Gag Rule: Software Vendors' Clauses 
Respected analyst and my friend, Forrester Research's Ray Wang, recently warned about "gag rule" clauses creeping into software contracts on his blog, A Software Insider's Point of View.
Important note: while our monthly newsletter normally addresses Oracle licensing matters, the content of this newsletter doesn't point at Oracle -nor imply Oracle directly or indirectly- but rather to other players in the software industry.
While no stranger to software licensing negotiations, we have come across our fair share of software vendors trying to insert language beneficial to their cause - but, then again, who wouldn't? According to Ray Wang, software vendors are trying to limit third-party advisors and restrict communications about their products.
From Ray's blog:
- Limits on third party negotiation support. Licensees limited in their ability to discuss contractual terms with others. On top of this, discussion of contractual details require the vendor's written permission. The impact: Legal advisers, contract specialists, and other interested third parties must obtain permission. A vendor recently banned a licensee from working with a contract specialist citing confidentiality.
- Restrictions on freedom of speech. One vendor had the audacity to include legal language to restrict a client vendor from disclosing details about bugs, defects, and contractual breaches with the press, peers, and user groups. The impact: Licensee prevented from working with peers and ecosystem members to resolve technical issues and compare pricing options. In addition, the customer now lacks the proper check and balances in pressuring a vendor to deliver on promised capabilities or address severe security issues and can not go to the media as a last resort if needed.
Before you sign any software contract, especially one that limits your ability to seek outside counsel or even to speak to your peers, remember that you can negotiate the contract. Our recommendation would be to:
- Ensure that your own house is in order first - from your software compliance to understanding what your objective with the particular vendor is and how you plan to deal with the company in the near and long-term. This way, you are dealing from a position of strength.
- Ask your vendor why the "gag rule" language is in there. It may be as simple as they do not want to risk disclosing their proprietary information or intellectual property to an unknown third party. In this case, it's easily solved through non disclosures agreements. There may be additional solutions to resolving any clause as long as you understand that reason behind it.
- You have a right to counsel - legal or otherwise - on any contractual agreement. Do not give up this right.
- If the vendor is not willing to lift the language, negotiate to have your consulting firms included under a list of "approved consultants" within the contract.
Most software vendors are reasonable and want to work with you. Again, this is not about Oracle but about other software vendors in the industry.
|
|
****************************************************************************
We'd like to hear from you
What would you like to hear about? We're pulling together our 2009 webinar events and we'd like to learn what you think. Take this survey and we'll enter you in a raffle drawing for a $50 Starbucks gift certificate. Click here
|
