[Federal Register Volume 59, Number 72 (Thursday, April 14, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8834]
Federal Register / Vol. 59, No. 72 / Thursday, April 14, 1994 /
[[Page Unknown]]
[Federal Register: April 14, 1994]
VOL. 59, NO. 72
Thursday, April 14, 1994
DEPARTMENT OF AGRICULTURE
Rural Electrification Administration
7 CFR Parts 1753 and 1755
REA Telecommunications Software License Agreement
AGENCY: Rural Electrification Administration, USDA.
ACTION: Final rule.
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SUMMARY: The Rural Electrification Administration (REA) hereby amends
its regulations on telecommunications to add a uniform
Telecommunications Software License Agreement that will be an Addendum
to any REA financed central office equipment contract where the
Borrower is required to execute a Software License Agreement. This
action provides a single Telecommunications Software License Agreement
instead of the present situation where each supplier uses its own form.
This action reduces the review and approval time of equipment contracts
and provides fair and equal treatment for all providers of central
office equipment.
EFFECTIVE DATE: May 16, 1994.
FOR FURTHER INFORMATION CONTACT: John J. Schell, Chief, Central Office
Equipment Branch, Telecommunications Standards Division, Rural
Electrification Administration, room 2836, South Building, USDA,
Washington, DC 20250-1500, telephone number (202) 720-0671.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This final rule has been determined to be not-significant for
purposes of Executive Order 12866 and therefore has not been reviewed
by OMB.
Executive Order 12372
This final rule is excluded from the scope of Executive Order
12372, Intergovernmental Consultation. A notice of final rule entitled
Department Programs and Activities Excluded from Executive Order 12372
(50 FR 47034) exempts REA and RTB loans and loan guarantees, and RTB
bank loans, to governmental and nongovernmental entities from coverage
under this Order.
Executive Order 12778
This final rule has been reviewed under Executive Order 12778,
Civil Justice Reform. This final rule:
(1) Will not preempt any state or local laws, regulations, or
policies;
(2) Will not have any retroactive effect; or
(3) Will not require administrative proceedings before parties may
file suit challenging the provisions of this rule.
Regulatory Flexibility Act Certification
The Administrator of REA has determined that this final rule will
not have a significant impact on a substantial number of small entities
as defined by the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).
This final rule provides for a uniform software license agreement which
will reduce review and approval time and ensure fair and equal
treatment for all providers of central office equipment.
Information Collection and Recordkeeping Requirements
The reporting and recordkeeping requirements contained in this
final rule have been submitted to OMB for approval. Comments concerning
these requirements should be directed to the Department of Agriculture,
Clearance Office, Officer of Information Resources Management, room
404-W, Washington, DC 20250, and to the Office of Information and
Regulatory Affairs of OMB, Attention: Desk Officer for USDA, room 3201,
NEOB, Washington, DC 20503.
National Environmental Policy Act Certification
The Administrator of REA has determined that this final rule will
not significantly affect the quality of the human environment as
defined by the National Environmental Policy Act of 1969 (42 U.S.C.
4321 et seq.). Therefore, this action does not require an environmental
impact statement or assessment.
Catalog of Federal Domestic Assistance
The program described by this final rule is listed in the Catalog
of Federal Domestic Assistance Programs under No. 10.851, Rural
Telephone Loans and Loan Guarantees, and 10.852, Rural Telephone Bank
Loans. This catalog is available on a subscription basis from the
Superintendent of Documents, the United States Government Printing
Office, Washington, DC 20402.
Background
7 CFR part 1753, Telecommunications System Construction Policies
and Procedures, contains guidelines for the preparation of Software
License Agreements subject to approval by REA. Efforts to conclude
satisfactory license agreements with individual equipment suppliers
have been time consuming and in certain cases REA has been unable to
reach an agreement that is acceptable to REA and the equipment
suppliers. This agreement will permit all REA financed purchases of
central office equipment and the suppliers to utilize a common uniform
Software License Agreement. The agreement will be an Addendum to all
REA financed central office equipment contracts and eliminates the
present practice of using individual license agreements negotiated with
separate equipment suppliers.
REA amends 7 CFR part 1753, by revising subpart A, Sec. 1753.7,
paragraph (f)(4), and subpart E, Sec. 1753.38, paragraph (a)(2)(i)(J),
to indicate that the software license agreement prepared by REA will be
an addendum to the central office equipment contract, and to amend
Sec. 1753.38, paragraph (c), by revising the software license
agreement. Additionally, it removes Sec. 1753.38, paragraph
(a)(2)(iii), which instructs the borrower to review the proposed
software licensing agreement and obtain REA approval, if required. This
final rule eliminates the need for instructions since the software
agreement has been prepared by REA and approved by the Administrator
prior to presentation to suppliers. It is also amended by adding a form
to Sec. 1755.93.
