Computer Associates 2016 Annual Report Download - page 20

internal patent program to increase our ability to capture patents, strengthen their quality and increase the pace at which we are
able to move our innovations through the patent process. At March 31, 2016, our patent portfolio included more than 1,200
issued patents and more than 950 pending applications in the United States and across the world. The patents generally expire
at various times over the next 20 years. Although the durations and geographic intellectual property protection coverage for our
patents may vary, we believe our patent portfolio adequately protects our interests. Although we have a number of patents and
pending applications that may be of value to various aspects of our products and technology, we are not aware of any single
patent that is essential to us or to any of our reportable segments.
The source code for our products is protected both as trade secrets and as copyrighted works. Our customers do not generally
have access to the source code for our products. Rather, on-premise customers typically access only the executable code for our
products, and SaaS customers access only the functionality of our SaaS offerings. Under certain contingent circumstances, some
of our customers are beneficiaries of a source code escrow arrangement that enables them to obtain a limited right to access our
source code.
We continue to be engaged in efforts to more fully employ our intellectual property by strategically licensing and/or assigning
selected assets within our portfolio. This effort is intended to better position us in the marketplace and allow us the flexibility to
reinvest in improving our overall business.
Product Licensing and Maintenance
For traditional, on-premise licensing, we typically license to customers either perpetually or on a subscription basis for a
specified term. Our customers also purchase maintenance and support services that provide technical support and any general
product enhancements released during the maintenance period.
Under a perpetual license, the customer has the right to use the licensed program for an indefinite period of time, typically upon
payment of a one-time license fee. If the customer wants to receive maintenance, the customer is required to pay an additional
annual maintenance fee.
Under a subscription license, the customer has the right to usage and maintenance of the licensed products during the term of
the agreement. Under our licensing terms, customers can license our software products under multi-year licenses, with most
customers choosing terms of three to five years, although some customers seeking greater cost certainty may negotiate longer
terms. Thereafter, the license generally renews for the same period of time on the same terms and conditions, but subject to the
customer’s payment of our then-applicable fees.
Within these license categories, our contracts provide customers with the right to use our products under a variety of models
including, but not limited to:
• A typical designated CPU (central processing unit) license, under which the customer may use the licensed product on a
single, designated CPU.
• A MIPS (millions of instructions per second)-based license, which allows the customer to use the licensed product on one
or more CPUs, limited by the aggregate MIPS rating of the CPUs covered by the license.
• A user-based license, under which the customer may use the licensed product by or for the agreed number of licensed
users.
• A designated server license, under which the customer may use a certain distributed product on a single, designated server.
The licensed products must be licensed for use with a specific operating system.
Customers can obtain licenses to our products through individual discrete purchases to meet their immediate needs or through
the adoption of enterprise license agreements. Enterprise license agreements are comprehensive licenses that cover multiple
products and also provide for maintenance and support.
For our mainframe solutions, the majority of our licenses provide customers with the right to use one or more of our products
up to a specific license capacity, generally measured in MIPS. For these products, customers may acquire additional capacity
during the term of a license by paying us an additional license fee. For our enterprise solutions, our licenses may provide
customers with the right to use one or more of our products limited to a number of servers, users or copies, among other things.
Customers may license these products for additional servers, users or copies, etc., during the term of a license by paying us an
additional license fee.
SaaS is another delivery model we offer for certain products when a customer prefers to use our technology off-premises with
little or no infrastructure required. Our SaaS offerings are typically licensed for a designated term using a subscription fee.
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