|Open Letter to Liveware’s Abra Suite Clients
From: Daniel Levin, President, Liveware Inc. / Liveware Publishing, Inc.
Date: June 21, 2002
Subject: Where do your Abra Suite annual maintenance fees go?
Dear Abra Suite Client:
This is a fairly long, but highly important, letter and I hope you will read it in its entirety very carefully and consider its implications to your firm.
As many of you already know, we are the publishers of R&R Report Writer and holders of the copyright and/or exclusive license for all R&R versions. Liveware Inc. was also an authorized Abra Business Partner since 1991; we use the past tense since we resigned our Business Partner status effective January 1, 2002. We took this extraordinary action because we discovered, much to our surprise and chagrin, that Best Software had failed to pay the major portion of its licensing fees for R&R, dating all the way back to 1994.
We notified Best of this problem and they have refused to officially acknowledge the under-reporting – in spite of our unequivocal documentation that proves it1 – and have left us no choice but to cancel2 their contractual rights3 to distribute R&R and sue them for copyright infringement and for other claims, including the underpayment of royalties. In addition, this dispute applies to the business unit of Best Software, Inc. they call the ‘Specialty Products Group’, and not to the entirety of Best Software or its parent company, The Sage Group, plc. (However, the corporate structure for Best requires us to sue the entire company now named Best Software, Inc., which until January 1, 2002 was named ‘Sage US’.) Best continues to distribute R&R in violation of our copyright and is fighting our claims with every legal means at their disposal, as is Liveware to defend our rights.
While this is an important development, there is another aspect to this case that more directly impacts each of you. During testimony taken at an April 4, 2002 hearing in U.S. District Court in Wilmington, Delaware, Karen Mortham, CFO of the Best division that manages Abra Suite, stated the following as facts4:
1) This division generates between $70 million and $100 million in revenue per year.
2) Abra Suite accounts for roughly 40% of the division’s revenue.
3) Annual maintenance fees account for 50% of the Abra Suite revenue.
4) There are roughly 9000 Abra Suite customers on maintenance.
Doing the math, this means that Abra Suite annual maintenance fees produce between $14 million and $20 million in revenue for Best Software, or roughly $2000 annually per Abra Suite client.
This hearing was initiated by Best in an attempt to receive a court order enjoining Liveware from communicating with Abra Suite customers. As Ms. Mortham testified, Best feared that they would lose revenue from non-renewal of annual maintenance agreements due to your potential belief that “Best was violating, you know, some business practice.”5
The Court’s ruling was entirely in Liveware’s favor and against Best. The court also found Best’s arguments ‘unpersuasive’. Some excerpts6:
“Particularly, the court credits Liveware’s argument that it was free to make such contacts because it had terminated the 2001 License Agreement after providing 30 days to cure [the material breaches]...” [emphasis added]
“Moreover, the court does not believe Best will be irreparably injured by Liveware’s contacting of its business partners and customers. To the extent Liveware’s communication discourage purchasing of Best’s Abra Suite products, the court believes such harm to be a natural consequence of the termination of Best’s license with Liveware and Best’s need to eventually alter its products to account for the termination.” [emphasis added]
Putting all this together means that Best wanted to keep Liveware (and myself) from telling you the truth about their ‘violating a business practice’. In my opinion, there was more to it than that. They might have wanted to keep me from telling you the truth about their use of your annual maintenance fees. I feel I have a fiduciary responsibility to share with you what I know and my conclusions as a result of this knowledge.
For some time, I have received feedback from my firm’s Abra Suite clients – and also from other Abra Business Partners – that Best’s technical support has become worse and worse for the past few years. (I concur.) In addition, the Abra Suite software updates Best has issued over the last few years have been, well, buggy. (In particular, Best’s modifications to the Benefit module have been very poor and required the release of several adjusting updates.) There have been few major new components of Abra Suite released as an automatic upgrade, even though the Attendance module, in my opinion, needs significant enhancements. As Ms. Mortham testified, Abra annual maintenance agreements are designed to “cover technical support, which is if a customer has a problem, they can call into the technical support and get answers, and then also if we have any updates to our software, bug fixes, patches, things like that”.7
Therefore, Best has received for the past several years about $20 million per year to fund these services to Abra Suite clients, but have not done a very good job. I have been to Best’s Florida site and have seen the cubicles where tech support people work. From our experience in software development, Liveware knows how many man-hours it takes to create updates using Visual FoxPro (which is Abra Suite’s base programming language). Best does not have nearly so many full-time equivalents assigned to providing these services as could be assigned with the revenue they receive from Abra Suite clients’ annual maintenance fees.8 All this begs the question: What does Best do with that money?
You should decide this issue for yourself and take actions you deem appropriate. From other documentation in our possession, as recently as the end of 1998 Best had 14,000 customers on annual maintenance.9 Since they have reported over 4000 new customers since then10, Best has lost over 9000 customers from annual maintenance fee rolls. Put another way, half of Best’s Abra Suite customers have decided NOT to renew their annual maintenance agreements, presumably because they decided that agreements were not worth it.
Clearly, Best is concerned that you will discover their violation or our copyright and that you will create, as Ms. Mortham stated, a “rush on [Best’s] technical support group to fix any bugs or anything like that, or get any help that they need prior to expiration of a contract,” if Abra Suite customers chose not to renew. Ms. Mortham also testified that such a response would overwhelm their ability to service your needs and “kind of cause one of those vicious circle, cycle problems.”11
I can’t decide for you whether you should renew your annual maintenance agreement or not. Best is concerned you won’t – for good reason – and not only because they are violating our copyright. I believe, and will get the information from our lawsuit to prove, that Best has diverted revenue from adequately fulfilling Abra Suite customers’ maintenance agreements to fund other aspects of their operations and/or enhance their profitability at your expense. If my conclusion is incorrect, as the court said in its ruling: “Best is free to communicate with its business partners and customers to rebut or clarify assertions made by Liveware.”
I want to reassure every Abra Suite customer that we will not pursue legal claims against you. We see Abra Suite customers as ‘innocent infringers’, but feel that you should be aware of the circumstances nonetheless. In addition, our own consulting clients, through Liveware Inc., hereby receive a special license exemption for continued use of R&R with Abra Suite, no matter what occurs. Even if Best should decide to comply with the law and cease their unlawful distribution of R&R, and recall all of the R&R Version 9.0 licenses they distributed without authorization, Liveware Publishing hereby promises to always supply a commercial version of R&R that you can purchase on very favorable terms that will preserve your investment in R&R reports.
We have always believed that Abra Suite is a terrific software program itself and an excellent value. Our current lawsuit does not change that opinion in the least. We will continue to provide direct professional services, which we think is of much better quality and at lower fees than what Best offers, to our clients as you choose to hire us for that work.
There is just one more aspect to this affair that I wish to share with you. Our contract calls for Best to turn over to us the full Abra Suite customer list, with contact information, upon termination of our agreement with them.12 Best has, thus far, failed to do so even though their attorney conceded in court that the contract is “dead”.13 Therefore, I do not have the ability to directly contact every concerned Abra Suite customer with this vital information. Therefore, I invite you to send copies of this letter to any other Abra Suite user you know about, or feel free to direct them to our special web site for this communication:
Thank you for your attention. We feel you deserve all the facts. If you have any questions at all, please feel free to contact me.
Very truly yours,
President, Liveware Inc. / Liveware Publishing, Inc.