Fidelity vs Broadcom: The VMware Standoff

On November 14, 2025 Fidelity Technology Group filed a lawsuit against Broadcom (owner of VMware), stating that Fidelity has a right to renew its subscription without price spikes. Broadcom is threatening to terminate Fidelity's software subscription, leaving Fidelity and its customers in the dark. 

In this episode we explain why Fidelity is suing Broadcom, what the challenges are in a lawsuit of this nature, and the potential outcomes of this case.

We'll be covering this case in future episodes as this story develops. Be sure to like and subscribe to get these updates.

Transcript

Setting The Stage: Lawsuit Overview

Craig Guarente 0:05

Welcome everybody to the world's greatest licensing podcast. Uh, this is gonna be a great episode today because we're actually talking about licensing issues. And joining me today is is Ed Hayburn, our residence licensing expert. Uh, he's gonna walk us through the news of Fidelity suing Broadcom, which is pretty fantastic. We don't often get to see Ed actual litigation over software disputes, especially what Broadcom has done.

Ed Heyburn 0:36

I know this is uh it is exciting. Most of these cases never make it to the courtroom, and here we are.

Craig Guarente 0:43

So, what we want to do is um just a little background, folks. Um Broadcom bought uh VMware several years ago, I think 2023, and changed all the rules. You all know that. So if you're using VMware, you know that Broadcom has uh we've heard, you know, thousand percent price hikes and done kinds of packaging and repackaging in software. And to be fair to Broadcom, what they've done isn't that different than what other companies have done uh to their own software or when they purchase software. I think the issue here is the software in question is really important and it's really hard to get off of immediately. So um I I I read through the case. Uh Ed and I are gonna go through it, and I think it's fascinating if you're in software asset management, if you're in procurement, if you're in IT, if you're in legal, and uh you you are dealing with software contracts or licensing agreements, uh, this is gonna resonate with you. So um, and it's step one, right, Ed? This is just the complaint.

Ed Heyburn 1:48

This is just the complaint. They they obviously have a long way to go. Um, and um, you know, once you file a complaint, then you move into this discovery phase uh where you have to exchange documents. And that's kind of where these um high-tech executives get a little bit uncomfortable because they have to turn over the things that uh they've never had to turn over before. And they also have to sit uh for depositions, and that can get pretty sticky because there's there's uh although when you're in court, you see on TV uh and you see in a courtroom, only relevant questions can be asked. But in a deposition, it's wide open. You can ask things that may not make it in a courtroom, but it's sure, sure gonna make it into a deposition transcript. So uh this is exciting for for tech nerds and legal nerds alike.

Why Redactions And Why Massachusetts

Craig Guarente 2:37

Well, and um I'd love to be in that deposition. I'd love to hear it. Uh and I was a little, and I know we're gonna, you know, walk through the complaint. I don't know if you want to bring that up on the screen. Uh but as we go through this, you know, for those who have a video feed, um, you'll see there's some areas that are redacted. And I scoured the internets today to find an unredacted version of this. So, you know, why is some of this redacted? And and will it be unredacted at some point?

Ed Heyburn 3:08

It looked I noticed it's odd. It's unusual that a complaint would would be redacted. Um, if you were uh filing medical records with the court or social security numbers, things like that, they have to be redacted. So that was the first thing uh I noticed, and it was unusual. Uh and it looks like they were um redacting it's the price, the pricing. It's you know, the proprietary.

Craig Guarente 3:34

Exactly. That's no, I'm sure Fidelity doesn't want people to know what they're paying for the VMware software, and I'm sure VMware doesn't want people to know, you know, we gave these guys a sweetheart deal, or we were really screwing them.

Ed Heyburn 3:46

Right. It yeah, it seemed to be like this mutually uh agreeable thing, like we'll we'll redact this, you know. But it did because when we're recording this, um the the federal government's dealing with the Epstein emails and all those redactions. So now when people see these redactions, they're gonna feel like there's something nefarious to it. But I think you're right, it's just more of a pricing uh information that both sides are trying to protect.

Craig Guarente 4:14

Hopefully there's no one in this complaint who is on that airplane.

Ed Heyburn 4:18

No. No, I I think that these people, although they've gotten themselves into a sticky situation, um, I don't think it's uh that kind of situation.

Craig Guarente 4:28

So let's walk through you got Fidelity suing Broadcom.

Ed Heyburn 4:33

But actually, first, um I uh obviously some of our listeners are are extremely sophisticated uh IT uh people, but there are going to be some people that maybe are in procurement and not as familiar with the with the IT aspect. I I think before you we understand, before we look at the complaint, maybe if you could just briefly explain what what VMware is, and and and I think that'll set the stage on why uh this this um litigation is important.

Craig Guarente 5:00

In the context of of this litigation and how most people think of VMware, it's uh what we call virtualization software. So it and it enables um a company to take one computer or multiple computers and have it look as one computer, or take one computer and have it look as six computers. You create virtual copies of computers. So, you know, for those of you who use a laptop, you might run Windows and Linux on the same laptop. So you've got two virtual desktops uh on one piece of hardware. So uh companies will use VMware to maximize the usage of hardware. So in in the before virtualization, you would run your software directly on top of the hardware, let's say. And so you were limited, or or you would run a piece of software and that hardware would be used, you know, 10%. What virtualization allows you to use more of your hardware. So the more you can virtualize, the less your hardware expenses are. So if you can't virtualize, you need a lot more hardware. So that's why people use VMware. So instead of needing a thousand physical servers, you only need 200 physical servers. So it's a money-saving thing. And then obviously, if you can't, if tomorrow you said I can't use VMware anymore, you gotta you gotta buy a whole lot of hardware, right? Your systems are gonna come crashing down because there isn't enough horsepower behind it to run all that stuff. So it's very important piece of technology.

Ed Heyburn 6:31

And this isn't uh an anomaly. This everybody's using VM software, one version or the other.

Craig Guarente 6:37

It's the VMware is the number one virtualization uh vendor, but there's other vendors out there. I mean, Oracle has their own KVM and there's other vendors that do virtualization. Uh, but uh VMware is the big one, and particularly with enterprises. Um, you know, big enterprises will use VMware all the time.