Comments
Public comments were received from Alcatel Network Systems, Inc.,
AT&T Network Systems, Commonwealth Telephone Company, Hastad
Engineering Co., Mitel Public Switching, Northern Telecom Inc., Redcom
Laboratories, Inc., and Seimens Stromberg-Carlson. The comments,
recommendations and responses are summarized as follows:
General Comments
One commenter felt REA should have one universal software license
for all software controlled devices.
Response: The use of a universal software license has been
considered by REA but is not viable at this time because of the large
difference in types of equipment and the requirements of various REA
contracts.
One commenter states that their switch uses firmware, which is
hardware based and sold with the product, rather than software,
therefore, they are not required to have a software agreement.
Response: REA does not require an executed software license
agreement. If the vendor requires an executed software/firmware license
agreement, then the only one acceptable to REA is the REA prepared
Software License Agreement (Addendum 2).
One commenter feels that it is in the best interest of the Licensor
and the REA Borrowers to use its existing standard form Software
License, or failing that, to use the currently approved REA Negotiated
License instead of the REA prepared Software License Agreement.
Response: REA believes one form of Software License to be used in
all Software leasing situations involving the Forms 525 and 545
Contracts is in the best interests of the suppliers, the borrowers, and
REA because a single uniform Software License presents a fair and
equitable distribution of risk to all parties involved and assures
borrowers that all manufacturers must meet the same requirements.
Two commenters felt that the term ``Licensed Software'' be used
consistently throughout the Agreement.
Response: The Agreement has been revised to reflect the above
comment.
Section (1)
One commenter suggested that the definition of Licensed Software
and the associated documentation be more specific.
Response: The definition of Licensed Software and associated
documentation has been revised to resolve this problem.
One commenter suggested that the definition of Licensee and
Licensor be expanded to include sublicensors of the Licensor so that
resellers or distributors could sign the Agreement.
Response: REA believes that there should be one party responsible
for meeting the Licensee's obligations and one party responsible for
meeting the Licensor's obligations so that the ultimately responsible
entities can be easily ascertained. The language in this definition has
not been changed.
Section (2)
Two commenters suggested that the last sentence of Section (2) be
changed to more clearly define the use of the Licensed Software.
Response: REA has revised this sentence to clarify the intention
that the Licensed Software can only be used with the System provided
under the Contract.
One commenter suggested that section (2)(i) be changed to require
the Licensee to notify the Licensor of any change in location of the
equipment and Licensed Software so that the Licensor could track its
software and assist in providing software support (e.g., change
notices, etc).
Response: REA agrees. Section (2)(i) has been revised to
incorporate the suggested change.
One commenter wanted additional language added to section (2)(ii)
emphasizing territorial limits and the comparable technical application
by transferee of the original License.
Response: REA has added language to sections (2)(ii) and (2)(iii)
to further define the responsibilities of the transferee and the
original License holder.
One commenter wanted language added to section (2)(ii) to restrict
the transfer of the Licensed Software unless the transfer was
authorized in writing by the Licensor.
It was also requested that the Licensor be allowed a 60 day period
to raise any objections to the transfer.
In addition, it was suggested that if a Company's relationship to
the Licensee changes such that it is no longer a subsidiary of the
Licensee then a transfer of the License Agreement is required or the
Licensor has the right to terminate the Agreement and revoke the right
to use the Licensed Software.
Response: REA feels that the Licensee should have the right to
transfer the Licensed Software to any party who acquires legal title to
the System.
REA has added language to section (2)(ii) to specify that the
Licensor should receive 30 days notice of any transfer.
The obligations of the Licensee and of the transferee who acquires
legal title to the System are covered under section (2)(ii). In
addition, REA has added language to section (2)(iii) to emphasize the
responsibilities of the Licensee, therefore, REA does not feel that
additional changes are advisable.
Two commenters felt that the word ``reasonable'' should be changed
to ``necessary'' in the first sentence of section (2)(iii).
One commenter felt that the word ``rightful'' should be added to
the last sentence before the word ``acts''.
One commenter requested that the following sentence be added to
section (2)(iii): ``The Licensee shall not make the Licensed Software
available to any person except its employees on a need to know basis''.
Response: REA feels the word ``necessary'' places too great a
burden on the Licensee and that ``reasonable'' provides Licensor with
adequate protection. This requested change has not been implemented.
The Licensee would not know if information or data that is
available to the general public was rightfully released or not. This
requested change has not been implemented.
REA has added language to restrict Software availability to a need
to know basis, however, the words ``its employees'' have not been
added. This would restrict the Licensee from obtaining assistance from
other sources in the event section (2)(xi) required enforcement.
(i) In section (2)(iv), one commenter wanted additional language
added to require the Licensee to follow the commenter's printed
procedures for copying the Licensed Software. It was suggested that the
phrase ``pursuant to the Licensor's then current procedures and
practices'' be added to section (2)(iv).
(ii) One commenter wanted the words ``In such reproduction,'' to
begin the second sentence and the word ``such'' inserted between the
words ``all'' and ``copies'' in the second sentence to further define
the limitation of reproduction of the Licensed Software.
