Q: How negotiable are other Microsoft agreements, like re-seller agreements for cloud etc?

A: We have found Microsoft to be fairly inflexible in negotiating re-seller agreements with the exception of very large clients involving significant revenue streams. Many of my clients resell Microsoft and we frequently request changes. Microsoft’s flexibility seems to be tied to relationship size in dollars. Much of our work in this area is focused on helping clients comply with the contractual obligations of the agreement and making sure the required terms are included in customer contracts.  

Q: What authority does Microsoft have to conduct the audit it requested in the letter I received?

A: The Microsoft Business and Services (MBSA) agreement contains a section called "Verifying Compliance" that gives Microsoft the right to engage with a third party auditor to conduct an audit of your use of all the Microsoft software licensed under that agreement. Many Microsoft licensing programs, including the Enterprise Agreement, Enterprise Subscription, and SPLA, are subject to the terms and conditions contained in the MBSA.

Q: What will happen if I ignore the request to cooperate in the audit process?

A: If you do not permit Microsoft to conduct its audit, your organization is arguably in breach of your agreements with Microsoft. In the event of a breach, Microsoft can terminate your rights to use any Microsoft software that was purchased under the master agreement (MBSA). At that point, all Microsoft software would have to be uninstalled, or you could be sued for infringing Microsoft copyrights, with damages of up to $150,000 per violation.

Q: What kinds of information am I required to share with Microsoft and the third party auditors during the audit?

A: If you received a letter regarding a "compliance audit of your Service Provider License Agreement," you will be asked to share detailed network infrastructure, client billing, and server access management information. The auditors will ask for as much information as they can get away with.

Q: What should I expect from the audit process?

A: Microsoft and its auditors will initiate the audit by requesting your organization to respond to an initial data request. Once they have received your answers, they will likely follow-up with an on-site audit that may take a week or longer. Experienced counsel can help to reduce the disruption to your business by arguing for remote auditing procedures and requiring Microsoft and their auditors to keep the scope as narrow as possible.

Q: Are there any risks in providing the information requested in a Microsoft Licensing Compliance Review?

A: Providing answers to a Microsoft Licensing Compliance Review document can expose your organization to an unwarranted liabilities or scope expansion. It is highly recommended to have an attorney familiar with your rights and obligations under all of your Microsoft agreements carefully review these responses before turning the information over to Microsoft. Many of our clients have cooperated in good faith only to be suprised by Microsoft's interpretation and substantial monetary demand.

Q: What are my options for complying with the audit request?

A: You can either use your internal staff, retain the services of an outside IT vendor, or use the services of an experienced law firm such as Scott & Scott, LLP.

Q: What are the benefits of an attorney-conducted software audit?

A: Unlike internal audits and IT-vendor audits, attorney-conducted audits are protected by the attorney-work-product and attorney-client privileges. This means that the audit results typically are exempt from disclosure in the event of litigation and therefore cannot be used against you or your company in court.