Contracts, Price Protection, And Venue Strategy

Ed Heyburn 6:56

Okay. So um uh in this uh complaint, Fidelity Technology Group um had a uh contract with uh Broadcom. And the um contract was uh they were licensing their VM software, and it built into the uh licensing agreement was a price protection. And it seems to me that that it's pretty important for businesses when they're laying out their IT spend uh to know what they're gonna have to pay when they have to renew their their software. And um the first thing that that struck me uh as interesting about this complaint is it was filed in Massachusetts. Now, both of these companies are uh Delaware companies, but we often see a lot of um this litigation filed in California because the tech companies uh are are um all out there. Uh but there's there's some interesting things, and they have some ideas that that I'd like to talk about it. First part of a uh a complaint, just so that uh our audience understands, well, a couple of things. One, um, this isn't intended to be legal advice, and we're not creating an attorney-client relationship with them. Uh, but uh we are just um putting up this complaint and discussing it uh for educational purposes. And uh a complaint is where uh one party files with the court and says that they've been aggrieved and something wrong has happened and they're entitled to some relief. And we'll we'll talk about as we go through the complaint, we'll talk about the different types of relief. Most people are very familiar with um like a claim for money damages. We all have that ant that fell down the stairs and sued somebody and um and and got a money damage award. Uh, that isn't what's interesting is that's not the important part of this this complaint uh is money damages. But in the complaint is uh an introduction, which sort of just uh it's not a requirement to be in a complaint, but it sort of sets the stage for the court so the court can see uh how the parties got to this. The second um part of the complaint is the parties, and it's important for the parties to tell uh the court uh who they are and uh where they're located. And in this case, we can see that Fidelity is a Delaware uh limited liability company, and um interestingly, Broadcom is also a Delaware uh corporation. Uh, this is to me, this was particularly interesting because they could have brought this case not in Massachusetts, where where obviously Fidelity, that's their hometown. And I think um the fact that it's their hometown is going to be uh pretty important to this case. But uh they could have sued in Delaware. And a lot of times people uh corporations like to sue in Delaware because Delaware has a very progressive business court uh where things get resolved really quick. I mean, things that would normally take uh years could take months, and uh they um have a very well-developed uh business court. So um attorneys, when they give you an answer, generally they'll refer to the case law, and you don't want an attorney coming back to you and say, well, you know, this court has never heard this issue before. And uh so we don't know exactly what's going to happen. In Delaware, because there's so many uh corporations there, and the courts made a very um progressive effort to um develop the case law, it it gives uh litigants and attorneys alike um, you know, some some sense of comfort, like they've dealt with these these issues before.

Fidelity’s Renewal Timeline And Broadcom’s Bundles

Craig Guarente 10:48

So one of the you know, Ed, when we think about why Massachusetts so VMware used to be its own company, and then Dell bought VMware, and then Dell spun off VMware and um it went over to Broadcom. Um I think Dell is a Massachusetts-based or used to be based in uh um used to be based in Massachusetts. No, who did Dell buy? They bought uh EMC. So EMC, so that's what it was. I think EMC owned uh VMware and then Dell bought uh EMC and then but um but but EMC was a was a Massachusetts based company, I believe. Uh so all of these agreements um, regardless of where the companies are located, they always have provisions for, you know, if I sue you or if you sue me, we're gonna go into this particular jurisdiction. So my guess, although I haven't seen the contracts, it's just a guess, is that you know, based on the timing of this, um the the contracts that these folks signed uh specifically stated if there's a dispute, and you know, we'll see they talk about the dispute resolution process. Uh, if it goes to court, we've got to go to this jurisdiction. And and sometimes these people put Delaware, sometimes they want different states, and then they'll negotiate. Well, what let's just do it in Massachusetts because we're all physically in Massachusetts, so we might as well do it here. That's my guess as to why they filed in en masse.

Switching Costs And Leverage In Licensing

Ed Heyburn 12:15

It's just that's what the I don't think that's the case. I mean, we'll find out, and I'd love to talk to the lawyers. I think this is a classic case of of um of fidelity trying to hometown uh VM Broadcom and say, okay, you want to argue this? You come to our town, okay? And and uh and and I'll explain why why I think that. One, you're right. There's there's usually these form selection clauses in in these contracts, okay? But as we're gonna see, this is a repudiation of a contract. So so it what we're gonna get to is where um fidelity says, well, Broadcom, you've repudiated the contract, which, if true, means that that form selection clause isn't valid because at least what it seems like, it what they're saying in this um complaint is the form selection clause isn't gonna be valid because you've repudiated the contract. So you can't repudiate a contract and then get the same benefit of it. But here's here's here's what I think is happening behind the scenes. When uh Litigan files this type of um case, they have a couple of concerns, and it and and all indications seem to say that Fidelity wants us to stay in Massachusetts, they want a Massachusetts jury, they want a Massachusetts judge, and although judges all try to be fair, you know, there is uh some sense that if somebody is local, you're sort of going to lean there this way. But they go out of their way to make sure that they mention that they have a presence in California. So unlike people, like we we only have um like one residence. Uh corporations can have multiple, um, they can be citizens of multiple places. So they registered their corporation in uh Delaware, so they're they're they're subject to litigating things in Delaware, but they also and their headquarters is Fidelity's headquarters is in Massachusetts, so they clearly can sue and be sued there. But they also mention that they are in California. And uh in the complaint, they specifically say that um, well, to the effect that, well, this can't be removed to federal court under what we call diversity, where uh you're from one state, I'm from another state, and if I sue you, you can say, well, it's not fair to bring it in a uh in a state court. This should really be done in a federal court. And that happens all the time. So somebody sues uh a company in um in a state court, and the other company says, Oh, you know what, we're from a different state. So the only way, the only thing that's fair is if we bring this to federal court. And it there's a huge difference. I'm not exactly sure why, but but you can see when you talk to lawyers, there's a huge difference between uh state court and federal court. Uh, one of the differences is um the uh federal courts will rush you through things and they'll limit your ability to get discovery. And some state courts will let you go through discovery ad nauseum, whereas a federal court might limit the amount of interrogatories, the written questions, they might limit the amount of depositions. Um and um also once it's removed to federal court, they they can change the venue so uh they can um remove it to federal court and then transfer it to California. And uh I'd love to see what the lawyer's mindset was, but my guess is uh they did everything they could in this complaint to make sure that um it wasn't gonna get removed to federal court and that it was not gonna get transferred to California. And I think um when you look at the case, the tech cases coming out of California, especially when they get to the Ninth Circuit Court of Appeals, um it just gets really dicey. And I and I think you just never know where the Ninth Circuit's a huge circuit. There are a lot of uh judges on the Court of Appeals, and you never know where it's going to. So everything in this case screamed to me that they wanted to stay in Massachusetts, and it looks like uh they did a good job. And in the complaint, you see um they're they're citing Massachusetts uh law uh on jurisdiction and venue to sort of keep them there. So that that's the third part of the complaint is laying out with the court to say, you know, why does this court have jurisdiction? You know, not every court can hear every type of case. Uh, and then if the court has jurisdiction, is the venue, is this particular court proper? And in the complaint, they set out why the Massachusetts court is is uh proper.

