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Gérald Sadde

Gérald Sadde

SHIFT Avocats
Partner Lawyer & Doctor in law

Software licence agreement in France : audit practice and new contractual law

Starting on the 1st of October, the contract law amendment should significantly impact the software license's contractual balance between publishers and users, or it should at least strengthen the path taken by the judges on the use of software licence's audits recently.

Indeed, over the last years, the auditing of the correct use of software licenses subscribed is causing high issues between publishers and users. The so called “Licenses”, “End User License Agreement” or “Terms Of Use” for software as a service (SaaS) are hard to read and require advanced skills to understand their meaning. Despite all efforts, the ambiguity and looseness of the terms still remain a problem for the user.

Even though the practice of audits by publishers are known to be offensive, they are yet legal. Publishers often take advantage of their rights and require very expensive adjustments from users, amounts rising up to several million of euros.

Over the last years many publishers, such as Axa, Carrefour or AFPA, were tempted to abuse users. To respond to that, through three successive decisions in 2014(*), trial judges from Paris dismissed the applications of large software sellers (such as Oracle and Actuate ) due to a poor specification of the audit scope of software licenses agreements, whose terms were not clearly exposed.

Even though the users are satisfied with the judgement, it should be recalled that these recent cases result from first instance decisions and therefore are not yet reliable.

However, the contract law amendement has introduced new principles that should be helful to users and prevent publishers from misuing theirs rights. Such principles are :

- The duty for the parties to negociate and execute the contract in good faith;

- The duty to provide information without any limitation or restraint during negociation of the agreement;

- The enforcement of the theory of foresight which now allows the judges to review or end a contract when a change in unpredictable circumstances makes the contract enforcement excessively onerous for one party;

- The invalidity of clauses creating a significant imbalance for the seller in adhesion contracts.

 

The legislator wishes to avoid this kind of contentious issue by establishing better transparency between the parties. Therefore more detailed wording will definetely help to clarify reading terms and mainly specify the software license's framework.

In the meantime, pending a stable ruling, both parties will have to take into account these new rules in order to ensure a peaceful contractual relationship throughout the license agreement standing.

 

Gérald SADDE – Avocat au barreau de Lyon - Associé SHIFT Avocats – Docteur en droit gs@shift-avocats.com - http://www.shift-avocats.com/ - @SaddeGerald

 

*Tribunal de Grande Instance of Paris - 2014-05-07, Actuate vs AXA REIM Tribunal de Grande Instance of Paris – 2014-06-12 – Oracle vs Carrefour ; Tribunal de Grande Instance of Paris - 6 novembre 2014 - Association Nationale pour la Formation Professionnelle des Adultes vs Oracle.