Microsoft heads off rental scheme revolt

January 1, 1999

Microsoft is attempting a swift rewrite of a software rental contract that United Kingdom academic negotiators regarded as "legally dangerous".

The software vendor was unprepared for the revolt that erupted after November 2 when it introduced Campus Agreement, a rental scheme launched a month earlier in the United States. Under the agreement, institutions pay an annual rental fee for application programs including Microsoft Office. The price includes upgrades to applications and Windows operating systems.

Many UK institutions prefer the existing Select scheme, which allows them to buy software at a discount and then own it outright.

The Combined Higher Education Software Team and the funding bodies' joint information systems committee immediately voiced fears that if major institutions switched to Campus Agreement, Microsoft would take the opportunity to kill off Select.

The long-term future of Select remains uncertain. The master licence for Select 4 (the fourth Select scheme), held by Chest on behalf of the UK academic community, will expire on November 30, 1999. Chest wanted Microsoft to sign a contract immediately, committing it to a two-year extension when the existing contract expires. But Microsoft is unwilling to sign anything that guarantees Select for more than two years ahead. Microsoft's education group manager Mark East said: "I am happy to sign a new Select agreement tomorrow, but it would only be for two years." The company's US website maintains that "As long as customers require Select, Microsoft will make it available."

The cost of Campus Agreement is calculated on the number of staff in the department or institution, whether they use the software or not. Microsoft says Campus Agreement is designed for institutions that wish to standardise on its software.

The Universities and Colleges Information Systems Association says Campus Agreement will work out cheaper for some institutions and more costly for others. It has complained that institutions with fewer than 500 staff are excluded from the scheme.

UCISA and Chest also have legal worries about the terms of Campus Agreement. Chest software team manager Mark Summerfield said: "The US universities are signing up to something that we in the UK consider legally dangerous. It may be that our American friends are not so worried."

Chest was concerned that the draft contract did not include a buyout clause, allowing renters to buy their software (and forgo further upgrades). Without a buyout option, institutions terminating their contract would be compelled to delete every copy of the software. Chest feared that if a single student failed to delete software, a vice-chancellor could end up in court for software piracy.

Microsoft says that "side letters" issued with the main contract contain a legally binding buyout provision. But the company's European lawyers are now attempting to satisfy Chest's demand for a buyout clause in the main contract. "We agree it should be in the contract," Mr East said, adding that it would be in a new worldwide contract, to be issued later in the year. As a stopgap, Microsoft's lawyers are trying to decide whether they can produce a revised contract very soon, to cover Europe only.

Chest has failed to budge Microsoft on the cost of buyout, which the company has set at 250 per cent of the final-year rental. Chest wanted this reduced to 50 per cent, but Microsoft claims such a low price would encourage customers to buy out of the scheme and rejoin it repeatedly.

Mr East denied that Campus Agreement is intended to replace Select, or that Microsoft has any preference for one scheme over the other.

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