Craig Guarente 17:06

Yeah, you know, it's interesting. They didn't um there's nothing in here that says we're filing in Massachusetts because the contract says we're filing it, we have to file in Massachusetts. I guess if the contract did say Massachusetts, they would put that in here. You know, we've agreed that the venue is this court, right? That would be a simple way to do it. I still think the contract said Massachusetts. Uh I'm not gonna not contain you on this one yet, but it could find out soon enough. Or maybe we won't find out because this will get settled.

Ed Heyburn 17:34

Yeah, maybe. Uh it could be. I I I would be, yeah, I would absolutely love to uh to know that. Massachusetts is a is a is kind of a quirky venue for two tech companies, though, you know, unless they were both based there. I you know, I don't I don't see the upside of it.

Craig Guarente 17:52

Well, just from uh EMC was a Massachusetts-based company. Okay, the templates probably said Massachusetts. That's around the time when they bought these light this this this stuff from VMware. So maybe they're just using an old AMC template for this. That's that's gonna be my guess. And I don't I'm just thinking it was it's not something that's heavily negotiated in tech agreements, uh and it should be when these things come up. It's really important, but um but we'll see. I mean it's in it's immaterial here. I mean, I think for for us it's the the facts. What what did Broadcom do and when did they do it?

Ed Heyburn 18:30

All right, do you um are you comfortable with the facts? Do you want to walk through the facts and then uh I'll pick up with the causes of action? Yeah, let's do that.

Breach Of Contract And Ambiguity Risks

Craig Guarente 18:40

Okay. Let me I'll share my screen. So now when we look at what actually happened, what does VMware uh what does Fidelity claim happened? Unfortunately, some of this stuff is redacted, um, so we can't see actual dates. Um, but basically um Fidelity bought uh a license, it sounds like a subscription license, so not a perpetual license. So a subscription, so we can use your products for two years, we can use your products for three years. And here you can see uh Fidelity instead number 12 uh says that they've been using the products since since 2005. And when you use the products since 2005, they probably bought these perpetual licenses, maybe Broadcom bought them, and now they moved over to some subscription-based licensing uh based on what uh some of the changes that uh that Broadcom uh made. We can see that in 22 is when Broadcom bought VMware according to the complaint. Um and now we have um Fidelity uh purchase the VMware products. Uh doesn't have a total, uh, but that subscription ends in December of 2025. So in a month, this is all uh and it's interesting because it's a subscription which ends in at the end of the month, at the end of December. So this issue's gotta be resolved really fast. From a practical standpoint, on December 23rd, you know, technically the software will still run. It's it's not like it doesn't sound like it's on VMware's or Broadcom's servers, it's not like it gets turned off, but contractually they'll have no rights to use this. So they'll be using someone else's IP without a contract. So it's not a compliance issue, like we we sold you 100, you're using 110. This is now a copyright issue. Like you're using our stuff, uh, and you you have no license to use it at all. Uh again, unfortunately, a lot of this stuff is blacked out, so we can't see it.

Ed Heyburn 21:09

Uh I can wait. On that, on that point, um we've seen we've seen other cases where um there's there's a case, hopefully we can get to it in the future with uh Siemens, where uh Broadcom sued Siemens and they were looking for an engorgement of profits. So so the so if if if what you're saying is is right, and they know it is, that they could have theoretically still continue to use it because it wasn't on their server, it would have a cause of action could have arisen where Broadcom could have then said, okay, but all the profits that you made from using our software we're entitled to, which could have been in the millions and millions.

Craig Guarente 21:56

Well, and I think that's exactly why uh Fidelity is is you know doing this now. They're not waiting for Broadcom to have that opportunity. So um so then uh we've got um the acquisition of VMware by Broadcom. And then in December 23, Broadcom, everyone listening, if you're in the licensing space and you deal with these issues, you know Broadcom uh made tons of changes to how VMware licensed software. And without getting into the particulars, because they are listed here. You know, if you want to copy the complaint, it'll be on our website, you can find it. Um they basically took these little pieces or not little, these component pieces and they put them in big bundles. So it used to cost a dollar for this thing over here, but now you got to buy 10 products and it costs ten dollars, even though you're not using nine of the 10 products. You know, it fundamentally that is what you know Broadcom has been doing. So creating these big bundles out of these little pieces and not allowing people to buy the pieces anymore. Uh, and I think, you know, according to um uh VMware, I would think the price went up, right? If the price went down, VM uh Fidelity uh would have just you know bought the bundle, but obviously the price goes way up. So uh back in uh March of this year, so the contract ends in December of this year. In March of this year, uh Fidelity said, Hey, we want to exercise our contractual right to renew the subscription. So for another year, another two years, another three years, whatever the contract said, according to Fidelity, uh they had a right to do it. And um, you know, a month later in April, Broadcom came back and said, Nope, we are not going to allow you to uh renew it. You have to buy the bundle.

Ed Heyburn 23:46

The that the so what you're talking about is price protection. And you've you've been, I mean, you were with Oracle for um 15 years, and now you've been running your own business for 15 years. You know, you're the person that that was negotiating these contracts on both sides now. How important is price protection to a business like business like yours or business like Fidelity?