(iii) One commenter remarked that there was no need to copy the
code since it was contained on non-volatile ROM on the switch.
Response: (i) REA feels the suggested language regarding current
procedures and practices is too vague and could impose unknown
restrictions on the Licensee. This language has not been added to the
Software License.
(ii) The suggested language on limitation of reproduction has been
added.
(iii) REA feels that it is appropriate to be able to copy any
Licensed Software/Firmware that is furnished with the System covered
under the Contract for the reasons described in section (2)(iv) of the
Software License Agreement.
One commenter remarked that in section (2)(v), activation of
nonactivated program instruction steps is a process by which a non-
enabled software feature may be enabled and that, in such cases,
additional Right-To-Use fees may apply.
Response: REA agrees and has added language to that effect.
One commenter suggested that a new section (2)(vi) be added
restricting decompiling or reverse assembly.
Response: Although REA has not added a new section, the suggested
language has been added to section (2)(iii).
Four commenters replied on section (2)(vii)(A). Their comments are
summarized below:
(i) Three would void the warranty if the Licensee made any changes.
(ii) Three wanted section (2)(vii)(A) removed.
(iii) One suggested extensively revising the language.
(iv) One suggested refusing to allow Licensee to make any changes
to the Licensed Software to restore service.
Response: (i) REA feels the Borrower must be able to attempt to
preserve or restore service to their subscribers without incurring a
penalty if the Licensor is unable to preserve or restore service in a
timely manner.
(ii), (iii) Section (2)(vii)(A) has not been removed but the
language has been extensively revised to clarify REA's intention and
protect the Licensor.
(iv) As stated previously, REA feels the Borrower must be able to
attempt to preserve or restore service to their subscribers. However,
this section has been revised to indicate that any changes made by
Licensee can only be made if the Licensor is unable to preserve or
restore service in a timely manner.
One commenter wanted to know who determines that the Licensor is
unwilling or unable to furnish support for the Licensed Software under
section (2)(vii)(C).
Response: The exception set forth in section (2)(vii)(c) applies
only if section (2)(xi) is enforced. Section (2)(vii)(c) has been
revised to indicate the above.
One commenter feels that all rights to any changes made under
section (2)(vii) should remain the property of the Licensor.
Response: As indicated previously, section (2)(vii)(A) has been
revised for clarification and any changes made under section
(2)(vii)(C) are only allowed if section (2)(xi) is enforced. REA
believes any changes should become the property of the Licensee because
the changes are made only in the instance where the Licensor is
unwilling or unable to support the Licensed Software.
Comments were received on section (2)(ix) as follows:
(i) Five commenters stated that some software problems cannot be
corrected in thirty days and suggested that additional time be allowed
in these cases.
(ii) Two commenters suggested a one (1) year warranty period.
(iii) One commenter felt that the Software warranty should begin at
the Completion of Installation.
(iv) It was also felt that the Software should function according
to the Specification and not to the technical material provided to
explain the System and that the Licensor's sole obligation should be to
repair the Software and correct any physical damage caused by the
Software failure.
(v) One commenter wanted the phrase ``free from errors and
incompleteness'' added to the first sentence of section (2)(ix) to
reflect the requirement in 7 CFR 1753.38(c)(1)(v) and a definition of
those terms added to the Agreement.
(vi) It was also suggested that a one (1) year warranty period be
added for special equipment.
Response: (i) Section (2)(ix) already allows for an extension of
time if the software problem cannot be corrected in thirty (30) days.
This language has been further clarified.
(ii) REA requires a five (5) year warranty period because software
is information based and defects in seldom used programs would not be
detected until the program is used. REA believes that over a 5 year
period even seldom used programs would be used and any defects
corrected.
(iii) In order for the Licensee to realize a full five (5) year
warranty the warranty period must start with the delivery of possession
and control from the Licensor. If it began at the Completion of
Installation, the warranty period would be diminishing while the
equipment was still under control of the Licensor.
(iv) Performance of the software must be in accordance with both
the Specification and Licensor documentation. The documentation is
furnished to assist the Licensee in the operation, administration, and
maintenance of the System. REA has made no change in the obligations of
the Licensor as stated in the Contract.
(v) REA does not feel the term ``free from errors and
incompleteness'' fully describes the intent of this section (2)(ix).
This language has not been added to section (2)(ix).
(vi) This License was specifically designed for use with REA Forms
525 Central Office Equipment Contract (Including Installation) and 545
Central Office Equipment Contract (Not Including Installation) and does
not apply to special equipment contracts, therefore, there is no need
for a one (1) year warranty clause for special equipment.
Comments were received on section (2)(x) as follows:
(i) Two commenters wanted the ability to modify the Licensed
Software or replace it with equivalent software at Licensor's option.
(ii) One commenter suggested that section (2)(x) disclaim any
special, indirect or consequential damages in connection with the use
or performance of the Licensed Software.
