[c-nsp] SmartNet coverage on Cisco's chassis-based products

[Brett Frankenberger]

On Mon, Feb 11, 2008 at 05:28:09PM -0600, Justin Shore wrote:
> Tony Varriale wrote:
> > Are they cheaper once you buy the software license?  Let's not forget, 
> > the software license is not transferrable.
> > 
> > That's a typical oops not only in this method but from 3rd party resellers.
> 
> This may be blasphemy here but I'm really surprised that no one has ever 
> taken the big C to court on this particular issue because C would almost 
> certainly lose.  

It's difficult for a customer to initiate the legal action, because
they'd be asking the court to rule on a hypothetical (i.e. asking the
court to declare that if the customer were to attempt to use a
transferred license, they'd not be violating any of Cisco's rights)
or publicly stating that they had breached Cisco's interpretation and
asking the court to say that no violation of Cisco's rights had
occurred.

Courts don't generally do that (and, in the latter case, a company
probably wouldn't publicly admit their violation of Cisco's
interpretation, because there's no advantage do doing so).

What courts are good at is ruling on actual claims.  So, here, what
we'd need is for (1) Cisco to demand a relicensing fee from a customer
using transferred software, (2) that customer to refuse to pay, and
(3) Cisco to sue that customer.

That's unlikely to happen, becasue the risk/reward to Cisco for filing
suit just isn't there.  If Cisco sues and loses, then everyone starts
transferring licenses, because a judge said it was legal.  That's a big
risk, considering that currently, most customers play by Cisco's
interpretation already, just out of fear that Cisco might win.  So,
basically, the potential reward of suing is that the small percentage
of people running on transferred licenses would start paying; the risk
is that a judge tells the world that Cisco's interpretation is
unenforcable.  There's no reason at all for Cisco to take the risk.

> Microsoft fought that battle against people selling the 
> copy of Windows that came bundled with their PC or their PC and OS when 
> they bought a new model.  MS lost and set a perfect precedent.  The 
> courts found that the Doctrine of first sale does apply to OSs and 
> bundled software.  (see Softman v. Adobe)   Just because C calls it a 
> license doesn't mean that it actually is.

To be clear, I think Cisco's position is unenforcable and that they'd
lose in court.  But the situation with Cisco is more complicated,
because customers with SmartNet often aren't running the IOS that came
with the box; they've upgraded (as allowed by their SmartNet contract)
over time.  While the right to transfer the software that came with the
box might be clearly established, the right to transfer the software
obtained pursuant to a SmartNet contract isn't as clear.

> Not that I want to take on the Big C.  It is something that I've
> wondered about for years.  If MS, Adobe and others were slapped down by
> the courts on this very thing then why not the Big C?

Cisco hasn't make the mistake of suing anyone.

     -- Brett