Anticipatory Repudiation And Discovery Stakes

Injunctions, Irreparable Harm, And Timing

Craig Guarente 24:13

Well, this goes beyond price protection. Price protection is just, you know, I I bought like I bought a license to use the product and it's perpetual. And now, or I want to buy more of that license. I want to buy, you know, I bought 10 and I want to buy 10 more. This is literally a right to renew or a right to continue using that. So it's not only price protection, but it's usage protection, right? If they don't get this, they can't use the stuff. They can't use the software because it's it's a term license, right? You you you know, you you get a subscription for Netflix and you pay for a year, you know, in 13 months you have no right to use it unless you renew your subscription. So that's what we're talking about here. It's actually renewing, it's it's extending your your rights um to use the software. So it's it's not just about, hey, this is going to cost us a little bit more, like this could cost us 10 times more, 20 times more. Uh, and and what we've seen, and I don't know the particulars here because I don't know what's in the contract. Uh, for me, it it always goes back to the contract. What did the contract say? Did it say you may renew this product if we continue to sell that product? You know, that's something Oracle did all the time. Like we would have a price hold in a in, you know, here's the price that you can buy this product, assuming we still sell that product in three years, right? And then Oracle always packaged software up and unbundled it and bundled it and put it in different things. And you know, what was you know, this product is now that product, and they change the name. So this what what Broadcom is alleged to have done here is not unusual. Like companies do this, they they take a product and they bundle it in with something else. You had a you had price protection or you had the right to renew it. But typically those agreements say as long as we sell this to other customers, we will sell it to you at this price. Now, in this case, I I don't know what the contract says. Also, uh, there has been some you know 20-year relationship where you're relying on the other party to act a certain way. Um, and now all of a sudden Broadcom is alleged to have changed all that. So, you know, good on fidelity, right? Because this thing ends in in December. They went to Broadcom in March, which is so they they did something right. Uh, they didn't go to Broadcom in November, right? They went well in advance. And my guess is that the a contract said, You've got this provision, and it talks about it in in this complaint. You know, if there's a dispute, the dispute resolution clause, we have to go to arbitration, we have to do this, the executives will meet once for six months, and if all of that fails, then we can sue each other, right? So so that's what they're alleging here is that Broadcom said no, we try to negotiate. Um, they absolutely refuse to honor a contractual right to renew uh for the price, and it says price protection period. For the price, for the price, and and and Broadcom's like, nope, nope, no, no, no. And the six months ran out, which is brings us to today, the dispute uh resolution provision, and they you know they got uh uh provision, you know, uh section numbers and things. Uh and they said, Hey, we we've done everything we could, like we went in early, it's in our contract, we tried to negotiate good and in good faith over the last six months. Time is of the essence now. This thing expired, and we're gonna be out of business if if we don't get some resolution here. Um, and and Broadcom said, absolutely not, you pay us this money or you can't use our stuff anymore. Uh so it's it's a price issue, right? And so I don't know what the contract says. I don't know if it says uh, you know, I'm just thinking if this gets into be a contract dispute um and and provision and you're sort of arguing contract interpretation, did they have a right to renew it under any circumstances? Did they have a right to renew it under a certain set of circumstances which don't exist anymore? Uh so you know it Broadcom is pretty tough to deal with, you know. We've we've represented clients in audits against Broadcom. Uh, so it's like Oracle on steroids these these days. Um but I I can't give you an answer. Like, are they doing something wrong here? You know, did they violate the contract? Is is Fidelity uh entitled to this? Obviously, that's gonna go. My guess is it'll settle. There won't be a jury, there won't be a judge making a verdict in December, but who knows? Um, so that's that's where we are. We know contract was signed. Fidelity alleges Broadcom won't renew it, even though they're contractually obligated to do it. Broadcom has threatened them and said, if you don't give us this amount of money, you're not allowed to use our stuff anymore. Fidelity says, you know, that basically puts us out of business. We have no other choice but to sue you.

Bigger Industry Implications And Next Moves

Ed Heyburn 29:14

When when I was reading through uh this, I was thinking about how many of our clients um have always uh come to us and said, you know, we want to be good partners with the software vendors. You know, we want to be fair, we understand that their software is valuable, um, and um we're not looking to take advantage of anybody. We we just want to be fair and we're willing to pay for what we owe, but we don't want to get exploited. But then you you see the tech vendors that are clearly who have the upper hand that are are exploiting these agreements. At least that's what it seems from this complaint. Um, but I I thought it was interesting because you you have you know decent people doing like you said, they they did everything that they could, they went to arbitration, uh, they were only looking to um to have the clause that was negotiated on on uh on the price renewed they weren't looking to pay less they were looking to pay for what they had agreed upon and um from the complaint it looks like broadcom is trying to take advantage of them because it would cripple their business you know like you said what what are the i mean how are they gonna go out and and buy all the hardware to now replicate what they're doing with the uh vm software yeah or move on to a a VMware competitor you know something like that um yeah it's how we said it it's 18 to 24 months to do that right i i that that that seems like a herculean task to be able to switch midstream and and it must uh the I'm sure it interrupts their business process in that 18 to 24 months it's not something can be slowly rolled out well yes it's it's a total um it it it's millions and millions you know the cost of the software from VM from uh VMware Broadcom will pale in comparison to a migration cost right so at the end of the day my guess is at the end of the day let's say this a judge hears the case and on December uh 18th makes a ruling in Broadcom's favor and says to uh Fidelity you know you um you you either pay up or you stop using the software of course fidelity will appeal and try to get an injunctive and try to get you know a stay and you know extension and do all that but let's assume all of the the the path in in the goes up to the Supreme Court before the December end date and they rule in broad so everybody rules in Broadcom's favor.

Craig Guarente 31:39

Um of course Fidelity is going to pay the money. They're gonna pay whatever Broadcom said they're gonna pay right and and and obviously Broadcom would then be obligated to renew it and you know you can't punish these guys or charge them more than list fee or anything like that. But um they're they're they're in a tough spot. And you know I've been uh in many disputes you know our clients have disputes with various vendors you know not just Oracle um and for it to go to court is big. I mean something happened here something there's more than what's in here um I can't imagine that Broadcom believes they're violating the contract. I think they have an interpretation in their heads that they believe and you know the one that I think of all the time is the the contract says you can you can renew at this price provided that's still something on our price list. And now they're coming and saying that's actually not on our price list anymore. And you knew that back in 2023. You could have started a migration back in 2023 if you if you didn't want to pay these these new prices.

Ed Heyburn 32:48

But who knows there, you know these companies are talking all the time right there's you talked about discovery there's going to be three years of discovery between salespeople and executives and IT and like all of that is going to come out potentially in this um you know also that's that's interesting I I uh obviously you you you know having been in the industry for 30 years you know all these nuances and uh the different positions that these companies take you know looking at it from the outside in it seemed like a law and economics problem. And it's like if you remember your professor saying you know if you're in an apartment and you're paying $2,000 a month and there's an apartment across the street and you only have to pay $1900, well the free market would say well sure you'd move across the street to the apartment and pay $100 less. But the the the cost and and the aggravation of moving across it across the street is just not worth it. So you'll pay the extra $100. So it's never really a free market in in these situations because of that law and economics issue. I'm sure you're right.

