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Expected 2012 contract issues: IP clauses, licensing models



Tech companies that provide business management software might be wise to expect intellectual property clauses to be an issue in contract negotiations in 2012.

TechTarget recently spoke to SAP customers about their wishlists for 2012, and some customers expressed dissatisfaction with contract language related to intellectual property liability.

Don Whittington, CIO of sugar producer Florida Crystals, said SAP's standard contract language makes customers liable if SAP is sued for IP infringement by a third-party vendor. Whittington told TechTarget this contract language should be simplified and liability reassigned.

"From our standpoint, every contract we've had with major software providers, they've had a clause that holds us harmless from [their potential] infringement on third-party vendors' intellectual property," Whittington told the source.

Other customers told TechTarget they'd like to see SAP alter its software licensing models.

Rick Williams, director of software engineering for Ace Hardware, said SAP's licensing structure meant Ace was going to be charged as a superuser for deploying a certain web portal to access invoices, even though only a few people at each Ace store needed access to the site.

Smaller tech companies offering services similar to SAP might benefit from keeping this customer feedback in mind when drawing up software contracts and licensing agreements. Given that SMB Group predicted small and mid-sized businesses are likely to have diminished revenue expectations in 2012, tech companies might also get a competitive edge by building in as many value-added components as possible to their standard software contract templates for 2012.