Critical Notice to All VMware Customers
The landscape of enterprise software compliance has fundamentally shifted. What was once a commercial dispute to be resolved through negotiation is now a potential federal lawsuit with unlimited liability exposure. Every executive with VMware in their environment needs to read this advisory immediately.
The Rules Have Changed
On the surface, the Broadcom vs. Siemens lawsuit appears to be yet another vendor-customer compliance dispute. It is not. This case represents a fundamental and dangerous evolution in how enterprise software vendors will pursue licensing claims going forward.
Broadcom has made a calculated strategic decision that should alarm every enterprise software customer: they have bypassed standard "Breach of Contract" claims entirely and are instead suing Siemens for Copyright Infringement in United States Federal Court.
Why This Matters
This is not an isolated legal tactic. This is a template. When Broadcom's approach proves effective—and the legal structure strongly favors the plaintiff—expect Oracle, IBM, SAP, and every other major enterprise vendor to follow. The era of the "friendly audit" resolved through commercial negotiation is effectively over.
The message from Broadcom to the market is clear: comply with our terms exactly as we interpret them, or face unlimited liability in US Federal Court. This applies regardless of where your company is headquartered. Siemens is a German company. They are being sued in the United States.
Contract vs. Copyright: The Critical Distinction
Understanding why vendors are choosing Copyright law over Contract law is essential. This is not a minor procedural preference—it is a strategic weapon designed to maximize vendor leverage and customer exposure.
Traditional Contract Claim
- ✓ Liability Caps Apply: Most ELAs limit damages to 1x-2x annual fees
- ✓ Venue Negotiable: Often resolved in customer's jurisdiction
- ✓ Commercial Resolution: Typically settled through negotiation
- ✓ Predictable Exposure: Financial risk is bounded
Copyright Infringement Claim
- ✗ NO Liability Caps: Contract limitations do not apply to copyright torts
- ✗ US Federal Court: Forced into US jurisdiction regardless of location
- ✗ Disgorgement of Profits: Vendor can claim share of YOUR profits
- ✗ Unlimited Exposure: No ceiling on potential damages
The Three Fatal Consequences
No Liability Caps
Your carefully negotiated contract liability caps—typically limiting damages to 1x or 2x annual license fees—become worthless. Copyright infringement is a tort, not a contract claim. Those contractual protections simply do not apply. A $5M annual license could become a $50M, $100M, or larger judgment.
Disgorgement of Profits
Under US Copyright law, the plaintiff can seek disgorgement of the defendant's profits attributable to the infringement. This means Broadcom can argue that Siemens' profits from products built or operated using VMware infrastructure rightfully belong to Broadcom. The exposure is theoretically unlimited and directly tied to your business success.
Forced US Venue
Copyright infringement claims under US law force the case into US Federal Courts—regardless of where your company is headquartered. Siemens is a German multinational. They are being sued in the United States. US courts are known for broad discovery requirements, high damage awards, and plaintiff-friendly copyright precedents. Your local legal team and your familiar legal system are no longer relevant.
What This Means for Your Organization
If you have VMware software deployed in your organization—and especially if you have any uncertainty about your compliance position—you are now operating in a fundamentally different risk environment than you were six months ago.
The New Reality
- → Audits are no longer commercial negotiations—they are potential lawsuit preludes
- → ELA renewals are not routine procurement—they are risk management events
- → Compliance gaps that once meant negotiating back-fees now mean potential copyright liability
- → Every response to a vendor audit inquiry could become evidence in federal litigation
The "friendly audit" is dead. The vendor sitting across from you is no longer trying to find a commercial resolution. They are building a federal case. Every document you provide, every statement you make, every admission of imperfect compliance is potential evidence in a copyright infringement lawsuit with unlimited damages.
Immediate Actions Required
Given the severity of this legal shift, we strongly advise the following immediate actions for any organization with VMware deployments—and by extension, any major enterprise software from vendors likely to adopt similar tactics.
1. Legal Counsel is Mandatory—Not Optional
Handling a vendor audit without legal counsel in this environment is financial malpractice. This is no longer a procurement exercise. This is litigation preparation. Every interaction with the vendor must be managed with the understanding that you may be building the record for a federal copyright case.
Critical: Do not respond to audit requests, do not provide documentation, do not admit to any compliance gaps without legal counsel present and advising. What you say can and will be used against you in federal court.
