Court OKs Third-Party Software Maintenance

FRAMINGHAM (06/26/2000) - A six-year legal dispute over mainframe software maintenance issues has ended with a jury verdict affirming the right of third parties to service another vendor's legacy software.

The decision will potentially make it easier for companies to discontinue costly vendor maintenance and seek cheaper third parties to service their aging mainframe software, several users said last week.

But those firms first need to check their existing contracts to ensure that they're not legally bound to vendor maintenance services, the users cautioned.

In a unanimous early-June verdict, a federal court jury in Newark, New Jersey, said Grace Consulting Inc. in Parsipanny, New Jersey, didn't violate copyright laws in providing add-on software and maintenance services for customers of Geac Computer Corp. in Toronto.

Dun & Bradstreet Software - which became part of Geac when it was acquired in 1996 - initiated the suit against Grace Consulting in 1995. Dun & Bradstreet claimed that Grace violated its copyright by modifying its mainframe accounting and payroll software for customers while providing third-party maintenance.

Grace claimed that any tweaks it had performed were to make Geac's applications more interoperable with other software at customer locations.

Grace - which offers maintenance services at half Geac's rates - claimed that Geac was illegally using its copyright to prevent customers from hiring less-expensive third parties to maintain its software.

Consumer Support

Grace's victory means more third parties will be encouraged to offer similar services, said Forrest Eudaily, an associate director at Whitehall-Robins Healthcare, a $1.7 billion maker of over-the-counter drugs in Madison, New Jersey.

"I think it's great. . . . It opens up the market to better competition and better rates," said Joe Quinn, manager of financial and administrative systems at Connecticut Natural Gas Co. in Hartford.

The firm almost signed up with Grace in 1995 because its service was 55% cheaper than what Geac was offering but decided against it because of the lawsuit, he said.

But users need to make sure they're not violating copyrights when making changes to source code under third-party arrangements, warned Eudaily.

Maintaining aging software means having to make occasional changes to the source code, sometimes for regulatory reasons and sometimes to make the software more interoperable with new packaged applications, Eudaily said.

But unless users negotiate the right to make such changes up front, a vendor could prevent them from signing up third-party service providers at a later stage, said Wynn Pope, a director of Chicago-based Share Inc., a large-system user group.

"The best advice would be to simply talk to your vendor" before considering outside service, Pope said.

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