Open Invite To Both Sides & Closing

Craig Guarente 33:56

No no and both can be true and the the switching costs like I said the the the the 18 to 24 month program to move off of VMware would cost so much more than just paying Broadcom right I just I have to imagine that is you know that's the economics here. But what Broadcom wants is so much more than what Fidelity thinks they should be paying. I'm just I'm guessing here Fidelity's like man we agree we we have a contract we sign this you guys have been working with us for 20 years why are you screwing me now like that's ridiculous. So someone at Fidelity had to say screw these guys uh this is probably not the first issue that's come up um there's there's been some bad blood here and it you know we can't resolve it but the numbers have to be like I don't know Fidelity thinks they should be paying you know four million dollars a year and Broadcom wants fifty million dollars a year. I mean there's got to be a 10x increase I would I would imagine based on what I've read from other vendors and seen from our clients there's there's got to be some huge delta here between what Fidelity thinks they're getting you know and and what what uh Broadcom thinks they should be getting I agree if it was just a million dollar issue I bet you Fidelity would have bit the bullet and just paid it begrudgingly but I've I've seen customers write hundred million dollar checks to tech vendors to make them go like like you talk about right you but no write that to me give me right fix this. Yeah uh but it is sometimes you just because listen Fidelity's business is not virtualizing databases and software and Fidelity's business is providing advice and and managing finances and doing things like that. This is a distraction for them. This is a big distraction you know the inter another interesting thing when I went through this is Fidelity says when they're going to the court saying we want you to force Broadcom to renew this thing and um if you if if we lose the cost for us is unbelievable. But if they lose there's no cost to them. There's no damage to Broadcom it's just we're gonna continue giving you that amount that we gave you before like there's nothing Broadcom has to do uh differently if they lose this case other than you know send the invoice over to Fidelity.

Ed Heyburn 36:20

Yeah let's let's let me let me um pull up my screen and let's talk about the causes of action okay so the the next part of the complaint uh you went through the facts and did a great job we gotta find who if anybody has this unredacted version of this they can send our way please send it I want to read that contract die well right at at at the end of the contract uh are attachments uh and obviously they're they're under seal but you know if you you get a judge who's who's gonna threaten say you know what I I think that we have to unredact this and let this be out in the public and you know that that might make Broadcom you know come to the table. I I don't know I don't know who has more of a vested interest in keeping the contract under seal. I understand you know you made the point that that fidelity may not want anybody knowing that they got a sweetheart deal but I but I have to think that Broadcom definitely doesn't want that contract out.

Craig Guarente 37:23

Definitely I would say in you know maybe not I don't know the particulars of this one but in general the risk is on the vendor like if if if Fidelity did get a sweetheart deal and now it's in the public domain everyone who's negotiating with Broadcom is like hey I didn't get that deal like I've given you more money than them. Why are you screwing me? Right becomes a problem not an insurmountable problem um especially when it comes to software uh you know you're your discounting for software is the it's it's flexible on on there's an unlimited flexibility. It's not like you're selling a car where there's a cost you're you're you're giving access to someone to download bits and bytes from your website. So if they sell it for a dollar or sell it for $100 it at the end of the day there's no difference in cost to to Broadcom. It's just an interesting market.

Ed Heyburn 38:13

Uh you know the development cost and everything but uh it's just you can have a 99% discount or a 1% discount for software yeah that that is interesting that's a great point and you would think that that would make software less expensive but clearly the trend is software is getting more and more expensive.

Craig Guarente 38:35

You know well but uh in this case it sure did right again if if if VM if if if Broadcom bundled everything together and went to Fidelity and said hey we're charging you the same amount for and but you get all this extra stuff Fidelity would not be suing Broadcom right the only reason they're suing is because the price is right. The price is too is not right sorry.

Ed Heyburn 39:00

Right. Um so so the next section of the complaint is uh causes of action and that's um you know where the the plaintiff which is Fidelity the one bringing the lawsuit says you know this is what was done wrong and um this is why I'm entitled to relief and the first count is pretty straightforward breach of contract. So they're saying we had a contract with um with Broad Fidelity had a contract with um Broadcom uh for the licensing of the VM software and in embedded in that uh licensing agreement was this price protection that they could renew it at a certain price. Um the funny thing as we're recording this um you you the major league baseball is going through all the free agency where players are opting out of contracts and and you know um giving up two years of a contract and a new one and it's um interesting because that's kind of not how these contracts are written it's not it's not like you have a an option this contract is well I I guess maybe it is in a way right I I guess the if we looked at the contract they had an option to renew but I guess the contract didn't say that Fidelity was compelled to renew right um my guess is you're exactly right there was an option to renew or extend uh certain uh grants license access things like that uh ongoing maintenance that Broadcom um and and Fidelity exercised the option and Broadcom said we're not recognizing that we're not recognizing your acceptance right you know like the like a player say okay I'm gonna do the third year you have to pay me and the team says nah I know what the contract says but we're we're not gonna do the third year.

Craig Guarente 40:43

Right right um so so in this uh this is this this is probably the most straightforward um um cause of action is breach of contract and this is where I'm always interested because like I I read this and you know I dabble in looking at these complaints once in a while so I know I know breach of contract like I'm reading this going okay this is a breach of contract thing but I love some of the other claims like and and you're gonna get into that in a second because it's like huh it's not just breach of contract but it's you know also you're being a dick. You need to stop doing that.

Ed Heyburn 41:17

Well you know what's gonna happen down the line is uh well one of the things that's baked into the law is if uh you are the maker of the contract that contract will be construed against you. So when Broadcom comes to court they can't say well you know this clause is a little bit vague and we think that you know you should interpret it this way. You know the court's gonna say to them well you made the contract and you made it vague so we're to construe the contract against you.

Craig Guarente 41:44

But this is the most straightforward uh claim where um fidelity says that they had uh a right to um right here uh paragraph 41 uh they had a uh they exercise their right to renew their subscription to the software under the um enterprise order and um this is where uh they're saying that uh broadcom uh refuse to honor that portion of the contract and again so the people listening um just so that it's fair obviously it seems like we're we're beating up on Broadcom um this is just Fidelity's um this is fidelity's complaint uh Broadcom will have an opportunity to answer this complaint and there may be they may bring some facts in their answer uh that might may shed a little bit more of uh light on this um when you when you if if you just go um you know we talk about that um section four you know they they said uh it's uh breach of contract we had the right to renew um you know there's again there's a lot of uh sections that are redacted here so um I I would expect I would have expected to see that clause right here to say the clause says this like it's it's pretty clear so maybe there is some ambiguity here and you know you were talking about construing the contract against the drafter in some of these large enterprise deals um I I highly doubt it happened here because EMC and VMware and Broadcom are all big companies one bigger than the next um sometimes the uh the purchaser gives um their contract and you sort of negotiate off that one uh other times it's there's there's such um huge companies that they're okay we started with that contract but you've negotiated it basically to the point where it's almost a custom agreement um some of the ambiguity um and again this will this will go in if this keeps going like there's there's the clause in the contract that says you can renew but was that the original version were there previous versions of that did did Fidelity change it you know I've seen clients um before they were our clients make changes to vendors' contracts that were not in the client's best interest I'm like in my head I'm going why did you do that like that was terribly drastic so I'm wondering here again I I'd love for this to play through the courts I would go to Massachusetts and sit in the and watch this so that I could report on it. I again I doubt that's gonna happen but um there there is a provision there and I would have expected to see it right here in other uh complaints that I've that I've uh read through and some of them we've blogged about and I've done videos on uh they put the language right in here so I'm wondering why that's not sometimes it's what's not in the complaint that you have to think about like it was the same thing with the governing why is it in Massachusetts like if the contract said we have to sue in Massachusetts I I would have guessed you know that it would say that here but who knows yeah I there's a bigger story here Ed there is uh I I think your instincts are right I I think that uh there's gonna be litigation over whether the um right to renew was ambiguous uh because Bortcom's I mean they're a sophisticated company they're not uh I think there are a couple things going on.

