SAP UK Ltd v Diageo Great Britain Ltd

Under a software licence, authorised use is determined by the contract’s express usage and pricing provisions. Where usage of an integrated system involves messages sent to, processed by, or retrieving information from licensed software, it may constitute indirect use or access even though the user operates a separate interface.

A requirement for named-user licensing is not displaced by the use of an intermediary integration engine unless the contract creates an exception. If the contract contains no suitable pricing category for unauthorised usage, additional fees may still be assessed by reference to the supplier’s price list. Contractual interest provisions concerning undisputed overdue sums do not apply to disputed sums, although statutory interest may be available.

SAP UK Limited licensed enterprise resource-planning software and an integration engine to Diageo Great Britain Limited. Diageo later introduced two Salesforce-based systems, Connect and Gen2, which exchanged data with the licensed software through SAP PI.

SAP claimed additional licence and maintenance fees, an account, verification access and damages. Diageo disputed that users of the Salesforce systems used or accessed the licensed software and sought declarations of non-infringement. The court determined liability issues, including the proper construction of the licence, whether the relevant users were named users, verification rights, interest and declaratory relief.

1. Construction of the Agreement. Applying the contractual approach in Arnold v Britton [2015] UKSC 36, Rainy Sky SA v Kookmin Bank [2011] UKSC 50 and Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, the court held that the natural meaning of the words, read in their documentary, factual and commercial context, governed. The Agreement made named-user pricing the only licensing basis for mySAP ERP. SAP PI was an additional software-engine pricing mechanism, not an alternative route to authorisation.
2. Connect. A Connect customer used or accessed mySAP ERP indirectly. The customer initiated transactions, and orders were completed only when processed in mySAP ERP. The use of SAP PI did not alter that conclusion. Connect customers were not Professional Users, but no existing named-user category properly described their limited access to business-process functionality. Their usage was therefore unauthorised, and SAP was entitled to additional fees assessed by reference to the nature and extent of usage and SAP’s price list.
3. Gen2. Gen2 master-data managers were Professional Users. Sales representatives used or accessed mySAP ERP indirectly when processing returned-keg information, but not merely when retrieving commercial data. Their usage was unauthorised and most closely resembled Mobile User usage, although the Exhibit contained no Mobile User price. Other identified Gen2 users were not shown to use or access mySAP ERP.
4. Remedies and ancillary issues. Diageo had supplied the usage reports required by clause 3.19, so SAP was not entitled to access the Salesforce system for verification. Unauthorised usage breached clause 3.2, and SAP could claim damages in principle, subject to proof of loss and contractual limitations. Clause 6.3 concerned undisputed overdue sums and was not engaged, but statutory interest could be awarded under section 35A of the Senior Courts Act 1981. SAP was entitled to an account of additional fees. Applying Messier-Dowty Ltd v Sabena SA [2000] 1 WLR 2040 and Nokia Corp v Interdigital Technology Corp [2006] EWCA Civ 1618, the court refused Diageo’s declarations because no infringement claim had been advanced and the declarations would serve no useful purpose.