The NSW Police could face a damages bill of up to $12 million in its ongoing legal row with British software vendor Micro Focus after allegedly using more copies of the company's terminal emulation software than it had licenses for.
However, the law enforcement authority will allege the number of licenses were the result of its contract with local software distributor, Network Systems Technology (now NST Worldwide).
Micro Focus had initially sought $10 million from NSW Police, on the assumption a total of 16,500 versions of its Rumba and ViewNow software had been installed on Police computers.
The department had a 1998 agreement with Micro Focus and distributor NST for a total 6500 licenses.
However, a six-month, $120,000 KPMG audit of NSW Police systems – released this month but kept from public view – confirmed the total number of licenses found in the department.
Though unclear what that number is, the increased damages claim asserted by Micro Focus in a directions hearing last Friday indicates the total number of licenses may have exceeded initial estimates.
According to Micro Focus Australian and New Zealand managing director Bruce Craig, the company was seeking the damages based on a $6 million fine for misuse of licenses as well as ten years' worth of unpaid maintenance fees and nine percent interest on the charges.
The maintenance fee could be cut, based on a statute of limitations in Australian Federal Court that prevents charges being placed on copyright infringements dating back more than six years.
But presiding judge Justice Jayne Jagot could also impose a further fine on NSW Police if the infringement allegations are proven and deemed to be flagrant.
Legal counsel for Micro Focus, Matthew Darke, told the court on Friday that the vendor had simplified its case to a single version of ViewNow, and three versions of Rumba, based on the KPMG audit.
"What we say is now the key issue of the case, with the numbers largely sorted out, is in a pure contractual issue, which really involves the construction of a handful of emails and letters and one written contract from 1998," he said.
He urged the case be heard by the court as early as possible in order to avoid further interest payments should NSW Police be found to have infringed Micro Focus' copyright, which Darke said was of "concern to the NSW taxpayer".
"We think it's in the interest of all parties to have an early hearing if that's at all possible and able to be accommodated," he said.
Craig told iTnews he was happy with the audit report's final figure, but said that the process had taken too long.
"The Police could have gotten the fixed asset register, it would have taken them probably half an hour with an Excel spreadsheet to find out what the answer really is and then they could have tested that answer, and the job would have been done," he said.
"I don't think they had an interest in an answer."
Distributor partly to blame?
NSW Police are expected to file a cross-claim in the court battle, accusing software distributor NST Worldwide of playing a part in any license discrepancy on Police systems.
John Hennessy SC, appearing for Police on Friday, said the cross-claim had yet to be presented to NST Worldwide for consideration.
"We have been spending some significant time on the site licence while [KPMG auditor Stan] Gallo's been occupied," Hennessy said.
"We have a firmer view than ever about precisely what it was that NST was putting to us, including emails using the precise words 'site licence'.
"We will seek to have NST joined [to the case] and to say, to put it in crude terms, 'that is what you represented'."
Hennessy said legal counsel for Police sought further time to prepare and present the cross-claim before NST Worldwide, before proceeding to full hearings.
The parties are expected to begin the full hearings on November 19.
