quest Software? If so, it’s probably advisable to take a look at what Quest software you have within your estate.
Quest vs Nike Court Document – https://torrentfreak.com/images/nikepirate.pdf
ITAM Review forum – https://forum.itassetmanagement.net/2284961/Quest-Software-Audit