Corporation Bank battles software violation charge

CHENNAI, INDIA: Even though it seems to be on a strong wicket against a sudden charge of software licence violation, the Mangalore-based Corporation Bank, now under the Central Vigilance Commission's (CVC) scanner, is determined to fight it out.

Top officials at the state-run bank said it received a demand for around $2 million for violation of licensing conditions of a software "RMCOBOL" from the UK- headquartered Micro Focus International. Micro Focus has alleged that the bank has violated its software licensing conditions.

"The matter is under discussion. Beyond this I am not in a position to comment," Ramnath Pradeep, chairman and managing director of Corporation Bank, told IANS on phone.

Repeated attempts by IANS to get Micro Focus' views on the issue ended in vain.

"Out of the blue, Micro Focus told us our licence usage is bad and wants a compensation and regularisation fee. As per our records, there are no violations. But to be on the safe side, we are going for a second legal opinion," a senior bank official said.

There are three key players on the issue. One, Corporation Bank that is using the software originally sold by the US-based Liant Software Corp. Two, Micro Focus that acquired Liant for $5 million in 2008. The third is Laser Soft Infosystems, the core banking solution vendor for Corporation Bank and also the Indian distributor for Liant's products, before it was acquired by Micro Focus.

"Core Banking Solution is application software. It needs some other software to run. Such software is called 'run time software' which is what we sold to the bank as the distributor for Liant," B. Suresh Kamath, managing director of Laser Soft, told IANS.

According to senior bank officials, Micro Focus, after acquiring Liant, is contending that its software is being used in wide area network environment whereas the original licence was for usage in local area network.

Corporation Bank's own legal department has said that Micro Focus cannot have any claim on the Bank towards the usage of software licences already procured. Kamath also ruled out any breach of licensing norms by the bank.

"Laser Soft has been servicing Corporation Bank since 1989 onwards. The CBS was supplied in 2002 and it went live in 2003. The Bank has got unlimited user licence for the software," he said.

A senior official said a Pune-based law firm has suggested that the bank can look at a negotiated settlement to avoid any reputation risk.