• At Kemp Little, we are known for our ability to serve the very particular needs of a large but diverse technology client base. Our hands-on industry know-how makes us a good fit with many of the world's biggest technology and digital media businesses, yet means we are equally relevant to companies with a technology bias, in sectors such as professional services, financial services, retail, travel and healthcare.
  • Kemp Little specialises in the technology and digital media sectors and provides a range of legal services that are crucial to fast-moving, innovative businesses.Our blend of sector awareness, technical excellence and responsiveness, means we are regularly ranked as a leading firm by directories such as Legal 500, Chambers and PLC Which Lawyer. Our practice areas cover a wide range of legal issues and advice.
  • Our Commercial Technology team has established itself as one of the strongest in the UK. We are ranked in Legal 500, Chambers & Partners and PLC Which Lawyer, with four of our partners recommended.
  • Our team provides practical and commercial advice founded on years of experience and technical know-how to technology and digital media companies that need to be alert to the rules and regulations of competition law.
  • Our Corporate Practice has a reputation for delivering sound legal advice, backed up with extensive industry experience and credentials, to get the best results from technology and digital media transactions.
  • In the fast-changing world of employment law our clients need practical, commercial and cost-effective advice. They get this from our team of employment law professionals.
  • Our team of leading IP advisors deliver cost-effective, strategic and commercial advice to ensure that your IP assets are protected and leveraged to add real value to your business.
  • Our litigation practice advises on all aspects of dispute resolution, with a particular focus on ownership, exploitation and infringement of intellectual property rights and commercial disputes in the technology sector.
  • We have an industry-leading reputation for our outsourcing expertise. Our professionals deliver credible legal advice to providers and acquirers of IT and business process outsourcing (BPO) services.
  • We work alongside companies, many with disruptive technologies, that seek funding, as well as with the venture capital firms, institutional investors and corporate ventures that want to invest in exciting business opportunities.
  • Our regulatory specialists work alongside Kemp Little’s corporate and commercial professionals to help meet their compliance obligations.
  • With a service that is commercial and responsive to our clients’ needs, you will find our tax advice easy to understand, cost-effective and geared towards maximising your tax benefits.
  • At Kemp Little, we advise clients in diverse sectors where technology is fundamental to the ongoing success of their businesses.They include companies that provide technology as a service and businesses where the use of technology is key to their business model, enabling them to bring their product or service to market.
  • We bring our commercial understanding of digital business models, our legal expertise and our reputation for delivering high quality, cost-effective services to this dynamic sector.
  • Acting for market leaders and market changers within the media industry, we combine in-depth knowledge of the structural technology that underpins content delivery and the impact of digitisation on the rights of producers and consumers.
  • We understand the risks facing this sector and work with our clients to conquer those challenges. Testimony to our success is the continued growth in our team of professionals and the clients we serve.
  • We advise at the forefront of the technological intersection between life sciences and healthcare. We advise leading technology and data analytics providers, healthcare institutions as well as manufacturers of medical devices, pharmaceuticals and biotechnological products.
  • For clients operating in the online sector, our teams are structured to meet their commercial, financing, M&A, competition and regulatory, employment and intellectual property legal needs.
  • Our focus on technology makes us especially well positioned to give advice on the legal aspects of digital marketing. We advise on high-profile, multi-channel, cross-border cases and on highly complex campaigns.
  • The mobile and telecoms sector is fast changing and hugely dependent on technology advances. We help mobile and wireless and fixed telecoms clients to tackle the legal challenges that this evolving sector presents.
  • Whether ERP, Linux or Windows; software or infrastructure as a service in the cloud, in a virtualised environment, or as a mobile or service-oriented architecture, we have the experience to resolve legal issues across the spectrum of commercial computer platforms.
  • Our clients trust us to apply our solutions and know-how to help them make the best use of technology in structuring deals, mitigating key risks to their businesses and in achieving their commercial objectives.
  • We have extensive experience of advising customers and suppliers in the retail sector on technology development, licensing and supply projects, and in advising on all aspects of procurement and online operations.
  • Our legal professionals work alongside social media providers and users in relation to the commercial, privacy, data, advertising, intellectual property, employment and corporate issues that arise in this dynamic sector.
  • Our years of working alongside diverse software clients have given us an in-depth understanding of the dynamics of the software marketplace, market practice and alternative negotiating strategies.
  • Working with direct providers of travel services, including aggregators, facilitators and suppliers of transport and technology, our team has developed a unique specialist knowledge of the sector
  • Your life as an entrepreneur is full of daily challenges as you seek to grow your business. One of the key strengths of our firm is that we understand these challenges.
  • Kemp Little is trusted by some of the world’s leading luxury brands and some of the most innovative e-commerce retailers changing the face of the industry.
  • HR Bytes is an exclusive, comprehensive, online service that will provide you with a wide range of practical, insightful and current employment law information. HR Bytes members get priority booking for events, key insight and a range of employment materials for free.
  • FlightDeck is our portal designed especially with start-up and emerging technology businesses in mind to help you get your business up and running in the right way. We provide a free pack of all the things no-one tells you and things they don’t give away to get you started.

SAP v Diageo: Slicing the salami

In the recent case of SAP UK Ltd v Diageo Great Britain Ltd [2017] EWHC 189 (TCC), SAP succeeded in its claim against Diageo for over £54.5 million of additional licence and maintenance fees arising from indirect use of licensed SAP software that was out of the scope of Diageo’s software licence and maintenance support agreement with SAP (“Agreement”).   