2. US Intellectual Property Counsel Required
Your local general counsel—even excellent corporate lawyers in your home jurisdiction—are not sufficient for this situation. This is US Copyright Law. The case will be tried in US Federal Court under US legal standards with US procedural rules.
You need specialized US intellectual property litigators who understand copyright infringement defense, US Federal Court procedures, and the specific tactics vendors use in these cases. This is not a generalist exercise.
3. Conduct an Immediate Compliance Assessment
Before any vendor contact, understand your actual position. What licenses do you hold? What are you actually running? Where are the gaps? This assessment must be conducted under attorney-client privilege to protect the findings from discovery. An unprivileged self-audit could become Exhibit A in their case.
4. Treat ELA Renewals as Strategic Risk Events
Your next VMware renewal is not a routine procurement exercise. It is an opportunity to either cement your compliance position or expose yourself to litigation risk. Approach it with the same rigor you would apply to an M&A transaction or securities offering.
How Costif.ai Can Help
At Costif.ai, we specialize in helping enterprises understand and optimize their software asset positions. In this new environment, our role has become even more critical as a first line of defense in risk assessment.
Risk Assessment
Comprehensive analysis of your current VMware deployment, licensing position, and compliance gaps—identifying exposure before vendors do.
ELA Renewal Preparation
Strategic preparation for ELA renewals that positions you for compliance and optimal commercial terms—before the audit trigger is pulled.
Deployment Optimization
Technical analysis to right-size your deployment, eliminate waste, and ensure your actual usage aligns with your licensed entitlements.
Exit Strategy Planning
For organizations considering reducing VMware dependency, we provide migration planning and execution support to reduce exposure.
Platinum Service: Your Shield Against Copyright Claims
Purpose-built for this exact scenario
In the post-Broadcom v. Siemens world, organizations facing unlimited copyright liability exposure need more than software tools—they need a comprehensive defense team. Our Platinum service was designed specifically to protect enterprises from exactly this type of escalating vendor legal strategy.
Partner Legal Firm Access
Full-service access to top-tier US IP litigation firms with proven track records in software copyright defense. When the audit letter arrives, you have immediate access to the right lawyers.
Vendor Audit Defense
Expert team that coordinates your response to vendor audits—ensuring every document, statement, and interaction is strategically managed to minimize litigation exposure.
Privileged Compliance Audit
Manual audit conducted under attorney-client privilege, so your compliance assessment cannot become "Exhibit A" in a federal copyright lawsuit.
Senior Licensing Expert Team
Dedicated team of senior licensing specialists who understand VMware/Broadcom licensing inside and out—identifying compliant paths forward before vendors find gaps.
Contract Redlining
Expert review and redlining of all vendor agreements to ensure you're not signing away critical protections or inadvertently expanding your liability exposure.
24/7 Priority Support
When the audit letter arrives at 4pm Friday, you don't wait until Monday. Immediate access to your dedicated team and legal partners when crisis strikes.
The Cost of Being Unprepared
Without the protections Platinum provides, you're facing potential unlimited copyright damages, disgorgement of profits, and forced US Federal Court litigation. A $5M annual VMware spend could become a $50M+ judgment. Platinum's fee—40% of realized savings—becomes trivial insurance against catastrophic exposure.
Our Commitment: No-Fee Legal Referrals
Costif.ai is not a law firm. We cannot and do not provide legal advice. However, we recognize that in this environment, access to the right legal counsel is critical—and not all organizations know where to find specialized US intellectual property litigators.
Our Promise
Upon request, Costif.ai can recommend top-tier specialist lawyers with proven track records in software copyright defense and vendor audit disputes. We take absolutely no referral fees or commissions from these recommendations. This is purely to ensure our clients are protected by the best available counsel. Your relationship with legal counsel is entirely separate from your relationship with Costif.ai.
Our goal is simple: protect our clients. In this new legal environment, that means ensuring you have both the technical clarity we provide and the legal representation this situation demands.
Don't Wait for the Audit Letter
The time to assess your risk and prepare your defenses is now—before Broadcom or any other vendor decides you're their next target. Contact Costif.ai today for a confidential risk assessment.
Disclaimer
Costif.AI is an IT cost optimization and asset management consultancy, not a law firm. The information provided in this article is for educational and strategic planning purposes only and does not constitute legal advice. Every audit situation is unique. We strongly recommend engaging qualified intellectual property counsel to review your specific circumstances before responding to any vendor audit claims.