February 21, 2009, 10:19 AM — A U.S. tool manufacturer says Infor Global Solutions is unfairly demanding it pay retroactive license fees on an ERP system it first licensed in 1987 from SSA Global, which Infor acquired in 2006.
Vaughan & Bushnell Manufacturing of Hebron, Illinois, paid SSA a one-time US$87,000 fee for the nine-module enterprise resource planning suite and used it "unmolested" for more than 20 years, according to a complaint the manufacturer filed earlier this month in US District Court, Northern District of Illinois, Eastern Division.
Vaughan & Bushnell, which makes hammers, pry bars and other hand tools, also received a software upgrade in October 1987. But since then, the company received no maintenance or installed upgrades from SSA and did not hear from Infor until last July, the complaint states.
The current dispute revolves around the hardware being used to run the software.
Initially, Vaughan & Bushnell installed the suite on an IBM System/38 minicomputer, which it replaced in 1993 with an AS/400. In 1999, it upgraded once more, to an IBM AS/400E, according to the filing.
In 1993, an SSA official told the company a "small re-licensing fee" would be required due to the AS/400 upgrade, the complaint states.
But Vaughan & Bushnell did not pay it because its license agreement said it could use the software on "any computer that is a direct and single replacement" of the original one, according to the complaint.
Now Infor is arguing that the hardware upgrade represents a breach of Vaughan & Bushnell's agreement, due to the newer system's additional processing power. But Vaughan & Bushnell contends the original license agreement "places no limits on the processing power of replacement computers."
An e-mail to the manufacturer from an Infor licensing official, which was filed along with the complaint, states that the list price of upgrading from a System/38 to an AS/400 is $1,034,000. But the e-mail does not explicitly demand that Vaughan & Bushnell repay that amount.
An Infor spokesman could not immediately comment on the matter Friday. Infor has not yet filed a response to Vaughan & Bushnell's complaint, which asks that any future legal claims by Infor about the company's use of the software be barred.
Vaughan & Bushnell was "quite surprised" at Infor's sudden demand, according to Richard Assmus, an attorney for the manufacturer.
"This is about a very, very old software license that our client believed they had bought and paid for," he said. "It's our belief that our client's use of the software has been entirely consistent with the license they signed," he said.
Vaughan & Bushnell is happy with the software's performance and isn't interested in upgrading despite its advanced age, he added.
Assmus attributed Infor's move to the recession.
"I think any company, including Infor, is looking for additional streams of revenue," he said. "Contacting old customers about allegedly overdue fees is one way of doing that."