In May 2004 SAP, a world leader in business applications, originally entered into the Agreement and granted a licence to Diageo plc, a global alcoholic beverages company, to use SAP’s mySAP Business Suite software and certain software engines and SAP agreed to provide maintenance support to such use. SAP alleged that Diageo’s use of the mySAP Enterprise Resource Planning software (“mySAP ERP”) and SAP Exchange Infrastructure software engine (“SAP PI”) infringed Diageo’s licence with SAP, in particular in relation to SAP PI which was software that facilitated interactions between third party software and the SAP software.

In around 2011, Diageo used a hosted software platform made available by Salesforce.com (a competitor of SAP) to develop two new software systems: Gen2 and Connect (the “Diageo Systems”). The former assisted with the management and tracking of sales by collation of data whilst the latter facilitated direct review and placement of orders via an online portal. The Diageo Systems were then launched into live use by Diageo in 2012 and interacted with mySAP ERP via SAP PI. SAP claimed that it had a right to £54,503,578 either in additional fees or damages because the Diageo Systems used and/or accessed the mySAP ERP software directly or indirectly. On the other hand, Diageo was of the view that the existing licence fees that they paid for using the mySAP Business Suite software and software engines covered the use of SAP software with the Diageo Systems.


The High Court examined how the Diageo Systems functioned in light of the terms of the Agreement, specifically focusing on the wording of the recitals and the licence provisions in relation to authorised usage. In reaching its judgement, the Court only considered the issue of liability, leaving the issue of quantum to a later date.

The Agreement used a tiered pricing structure, such that fees were payable based on the number of “Named Users” of mySAP ERP, who were in turn defined as “individual[s]… authorised to use or access the software directly or indirectly”. The licence stated that whether a Named User was in fact authorised, depended upon their user category as set out in specified list in a schedule to the Agreement. Applying Arnold v Britton [2015] UKSC 36, the judge, Mrs Justice O’Farrell, rejected Diageo’s claim that the Agreement was a “gatekeeper licence” for general access to the SAP software suite, and found that there were no words in the Agreement to make an exception to the rule that usage under the Agreement was subject to this Named User pricing structure.

Further, upon examination of how the Diageo Systems interacted with mySAP ERP, the judge found that, logging on to the Salesforce interface used by the Diageo Systems triggered messages and data to be sent to and from mySAP ERP via SAP PI.  This in turn meant that customers accessed mySAP ERP indirectly through SAP PI and the Diageo Systems in breach of the licence conditions of the Agreement.


It is standard practice for licensors, whether software vendors, market data vendors, content distributors or any other copyright owner, to seek to permit only a defined list of activities in respect of their intellectual property and to exclude any other activity. This encourages the customer to speak to the licensor for any new usage, allowing the licensor to extract new fees and keep on top of development in the market.

However, in this instance Diageo will feel aggrieved that O’Farrell J did not find in its favour. The Diageo Systems were designed to remove the need for call centre staff to regularly access to mySAP ERP when dealing with customer queries, and instead allow Diageo’s customers to engage with mySAP ERP via the Salesforce.com cloud platform. When the parties entered into the Agreement in 2004, this way of interacting with mySAP ERP and SAP PI was not anticipated and, consequently, not reflected in the Agreement.

Diageo took the view that since it had paid SAP for access to the mySAP ERP software and a separate fee for the SAP PI software to facilitate access by third party platforms, access by the Diageo Systems to the SAP software packages was therefore permitted. As such access by a third party cloud platform was not covered by the pricing structure (as the judge also found), Diageo thought that no charge was payable.

It is possible to have sympathy with Diageo’s position, as the Agreement appears to have lacked any catch all provision that may have clearly prohibited any usage other than as specifically licensed. Organisations will often have one vendor’s software interfacing with the software of another vendor, and so managing the different licence fee structures in respect of such interfaces and otherwise can become a complicated task. However, what seems to have undone Diageo in this case is that the interface with the Diageo Systems was intended to channel requests from multiple individuals and this reflected the “per user” method of charging by SAP, which may have encouraged the judge to look beyond the Diageo Systems connecting with the SAP software and to examine the activities of the ultimate users – which in this case was a much larger group of individuals.


Licensors will want to ensure that:

  • clear wording is included in their licence agreements;
  • the licence excludes all usage except as specifically authorised; and
  • fee structures are plainly stated to ensure that the licensor can recover charges for increased usage or require additional fees for a change in the nature of such usage.

Customers ultimately need to ensure that:

  • their use of software complies with the terms of the agreed licence; and
  • such use is also aligned with the agreed charging mechanisms in respect of software provided.

This case is a good reminder to customers to be watchful of any usage that may deviate from what is originally agreed. If the customer proceeds with incremental usage without the licensor’s agreement, it runs the risk of a large back bill at a later date. Sooner or later, the licensor is likely to get wind of the customer’s usage, whether in the marketplace, on renegotiation, an audit, disposal of a business or when new or additional services are requested.

That being said, when entering into new licence agreements, customers should pay particular attention to the scope of use and continue to manage such contracts diligently on an ongoing basis to prevent unwanted surprises in the form of additional fees. Early and open communication with licensors can help customers manage their exposure, as it is more difficult for licensors to levy charges for small incremental changes in scope and discussion with the vendor can take the additional costs into account when re-designing their systems.