September 16, 2025

Then the Call Came Out of the Blue… $500K or Else!

A European defense contractor had been a loyal customer for years, diligently paying annual support and maintenance for their content management system.

Then came the accusation:
“You’ve deployed more licenses than you purchased. Our estimate: $500,000.”

The customer — who had licensed the software through a reseller — thought they might be slightly over.
The vendor calculated a 10x difference.

The Setup

The software was licensed in the most complex way possible:

  • Some components by instance

  • Others by CPU (including per-core)

  • Others still by named users

Even with definitions in place, this would have been difficult to measure. Without them, it was chaos.

The Reveal

What made the situation worse was the missing paperwork.

  • Years earlier, the customer purchased through a reseller.

  • The reseller never delivered the executed EULA with definitions to the customer.

  • The vendor never required executed copies back from the reseller.

  • The only record the vendor could find in its archives was a redacted order form.

  • The reseller? Out of business for years.

  • The $500K claim was based on incidental support-call data — never validated, never confirmed.

What should have been handled with calm discovery instead escalated into an adversarial demand.

The Standoff

Letters flew between procurement and compliance, then between lawyers.
Each side stretched arguments to the limit.
Hundreds of hours were lost. Trust eroded.

The Resolution

Eventually, both sides retreated.

  • The customer paid a token settlement — far less than $500,000.

  • The vendor issued a clean, fully executed EULA with proper definitions.

  • The customer received all the licenses they needed.

No lawsuit. No new business. The relationship was drained dry.

Lessons Learned

For Vendors

  • License models must meet four tests: clear, measurable, controllable, and persistent. This one failed all four — because there was no documented, executed license model.

  • Update click-through EULAs with current definitions. They may be the only fallback when paperwork is missing.

  • Don’t outsource risk. Require resellers to return fully executed agreements, even if redacted.

  • Don’t jump the gun. Support data can surface questions, but it shouldn’t be treated as audit evidence. Lead with discovery and communication.

For Customers

  • Always get the grant. Don’t rely only on order forms. Make sure you have a fully executed license agreementwith definitions.

  • Establish governance. Assign responsible owners for license management.

  • Fully review and document. Ensure your team understands the license metrics, capture any questions in writing, and request written explanations from the vendor when possible. Even if this communication sits outside the contract, it may prove invaluable in future negotiations if disputes arise.

  • Engage early. Resolve questions before they escalate into disputes.

  • Don’t dismiss “minor gaps.” Even small overuse can balloon into conflict.

Practical Checklist for Customers

To avoid falling into the same trap, here’s a 5-step checklist every customer team should follow:

  1. Secure Fully Executed Agreements

    • Always obtain fully executed contracts and EULAs with metric definitions.

  2. Centralize Contract Storage

    • Keep agreements, amendments, and renewals in one accessible repository.

  3. Review and Educate

    • Walk your team through the license metrics and document questions.

    • Push vendors for written explanations where clarity is missing.

  4. Track and Govern

    • Assign ownership of license tracking and usage monitoring.

    • Document deployments against agreed metrics.

  5. Maintain an Audit File

    • Keep correspondence, vendor clarifications, and system diagrams.

    • Even if outside the contract, this record can be invaluable in future disputes or negotiations.

Closing Thought

This case wasn’t about bad actors. Both sides were experienced professionals. Yet the absence of clear definitions, poor contract hygiene, and a hasty escalation turned a manageable issue into months of wasted effort.

The dollar settlement was small. The opportunity cost was massive.

📊 Vendors: Are your reseller agreements watertight, and do your license model definitions flow down enforceably to their end users?
🔍 Customers: Do you truly know — and have fully executed agreements covering the definitions that govern your usage?

#SoftwareLicensing #Compliance #Contracts #SoftwareAudit #RevenueRecovery #SaaS