Ed Heyburn 45:06

Well one I mean you laid out that there were acquisitions so the the people that are allegedly repudiating these contracts probably aren't the same people that were involved in negotiating um and negotiating the the terms of it so I I think that if you if they actually did put the clause that they're referring to uh they didn't even put because they they attach a copy of the documents although we don't have them but we can see it you're right so maybe it's all maybe all this pontificating I'm doing no no I yeah I think your plaint has the document. Right but I I which is important because it that then all of that is before the court but what struck me I I I think that was a good catch that you said well you know normally you would just cut and paste the language uh of the clause of the contract but they don't even cite I would have expected them to say you know under paragraph 93 on page 55 under section blah blah blah it's a you know it gives us the right they don't even do that. So uh I think that that you're we're probably gonna find out that you're right that that you there's a lot of ambiguity and that there were so many revisions uh that that kind of made it more vague. I don't think it's gonna help Broadcom very much.

Craig Guarente 46:31

But um let me ask you sort of thinking about this um we might not have the answer to this but this is not the first time I've heard of Broadcom being aggressive with their customers. And it's obviously a a good piece of litigation that hasn't uh been brought forward before this time. If you're in the similar situation as the situation Fidelity says they're in like so you're another company coming ABC Acme Dynamite company and you you're using the Mware and um Broadcom is doing the same thing to you that they're doing allegedly doing to to Fidelity you're probably watching this like can you join can you join this or is do you have to do separate you know you have to I'm gonna pile on like they're waiting for something to happen here so they can jump on Broadcom too.

Ed Heyburn 47:24

Right. I don't I my guess is that the court wouldn't let them join because they're not involved in this particular contract. But but but along that line you know there's uh the concept of um issue preclusion and that this issue preclusion is where a court um decides an issue and um if these contracts I assume that they're they're they're standard and I know you said there were probably a lot of revisions but if if this Massachusetts court tells Broadcom you know this clause gives your clients the right to renew at the price stated and and the court makes that determination that is then going to be binding on Broadcom and all of its um all of its um other customers so if Broadcom tries to do this to another company they're gonna say well wait a minute you just argued this issue and the court decided that you can't do that. So that and and to to me and I I really haven't seen anybody write on it and I wish I wish that they would that is what makes these companies settle because if uh if Broadcom settles this case then they can litigate this over and over and over with every single one but if a court decides that Broadcom can't do that under this contract they're stuck and every time they do it um what what what uh their their clients are gonna do is they're gonna file suit they're gonna file for and we're we're we'll get to uh declaratory judgment but they're going to um file declaratory judgment they're gonna say a Massachusetts court has reviewed this contract it's identical to our contract and uh Broadcom had an opportunity to litigate this and uh and they lost and now um they're bound by that interpretation on every other one of these related contracts I think issue preclude and issue preclusion in law school is perhaps one of the most boring issues ever but here it's key and and also though you know if you are a customer who's in a similar situation to Fidelity and you buckled and just wrote Broadcom a check in August of this year because you know they were threatening you shutting us off and you're like I'm not gonna sue but I'll just write the the the check do you have a I mean I guess you can then go back and say whoa you guys screwed me I want my money back. Like I want the ideal um I mean you you're you're saying legally or you're just saying as a practical matter?

Craig Guarente 50:10

Well I mean listen every state's gonna be a little different and and the contracts will you'll never have a perfect match. Maybe some apples and oranges to each one but um you know I I know when when Mars sued Oracle over a virtualization issue um that was settled. Right we we we were not you know we're not we're not counsel we don't represent Mars uh but we were supporting uh their attorneys and um you know that was settled and I know after the fact when that thing sort of went away Oracle's behavior changed. So they didn't lose they didn't win they didn't lose it was settled nobody knows what happens I mean we know what happened but um you know it's not publicly known you know what happened and um but the behavior changed. So I'm wondering regardless of what happened even if Broadcom settles this it'd be interesting to see you know in three months did they settle it and and change their ways or did they settle it and just continue to do the same thing because you know it's they've got a thousand customers one of them sued. That means 999 did something else right so the cost of the lawsuit is is going to be de minimis for Broadcom uh but you're right losing the lawsuit could be huge because now it's all of the future clients as well that they can't force into the bundle.

Ed Heyburn 51:37

Yeah I remember what else do we got what else do we got Ed in terms of causes of action okay so the the second one is is probably the more um interesting part it's anticipatory repudiation and that's when uh the contract isn't technically breached yet because it it hasn't expired right so they're still under contract well you're gonna screw me next month and before you screw me I need this court to get involved so I don't get screwed. Right.

Craig Guarente 52:06

You haven't screwed me yet but you're about to screw me.

Ed Heyburn 52:09

It's it's like when you have a Tinder date and you think you're gonna get ghosted and you say well I know you're gonna ghost me so I'm ghosting you first. But but this essentially is when um and and there's always there's in in these uh anticipatory repudiation cases there's always language where you know that they're not gonna honor uh a portion of of the uh contract and according to Fidelity Broadcom is pretty friggin' clear like no you can't use this stuff like there must be emails and communications that says no this goes away and you'll have no rights to the software after December 20th whatever December whatever uh and you're gonna be screwed. Right.

Craig Guarente 52:48

I would imagine the salespeople at Broadcom just guessing have made some, you know, they before it got into the litigation mindset when it was in the sales mindset there's probably a lot of communications that went back and forth between the two companies that both sides aren't going to want out there in the public domain is part of a deposition.