(iii) One commenter wanted the infringement clause to apply only to
United States patents, copyrights and trademarks and the right to
remove the enjoined Licensed Software and refund some of the Right-to-
Use Fee if modification or replacement is not feasible.
(iv) One commenter wanted the Licensee to indemnify the Licensor in
like manner for any claim, suit or proceeding brought against the
Licensor for infringement caused by the Licensee. The commenter also
wanted to remove the phrase ``This shall be in addition to any other
rights or claims which the Licensee may have'' and suggested that
section (2)(x) disclaim any liability for any settlement made without
Licensee's consent.
Response: (i) The option of modifying or replacing the Licensed
Software is in the current language.
(ii) REA's intent is to limit liability for special, indirect and
consequential damages to provide the Licensor with reasonable
protection against losses related to product failure; protect the
government's loan security; and serve as a standard that bidders and
owners alike can expect to see on all central office equipment
contracts so competitive bidding can be facilitated. This language has
not been changed.
(iii) REA feels that the Licensor should know what software can be
legally licensed by the Licensor, and the Licensee should expect that
the Licensed Software furnished with the System is not going to be
subject to infringement challenges. Simply allowing the Licensor to
refund some of the Right-to-Use Fee and remove the enjoined Licensed
Software gives the Licensor the right to ``buy back'' equipment or
software when a copyright problem is encountered. To the Licensee, this
means that essential features or capability could be lost and would
remain unavailable for the entire useful life of the new switching
equipment. The resulting reduction in value of the contract to the
Licensee cannot be predicted, and certainly cannot be limited to the
price of the infringing equipment or software less depreciation. These
requirements have not been changed.
(iv) Section (2)(x) specifically exempts the Licensor from
liability if the infringing software is of the Licensee's design or
selection. REA feels that the existing language sufficiently protects
the Licensor from unwarranted claims caused by the Licensee. REA also
feels the Licensee should not have to relinquish its rights as covered
in the Contract because the Licensor is involved in an infringement
dispute. This language has not been changed. Also, the Licensee cannot
commit the Licensor to any settlement, therefore, the suggested
additional language is not required.
Comments were received on section (2)(xi) as follows:
(i) Two commenters suggested that software support after the
warranty period should have a specific time period.
(ii) Two commenters suggested that they should not be required to
support retired software when there is active equivalent or upgraded
software available from the Licensor which it will support.
(iii) One commenter suggested that the language should be amended
to exclude information that the Licensor does not have the legal right
to turn over; e.g., third party Software.
(iv) One commenter suggested that the only support covered under
this section (2)(xi) should be the support required by the Contract.
The commenter also felt that the Licensee should be allowed to modify
the Licensed Software for proper equipment operation but not for
feature enhancements, and the Licensor should receive royalty-free
rights to make, use and sell any modifications made by the Licensee
under this section.
(v) One commenter remarked that the only time the Licensee should
be able to modify the Licensed Software is in the event that the
Licensor withdraws from the business of selling and supporting the
Licensed Software.
Response: (i) REA agrees that support after the warranty period
should have a specified time limit. This was addressed when REA
published the Proposed Rule Form 525 Central Office Equipment Contract
(Including Installation) in the Federal Register.
(ii) REA feels that the Licensee should reasonably expect to
receive support for the Licensed Software without having to upgrade the
System.
(iii) REA agrees in principle, however, this exclusion does not
extend to any information or Software not specifically identified as
``agreed excluded documentation'' in an attachment to the Contract, and
under no circumstance can it include the overall operating Software of
the System. Section (2)(xi) has been revised to reflect the above.
(iv) REA agrees that the support referred to in section (2)(xi) is
the support required by the Contract. The language has been changed to
reflect this. However, REA does not agree that the Licensee should be
restricted from making feature enhancements. The Licensee must be able
to add enhancements to the System in order to offer current and future
services to their subscribers. Due to the circumstances that would
require enforcement of this section (2)(xi) any changes made under this
section become the exclusive property of the Licensee.
(v) REA feels the Licensee should have the right to modify the
Licensed Software in the event that the Licensor refuses to furnish
support as required by the Contract.
One commenter felt that in section (2)(xii), the word Licensor
should be Licensee. One commenter felt that this section should apply
to both the Licensor and the Licensee.
Response: Section (2)(xii) refers specifically to the Licensor.
Section (2)(xiii) refers to the Licensee and details the remedies
available to the Licensor.
Five commenters remarked on section (2)(xiii). Their comments are
summarized below:
(i) One commenter felt that damages of ten times the Contract price
for a breach of the Software License was excessive and should be
changed to the initial cost of the Software.
(ii) One commenter felt that damages of ten times the Contract
price for a breach of the Software License was not a sufficient
deterrent and sixty (60) days notice before termination may cause
irreparable harm to the Licensor. It was suggested that section
(2)(xiii) be eliminated in its entirety.
