Honda Loses Bid to be Released from Software Licence Agreement

On October 9, 2015, the Ontario Superior Court (Court) released its decision in Honda of Canada Mfg v Micro Focus (Canada), 2015 ONSC 6264, dismissing an application by Honda of Canada Mfg (Honda) for a declaration, among other things, that Honda was not bound by revised terms of a licensing agreement with Micro Focus.

In 1998, Honda had contracted for the installation of a software product called Orbix for its plant assembly lines. Installation took place on 2 servers and 14 computers, each computer having a single processing unit.  The rights to Orbix were later acquired by Micro Focus.  Sometime thereafter, Micro Focus moved to a new “per core” licensing model.  These revised licensing terms were allegedly included in a “click-wrap” agreement that accompanied Orbix software updates.  Honda continued to use Orbix on 2 servers and 14 computers, but due to hardware upgrades to those computers, was using Orbix on substantially more cores than before.  Micro Focus demanded payment from Honda of arrears on license fees of nearly $1.4 million related to deployment of Orbix on these additional cores.

In response, Honda filed this application for interpretation of the parties’ rights under the licensing agreement and for a finding of fact that the terms were never the subject of an offer and/or acceptance.   Where parties disagree on their rights under a deal and litigation is on the horizon, sometimes such a summary application for interpretation can defuse that path.  However, in this case, the Court determined that Honda asked not just for the Court to interpret the contract, but for it to make findings on disputed facts for which Honda provided little evidence.  The Court found that Honda did not satisfy the onus on them to prove their version of the facts, and consequently, dismissed Honda’s application.