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3M, Infor in legal battle over millions in software fees

Chris Kanaracus | Nov. 29, 2011
In a case that hinges on interpretations of software contract language and the respective rights of customers and vendors when it comes to third-party support organizations, 3M wants a court to declare that it doesn't owe Infor millions of dollars in fees.

This year, Infor conducted an audit of 3M's software usage. In the process, Infor asked whether 3M had "outsourced the day-to-day operation and/or maintenance of the Infor software," the suit adds. 3M responded that it had, and identified Cognizant as the provider.

"The audit did not ask whether 3M had outsourced management of the software," it adds. "In fact, 3M has never outsourced management of the software."

In July, Infor sent 3M a letter claiming it had breached a confidentiality clause in the companies' contract due to Cognizant's involvement, and demanded $20,923,526 in exchange for giving Cognizant access rights, according to the suit. Infor later dropped that amount to between $17 and $18 million, it adds.

Earlier this month, 3M dissolved its contract with Cognizant "in an effort to maintain its relationship with Infor," believing that based on "previous representations by Infor" doing so would resolve the companies' differences.

Yet on Nov. 10, Infor "made yet another demand that 3M pay fees based on an unexplained 'analysis' for 'back usage' by Cognizant," it adds. In this instance, Infor asked for about $7.8 million but said it was willing to discount that amount to roughly $5.9 million, according to the suit.

3M is seeking a declaration that Cognizant "did not perform the 'primary function' of 'day-to-day management and support responsibility of the software,'" and therefore 3M is not in breach of its contract with Infor, it states.

The conglomerate also wants a declaration protecting it even if Cognizant did perform such activities, as well as attorneys' fees and other relief.

But the case could end up being settled before trial.

"Infor has a reputation for service and support excellence, and 3M is a valued Infor customer," said Infor spokesman Dan Barnhardt in a statement. "We are currently working with 3M to bring this matter to a speedy and satisfactory resolution. All software agreements necessarily restrict access to and modification of source code by third parties to encourage and protect substantial investments in continuous innovation."

3M's complaint does not mention source code modification. Attorneys for 3M did not immediately respond to a request for comment on Monday.

While it's impossible to know exactly what transpired between the companies on this front without more information, vendors have no legal claim or control over any customizations created by a customer that don't touch the underlying source code, said analyst Ray Wang, CEO of Constellation Research.

 

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