(iii) One commenter suggested that the sixty (60) day notice period
for REA should be changed to thirty (30) days.
(iv) One commenter wanted section (2)(xiii) to apply to the
Licensee and the Licensor and exclude from damages lost revenue or
profits.
(v) One commenter wanted REA to agree that certain events would
cause REA to recommend termination. One commenter wanted the right to
terminate the Software License without REA approval.
(vi) One commenter suggested the word reasonable in the first
sentence of section (2)(xiii) be changed to thirty (30) days.
Response: (i) REA feels that damages limited to the initial cost of
the Software is not a sufficient deterrent to provide a reasonable
amount of security against a breach of the Software License. However,
after further evaluation, and in response to the comments, REA feels
that ten times the Contract price could financially devastate the
typical REA Borrower and consequently jeopardize REA loan security.
Damages payable by the Licensee for breach of this License have been
changed to not exceed the total Contract price
(ii) In order to protect the Borrower and REA loan security REA
feels there must be a cap on damages against the Licensee for a breach
of this License. REA also feels that there must be some restrictions on
the termination of the Software License. This section (2)(xiii)
remains.
(iii) REA feels that thirty (30) days is not sufficient time to
thoroughly evaluate and arrive at a fair and equitable decision
regarding the circumstances that might cause termination of the
Software License.
(iv) As stated previously, section (2)(xii) refers specifically to
the Licensor. Section (2)(xiii) refers to the Licensee and details the
remedies available to the Licensor.
(v) Any event that would cause the Licensor to recommend
termination of the Software License must be individually and thoroughly
evaluated by REA prior to any recommendation by REA. In order to
protect the loan security of REA and the Licensee's ability to repay
that loan, REA must be included in any decision to terminate the
Software License.
(vi) REA has evaluated the suggestion to change the word reasonable
to thirty (30) days and agree that it would make the Software License
more definitive. The language in section (2)(xiii) has been changed to
reflect this.
The remainder of section (2)(xiii) has not been changed.
One commenter felt that section (2)(xv) was unnecessary because the
Software License is an Addendum to the Contract and the Contract is
subject to REA approval.
Response: Separate provisions for REA approval of the Software
License Agreement makes the Agreement more prominent and helps ensure
that arbitrary changes are not made to the Agreement without REA's
knowledge or approval.
One commenter wanted four additional paragraphs added to section
(2) of the Software License. One commenter wanted two additional
paragraphs added to section (2) of the Software License. These six
paragraphs are summarized here.
(i) One paragraph specified that the obligations of the Licensee
under this agreement shall survive after the termination of this
Agreement.
(ii) One paragraph specified that the Licensee shall not, without
the prior written permission of the Licensor, use in advertising,
publicity, or otherwise, any trade name, trademark, or any other
identification owned by the Licensor.
(iii) One paragraph specified that the Software License Agreement
shall prevail notwithstanding any conflicting terms or legends which
may appear on or in the Licensed Software.
(iv) One paragraph specified that nothing contained herein shall be
construed as conferring by implication or otherwise (1) any license or
right to use any name, trade name, trademark or any other
identification, or simulation thereof; (2) any obligation to furnish to
any person, including Licensee, any assistance whatsoever, or any
documentation other than Licensed Software and related documentation as
specified in this Agreement; (3) a grant to sell, lease, or otherwise
transfer or dispose of Licensed Software, except as specified.
(v) One paragraph specified that the Licensee shall not decompile
or reverse assemble the Licensed Software.
(vi) One paragraph specified that the Licensee assumes sole
responsibility for ensuring that the Billing Center can correctly read
call records and risk of loss for any data, use, revenue or profit
shall be the responsibility of Licensee.
Response: (i) REA agrees and has added the suggested language to
the Software License Agreement in section (2)(xiv).
(ii) REA agrees that the Licensor and Licensee have a right to
protect their trademarks, trade names and other forms of
identification. Language has been added to the Software License to
reflect this in section (2)(xv).
(iii) REA believes that this is the intent of the Software License
Agreement and has added the suggested language to the Software License
in section (2)(xvi).
(iv) REA believes that the language added to the Software License
for paragraph (ii) covers part (1) of this paragraph. Part (2) of this
paragraph has not been added as the Licensor must provide support and
assistance as required by the Contract. REA has not added part (3) of
this paragraph because section (2)(ii) of the Software License already
states the requirements for sale of the System.
(v) Although REA has not added a new section, the suggested
language has been added to section (2)(iii).
(vi) REA believes it is the responsibility of the Licensor to
determine what format is required for the call records and react
accordingly. This paragraph has not been added to the Software License.
List of Subjects
7 CFR Part 1753
Communications equipment, Loan programs--communications, Reporting
and recordkeeping requirements, Rural areas, Telephone.
7 CFR Part 1755
Loan programs--communications, Reporting and recordkeeping
requirements, Rural areas, Telephone.