Ed Heyburn 53:10

Right. Right I I agree. So the um count to anticipatory repudiation gives um a party an opportunity to come to court without having to wait.

Craig Guarente 53:22

Normally you have to wait until you have a cause of action right so if um it's a breach of contract you have to wait until they breach the contract but uh they just uh courts know that um that's not really helpful to the business cycle if you know somebody's going to breach the contract and you want uh an answer you can get the court to decide it uh and I thought that was kind of interesting I think people in in sort of outside of the sort of legal world you know from a from a criminal perspective cops have to wait for a crime before they can arrest you a crime they can I think you're gonna commit a crime in a month so we're gonna arrest you now because like so this is it gives people the ability to to anticipate like I mean it says anticipatory it gives them the ability to do something before the harm has been incurred.

Ed Heyburn 54:13

Right right and because here in this particular case we're gonna see the harm could be devastating so why wait uh for that um the this clause um breach of implied covenant of good faith and fair dealing and you know this is the type of clause uh you know if you're a law school student you think wow this is this is great um this is um this is what contracts are all about you know we we all have to be fair and we have to deal in good faith and then it is so that there's nothing in these contracts that are ever uh fair and good faith and fair dealing i mean you we see it time and time again it's just really backstabbing um but they have to put it in uh they have to put it in the um in the complaint uh because you know parties you you're not you're not supposed to be able to trick another party okay you're not supposed to be able to say okay wink wink sign this contract and you can renew for this price knowing that you're not going to renew it uh I just don't I I just haven't really seen any evidence that um parties are winning on this clause of action alone I I think the breach of contract clause right yeah if there wasn't the breach of contract clause everything else goes away in from what I've seen right so there's just a there's a there's a basic human understanding that we will treat each other uh I don't want to ethically at least we're not gonna lie cheat and steal um and so you know you're if you read these agreements they don't say that it doesn't say you know we both agree that we will not lie you know that we will not cheat each other it's like it's just you that is how you do business like there's got to be some bedrock of civility normal to to doing business and so they'll throw these things in it's always the third or fourth or 20th uh count in in these complaints that I've seen right I I don't think that's the heart of it I just uh I don't see it um here um the count four is declaratory judgment so uh this is really the heart of the matter because what they're doing is they're they're throwing it before the court and they're asking a court say they're saying essentially here's the agreement and we don't have it but um uh you know the court does and they're saying you can look at it and you can make a decision and then you can come out in our favor. Uh what's interesting about declaratory judgment is sometimes the judges can just look at because it's a contract case sometimes the judges can look at it and say well the contract says this and um you know he or she is going to say well I decide for the plaintiff or I decide for the defendant and then just uh make that decision. But often you see judges say well you know there's a little bit more of a nuance to this let me take depositions about what was happening in the background to sort of supplement it. But uh in other times you'll you'll see declaratory judgment case a lot of times they're they're filed separately but you'll just see um uh a judge have oral argument and uh have the case uh parties will will brief the law and the judge will just make the decision uh I suspect that this is gonna go through some discovery though.

Craig Guarente 57:27

Well and and like I think you said in the beginning, you know this is you know act one right so they're not gonna get declaratory judgment before Broadcom responds, right? At the very least there will be a response I shouldn't say that this will be withdrawn because they settle or Broadcom will respond and and then they'll settle or then there'll be depositions or but something has to happen by the end of December. Like this it if if if a judge does nothing and says I'll I'll hear the case in January well Broadcom's gonna turn off the the access rights for VMware right and then I've on Broadcom now I have a claim of action against Broadcom's against uh uh a fidelity so um you know this this from one of the exciting things here is it's it's gotta move fast. So we're gonna know in December what happened with this thing. Yeah and just like just know that it's settled.

Ed Heyburn 58:23

Right. Well um it's it it's almost like Netflix is going to pick it up and it's gonna be an eight part series. But um what so so the next section is a prayer for relief and and what you're referring to is they asked for a preliminary injunction because they're running out of time you know they have uh a month to be able to work out this issue. And I think saying that the court would hear it in January would would would be generous. You know this is not going to be you know the court's probably not even going to entertain any motions well into next year. So uh under subsection E, they ask for a preliminary injunction. And that's essentially where they're telling the court you know if you if you don't stop Broadcom from terminating our our license, shutting off our software, um there's going to be irreparable harm. Okay. And a lot of times that that's what gets sticky. It's because you know losing money in and of itself um isn't irreparable harm. You know that's something where you know even if it's uh a billion dollars you know if they say well to the court uh we want injunctive relief because if you um if we're right and you don't give injunctive relief, we could lose a billion dollars the court's gonna say well okay but then we could just make Broadcom pay you a billion dollars so you're not entitled to injunctive relief. So um so this is where Fidelity makes out a case that um they need in the injunctive relief because um the harm's gonna be worse than just uh a money damage.

Craig Guarente 59:58

I'm just not that the judges live the judge Needs some advice here when I was hearing this case, I I would give injunctive relief.

Ed Heyburn 1:00:07

I think you're right. Um, because if nothing else, it's the status quo. And I mean, courts love the status quo. I mean, how how many times do you do you see in in every uh other than maybe criminal? Um, but like in family court cases, business cases, and civil cases, it's like, well, let's just keep what we're doing now until we can figure out what the answer is.

Craig Guarente 1:00:29

And and you know, I think fidelity gets into this a little bit. Even if it's a six-month extension or something like that, Broadcom's getting more money, right? They're getting what they would have gotten, you know, under the agreement, potentially. So, um, or it's, you know, just give them this amount of money, but if you lose, then you have to give them the rest. Like, so um, yeah, but I it something will happen, like it's not like this is going to be silent by December. Like something has to happen, injunctive relief or or or someone's getting screwed big time. Um if the court doesn't do anything, like if they just say thank you, Broadcom, for your you know, they they file a response to the complaint next week, you know, the day before Thanksgiving, and the judge says, I'll I want to have a hearing on January 4th. Like that's really bad for fidelity.

Ed Heyburn 1:01:17

Uh they would be panicking. Well, I you know, I I don't know what the dollar amount in question is, but um, I I think that they would end up if denying them um their relief is as valuable as they say it is, I think they would have to pay it. Can you appeal that?

Craig Guarente 1:01:38

If a judge says we're not gonna plug into this until January, can you go to the telecourt and say, hey, this guy made a mistake. I really need injunctive relief.

