Computer Associates 2012 Annual Report Download - page 19

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Intellectual Property
Our products and technology are generally proprietary. We rely on U.S. and foreign intellectual property laws, including patent,
copyright, trademark and trade secret laws, to protect our proprietary rights. However, the extent and duration of protection given to
different types of intellectual property rights vary under different countries’ legal systems. In some countries, full-scale intellectual
property protection for our products and technology may be unavailable, or the laws of other jurisdictions may not protect our
proprietary technology rights to the same extent as the laws of the United States. We also maintain contractual restrictions in our
agreements with customers, employees and others to protect our intellectual property rights. These restrictions generally bind our
employees to confidentiality and limit our customers’ use of our software and prohibit disclosure to third parties.
We regularly license software and technology from third parties, including some competitors, and incorporate them into our own
software products. We include third-party technology in our products in accordance with contractual relationships that specify our
rights.
We believe that our patent portfolio differentiates our products and services from those of our competitors, enhances our ability to
access third-party technology, and protects our investment in research and development. As of March 31, 2012, our patent portfolio
includes more than 700 issued patents and 700 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 principal business product areas.
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-premises customers typically access only the executable code for our products
and SaaS customers access only the functionality of our SaaS offerings. Some of our customers are beneficiaries of a source code
escrow arrangement that enables them to obtain a contingent, limited right to access our source code.
We have begun an effort 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-premises 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 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 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 flexible licensing terms, customers can license our software products under multi-year licenses, with most
customers choosing terms of one-to-five years, although longer terms may sometimes be negotiated by customers in order to obtain
greater cost certainty. 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 prevailing subscription license fee.
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.
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