For the reasons set out in the preamble, Chapter XVII of title 7 of
the Code of Federal Regulations is amended as follows:
PART 1753--TELECOMMUNICATIONS SYSTEM CONSTRUCTION POLICIES AND
PROCEDURES
1. The authority citation for part 1753 continues to read as
follows:
Authority: 7 U.S.C. 901 et seq., 1921 et seq.
2. Section 1753.7 is amended by revising paragraph (f)(4) to read
as follows:
Sec. 1753.7 Plans and specifications (P&S).
* * * * *
(f) * * *
(4) Telecommunications software license provision. If the borrower
is required to enter into a software license agreement in order to use
the equipment, the contract must contain the REA prepared Software
License Agreement as an Addendum.
3. Section 1753.38 is amended by revising paragraph (a)(2)(i)(J),
by removing paragraph (a)(2)(iii), by redesignating paragraphs
(a)(2)(iv) through (a)(2)(vii) as paragraphs (a)(2)(iii) through
(a)(2)(vi), respectively, and by revising newly designated paragraph
(a)(2)(v) and paragraph (c) to read as follows:
Sec. 1753.38 Procurement procedures.
(a) * * *
(2) * * *
(i) * * *
(J) A software license agreement (if required by the manufacturer)
in the form indicated in =1753.38(c).
* * * * *
(v) After evaluation of the technical proposals and REA approval of
changes to the P&S, sealed bids shall be solicited from only those
bidders whose technical proposals meet the P&S requirements. When fewer
than three bidders are qualified to bid, REA approval must be obtained
to proceed. Generally, REA will grant this approval only if all
suppliers currently listed in the ``List of Materials Acceptable for
Use on Telephone Systems of REA Borrowers'' were invited to submit
technical proposals.
* * * * *
(c) Software license agreement (Addendum 2). The Addendum in this
paragraph to REA Form 525, Central Office Equipment Contract (Including
Installation), and REA Form 545, Central Office Equipment Contract (Not
Including Installation), must be used with any central office equipment
contract that requires a software license agreement and for which REA
financial assistance is to be provided.
Addendum 2--Software License Agreement
(1) Definitions. For the purpose of this Software License
Agreement--
Contract means the REA Form 525 Central Office Equipment
Contract (Including Installation) or REA Form 545 Central Office
Equipment Contract (Not Including Installation),
dated ____________, between
----------------------------------------------------------------------
(the Licensee) and
----------------------------------------------------------------------
(the Licensor).
Days means calendar days.
Licensed Software means the computer programs, furnished for the
operation of the System(s) provided under the Contract, whether
contained on a tape, disc, semiconductor device, or other memory
device or system memory consisting of logic instructions and
instruction sequences in machine-readable object code, which
manipulate data in the central processor, control and perform input/
output operations, perform error diagnostic and recovery routines,
control call processing, and perform peripheral control,
administrative and maintenance functions; as well as Licensor's
standard customer documentation, excluding source code, used to
describe, maintain and use the programs provided under the Contract.
Licensee and Licensor, respectively, mean the parties signing
the software license agreement as the licensee and licensor.
Right-to-Use Fee is defined in section (2).
Specifications means the REA Form 522, General Specification for
Digital, Stored Program Controlled Central Office Equipment, which
is part of the Contract.
System means the stored program controlled central office and
associated remote switching terminal or terminals which use the
Licensed Software covered by this License.
(2) Software License Provisions. The Licensor may charge a fee,
herein referred to as a Right-to-Use Fee, for use of the Licensed
Software. The Right-to-Use Fee shall be included in the Total Base
Bid as defined in the Contract. In consideration of the Right-to-Use
Fee, the Licensor hereby grants the Licensee the right to use all
Licensed Software, solely in connection with the System provided
under this Contract, so that the System performs in accordance with
the Contract and the Specifications.
(i) The Licensee's right to use the Licensed Software is non-
exclusive and limited to use or operation in the United States of
America, including its Territories, the Federated States of
Micronesia, the Marshall Islands, Palau and the Commonwealth of
Puerto Rico, with the System for which the Licensed Software is
provided by the Licensor. The Licensee may reuse the equipment and
its accompanying Licensed Software at another location within the
Licensee's System without obtaining additional approvals from
Licensor, provided, however, that the Licensee notify the Licensor,
within ten (10) days, of the change in location of the equipment and
Licensed Software.
(ii) The Licensee and any successor to the Licensee's title in
the System may, without further consent of the Licensor, transfer
the Licensed Software and all of the Licensee's rights and interests
under this Software License to any transferee who acquires legal
title to the System, provided that such transferee first agrees in
writing to the Licensor to abide by all of the terms and conditions
of this License including, without limitation, the territorial
limitation stated in section (2)(i) and the restrictions on
decompiling or reverse assembly stated in section (2)(iii). Licensee
shall give Licensor written notice thirty (30) days prior to any
transfer. The Licensor shall not place any additional conditions on
the transferee's use of the System or the Licensed Software. If the
provisions of this section (2)(ii) are satisfied, thereafter the
Licensee shall bear no responsibility for transferee's failure to
abide by the terms and conditions of this License.
(iii) The Licensee shall take reasonable steps to protect the
confidentiality of the Licensed Software and shall not decompile or
reverse assemble all or any part of the Licensed Software to
generate source code. The Licensee shall not make the Licensed
Software available to any person except on a need to know basis. The
obligations of the Licensee hereunder shall not extend to any
information or data relating to the Licensed Software which is now
available to the general public or becomes available by reason of
the acts of the Licensor or third parties.
(iv) The Licensee may reproduce or copy the Licensed Software
and related materials solely for the purpose of archival backup, in-
house training and operating, maintaining, and administering the
System provided under this Contract. In such reproduction, the
Licensee shall include, upon all such copies of the Licensed
Software, all proprietary notices, including the copyright notice
within the Licensed Software program and related documentation in
the form in which it is received from the Licensor.
(v) The Licensee acknowledges that the Licensed Software program
is the property of the Licensor, and shall not do, or cause to be
done, anything to activate any of the subsisting nonactivated
computer instruction steps therein unless authorized in writing by
the Licensor. The Licensor shall have the exclusive right to
activate, or authorize the activation of, the subsisting
nonactivated program instruction steps in the Licensed Software. In
this event Licensee shall pay any additional Right-To-Use Fee(s)
agreed to by Licensee and Licensor.
(vi) In the event the Licensor develops significant improvements
to the Licensed Software, the Licensor may market the improvements
as a separate offering requiring payment of an additional Right-to-
Use Fee.
(vii) The Licensee shall not modify or otherwise change the
Licensed Software other than at the direction of the Licensor. This
provision shall not apply to:
(A) Changes to the Licensed Software which are necessary to
preserve or restore service. Licensee shall use all reasonable
efforts to contact Licensor before making any such changes. If the
Licensor is unable to make the necessary changes promptly to the
Licensed Software to preserve or restore service, then the Licensee
may make only such changes to the Licensed Software as are necessary
to preserve or restore service. In such event, Licensee shall
promptly notify Licensor of the changes made by Licensee.
(B) Changes made by the Licensee to its own database; and
(C) Changes made by the Licensee in connection with the exercise
of its rights under section (2)(xi).
(viii) Within thirty (30) days after written notice that a
program or a release thereof has been discontinued and is no longer
required for the operation of the System and the Licensor has
furnished the Licensee with a new program that is fully satisfactory
to the Licensee, the Licensee agrees to return the original and all
copies of the discontinued program and specified related documents.
If such return is impossible or impractical, the Licensee shall
destroy said program and documents and provide the Licensor with a
written notice of such destruction.
(ix) The Licensor warrants to the Licensee that any Software
licensed under this Software License shall function for a period of
five (5) years from the warranty start date defined in the Contract
in accordance with the Specifications and any written or printed
technical material provided by the Licensor to explain the operation
of the Licensed Software and aid in its use. The Licensor shall
correct all deficiencies within thirty (30) days from the date of
receipt by the Licensor of written notice of such deficiencies from
the Licensee. An extension of this thirty (30) day period may be
allowed only if agreed upon by the Licensee and REA. It shall be the
Licensor's obligation to insert and thoroughly test, at no charge to
the Licensee, any software amendment or alteration provided to
satisfy the obligations of this section (2)(ix). If a deficiency is
detected or a correction made within the final ninety (90) days of
the warranty, the warranty shall be extended to a date ninety (90)
days after the deficiency has been corrected.
(x) The Licensor shall hold harmless and indemnify the Licensee
from any and all claims, suits, and proceedings for the infringement
of any patent, copyright, trademark, or violation of trade secrets
covering any Licensed Software used with the System, except for
items of the Licensee's design or selection. If the Licensee's use
of the Licensed Software is enjoined, the Licensor shall promptly,
at its own expense, place the Licensee in a position where it is
able to use the System in accordance with the Specifications,
whether by:
(A) Modifying the Licensed Software or portion thereof so that
it no longer infringes but remains functionally equivalent,
(B) Replacing the Licensed Software with noninfringing
equivalent software,
(C) Obtaining for the Licensee a license or other right to use,
or
(D) Such other actions as may be required. This shall be in
addition to any other rights or claims which the Licensee may have.
The Licensor shall, at its own expense, (and the Licensee agrees to
permit the Licensor to do so) defend any suits which may be
instituted by any party against the Licensee for alleged
infringement of patents, copyright, trademark, or violation of trade
secrets relative to the Licensor's performance hereunder. Either
party shall notify the other promptly of any such claims, and the
Licensee shall give to the Licensor full authority and opportunity
to settle such claims, and shall reasonably cooperate with the
Licensor in obtaining information relative to such claims.
(xi) In the event the Licensor becomes unwilling or unable to
furnish support required by the Contract for the Licensed Software,
the Licensor shall, upon written request of the Licensee, provide
with the greatest possible dispatch all Licensed Software back-up
documentation including proprietary information other than agreed
excluded documentation. In this event, (1) the Licensee shall be
permitted full use of all Licensed Software and documentation as
long as the System is operational and (2) the Licensee may modify,
or have modified, the Licensed Software for feature enhancement or
proper equipment operation and becomes the owner of such
modifications for all purposes, including patenting, copywriting,
sale, or license thereof. Agreed excluded documentation is Licensed
Software back-up documentation described in the first sentence of
this section (2)(xi) which (A) is proprietary information of a third
party, (B) was specifically described at the pre-bid technical
session and individually identified in an attachment to the Bid, and
(C) REA and the Licensee agree, before bids are opened, may be
excluded from the requirements of this section (2)(xi). In the event
the Licensor furnishes agreed excluded documentation and the
Licensee exercises its rights under this section (2)(xi), the
Licensor shall use its best efforts to provide such agreed excluded
information to the Licensee, or obtain continuing support agreements
from the parties retaining legal rights to the excluded
documentation. Licensor agrees that certain Licensed Software cannot
be excluded from the requirements of this section (2)(xi) including,
but not limited to, software, the absence or improper operation of
which would significantly impair the operation of the System, would
significantly impair the ability of the Licensee to generate
revenue, or would pose a risk to REA loan security.
(xii) A breach of this License by the Licensor is a breach of
the Contract. Therefore, the remedies specified in the Contract
shall apply.
(xiii) The Licensee shall have thirty (30) days after receipt of
written notice from the Licensor to correct any breach of this
License. Damages payable by the Licensee for its breach of this
License shall not exceed the total Contract price. The Licensor
shall not terminate this License unless:
(A) The Licensor has given REA sixty (60) days notice before
termination; and
(B) REA agrees with the Licensor that termination is the only
method available to prevent significant harm to the Licensor from
additional Licensee defaults.
(xiv) The obligations of Licensee and Licensor and any
successors in title under this Agreement shall survive the
termination of this Agreement and continue after any termination of
rights granted hereunder.
(xv) Licensee and Licensor agree that it will not, without the
prior written permission of the other party, use in advertising,
publicity, packaging, labeling, or otherwise, any trade name,
trademark, trade device, service mark, symbol, or any other
identification or any abbreviation, contraction, or simulation
thereof owned by the other party or any of its affiliates or used by
the other party or any of its affiliates to identify any of their
products or services, unless otherwise agreed by the parties.
(xvi) This Software License Agreement shall prevail
notwithstanding any conflicting terms or legends which may appear on
or in the Licensed Software.
(xvii) If any Section or part thereof, in this Agreement shall
be held to be invalid or unenforceable in any jurisdiction in which
this Agreement is being performed, then the meaning of such section
or part shall be construed so as to render it enforceable, to the
extent feasible; and if no feasible interpretation would save such
section or part, it shall be severed from this Agreement and the
remainder shall remain in full force and effect. However, in the
event such section or part is considered an essential element of
this Agreement, the parties shall promptly negotiate a replacement
therefor.
(xviii) This Software License and any amendments thereto, or
revisions thereof, are subject to REA approval.
Licensor
Company
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By---------------------------------------------------------------------
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Licensee
Company
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[End of clause]
* * * * *
PART 1755--TELECOMMUNICATIONS STANDARDS AND SPECIFICATIONS FOR
MATERIALS, EQUIPMENT AND CONSTRUCTION
4. The authority citation for part 1755 is revised to read as
follows:
Authority: 7 U.S.C. 901 et seq., 1921 et seq.
5. Section 1755.93 is amended by adding a new entry at the end of
the table and by revising footnote 1 at the end of table to read as
follows:
1755.93 List of standard forms of telecommunications contracts.
* * * * *
----------------------------------------------------------------------------------------------------------------
Source of
REA form No. Issue date Title Purpose copies
----------------------------------------------------------------------------------------------------------------
* * * * * * *
Addendum No. 2....... May 16, 1994........ Addendum to REA Forms 525 Incorporates the Software REA.\1\
and 545 Central Office License Agreement into
Equipment Contracts. REA Forms 525 and 545.
----------------------------------------------------------------------------------------------------------------
\1\A limited number of copies of the publication will be furnished by REA upon request. As this document is
produced by the Federal Government and is, therefore, in the public domain, additional copies may be
duplicated locally by any user as desired. Requests for copies should be sent the Director, Administrative
Services Division, U.S. Department of Agriculture, Rural Electrification Administration, Washington, DC 20250.
The telephone number of the REA Publication Office is (202) 720-8674.
* * * * *
Dated: April 16, 1994.
Bob J. Nash,
Under Secretary, Small Community and Rural Development.
[FR Doc. 94-8834 Filed 4-13-94; 8:45 am]
BILLING CODE 3410-15-P