Ed Heyburn 1:01:46

Um I assume so. We're in a weird time, right? So we're we're we're we're seeing all the litigation with the president, and the and the president gets this deference that if he doesn't get what he wants in in a lower court, he almost immediately gets an appeal. Um but the rest of us, we we don't get those rights, you know. You you you have usually you have an appeal, and every state is completely different, and the federal system is different, but um, usually you you have an appeal at the end of the case. And then in in rare circumstances, you have an appeal um based on an order inside a case. Um, but the courts generally don't like piecemeal litigation. They would much rather you say, well, deal with the whole case and then we'll straighten out whether or not there were errors. Uh, but I I I tend to think you hit on it and you're right that something this serious where if a court denied injunctive relief, that that would be enough for an emergent order for an appellate division um to agree. But I I I think it would it would be insane for a trial court judge to not say um to not issue an injunction, just keep the status quo, at least get us through the Christmas holidays, right? And then and then um and sort this out. And so many courts just love to punt issues, you know, and uh especially in state court and in federal court, you know, they're putting pressure on you, you know. Certain courts like in Virginia, they have the rocket docket and they want to get this settled. And even uh in in some of the federal criminal cases, like um James Comey um uh got arraigned and they were saying, well, we're gonna set a January trial date. It's like the guy doesn't even have the charges yet, you know, but they're they're pushing it so fast. But I I think that the court's gonna issue injunctive relief. Um then um the the the other thing that struck me that was interesting is the award of damages, right? Because we're really talking about money. So your first instinct is, well, how much money are they asking that Broadcom pay? But it's not about money, right? So so they just say uh uh, you know, they're asking for award of damages if uh approves at trial to the extent to the extent damages are available in addition to injunctive relief. So they're not they're not this isn't a damages case. This isn't where um Broadcom turned off their software. I don't know if that's possible or or prevented them from using it, and then they lost you know millions or billions of dollars. They really want the injunctive.

Craig Guarente 1:04:30

Yeah, that's you know what we talked about earlier. My my guess is the it's on-prem software, so they're they have access to the software. So, you know, again, I I I run, you know, I remember we used to have CDs and used to run like things right on your computer, like you have the software, you have the code. There's nothing that Broadcom can do to sort of remotely turn it off. But um, that code is updated all the time. You're getting patches, you're getting updates. Plus, again, it's a subscription, not a perpetual license. So it runs out. It runs out in December. So even though you have the CD in your hand or you have the code on your computers and your servers, you still have no rights to use it. Just because you have it doesn't mean you can use it. So that's where the damage is for Fidelity, if they continue using this after the subscription expires, that's when Broadcom can jump in and say, whoa, we want all your profits now. Right. That sort of thing. So yeah, um, so this there's a lot here for um, you know, for um again, software sub management, for procurement, for obviously for attorneys that are watching this. Uh, I we're following it closely because it's it's right in our wheelhouse. Uh, and and we've seen uh customers sort of heavy-handed tactics by Broadcom and others. Uh again, it's and and I don't even want to beat up on Broadcom. Again, I don't know what that contract says. I don't know you know what Fidelity agreed to. I don't know what they negotiated. I don't I don't know that the language that the sales team at Broadcom was using with the with the that the technical team and the procurement team at at Fidelity. This is for me, this boils down uh to the facts because I'm I do, like you said, I came back from Oracle and and we when I put my Oracle hat on, we bundled and unbundled software all the time. You know, it just made business sense, you know. There used to be a partitioning option, used to be an extra cost feature of the database, and then it it it became part of the database, and then other products that were in the database came out of the database, and and they did, you know, Oracle did so many acquisitions and they changed PeopleSoft and SIBL and Hyperion and all the licensing change, and we ripped out all those old agreements and put in new agreements, right? So on the face of it, although it might be tough, I can't say oh Broadcom's evil here, Broadcom did anything wrong. I just don't know um what the facts are here, all those redacted parts and the missing clause, missing contracts. Um, that's what we really need. Like I think once we have that, then we'll have uh, you know, here's really what you know shed a lot more light on, you know, what the parties can and can't do. But regardless, it's huge for Fidelity because if they can't use the software, it's they're shut down. Not not literally shut down, but it's it's it's gonna be a big problem for them. And if Broadcom loses, uh, it's gonna be a big problem for them because they rely, they generate a lot of revenue from what they're doing. So let me ask you this. Yeah.

Ed Heyburn 1:07:32

Would you be willing to open up this mic and invite Broadcom and its lawyers onto the world's greatest licensing podcast to make their case to the public directly and explain why it is that Fidelity is wrong? Would you be willing? Would you let them come on your podcast?

Craig Guarente 1:07:52

Listen, I would let uh absolutely uh open invitation, and I'll even extend that to Fidelity. We actually reached out to one of the Fidelity attorneys who filed this, haven't heard back from them. Uh, so as of recording this broadcast, there's been no response from the uh fidelity attorneys. But um, absolutely, I'd I'd love and you know, maybe we do that sort of after the dust settles, like they probably don't want to come on now while it's in litigation. Or here's another idea. Let's not have this litigated in front of a jury. They can come here on both sides and I will litigate this.

Ed Heyburn 1:08:28

Let you decide. I mean I will decide. You've you've literally spent 15 years on each side. There could be nobody that has a better perspective than you.

Craig Guarente 1:08:37

I like I said, I can't even beat up on Broadcom here, right? I lived that world for years and years, uh, and I can't beat up on Fidelity because they, you know, it's like I really want to know. Like, you know, when we do audits, um, you know, I say the vendor, when they audit you, they are not looking for the ultimate truth, they're just looking for leverage. And so Broadcom has a lot of leverage here, right? And and the only leverage that Fidelity had uh is suing or paying, right? You could pay or you could sue, and they chose to sue. Okay. Um, but um I would I would sit down and want to find the ultimate truth here and with Fidelity and and and Broadcom. But listen, even if Fidelity wins and the judge says, you know what, Broadcom, you have to renew that agreement. If I'm Broadcom, the next thing I'm doing is I'm I'm that's your last price protection. So good luck on your 24-month journey moving away from us. Now you're gonna spend a shitload of money. Uh so even if Broadcom were to lose uh sort of tactically or cave to fidelity this one time, um, it's still their software and it's still a subscription, and they're gonna have that inflection point two or three years down the road anyway. So fidelity's got some big decisions to make. If I'm Fidelity, I'm not relying on this stuff anymore. If I'm suing you, am I really gonna continue to put my faith that the next renewal you're gonna not do the same thing to me? I need an escape plan. And that's you know, good business practices, you know, not only you have good contracts, but you have uh you could you have an escape path. Uh it usually takes one renewal, like even you know, a Palisade, if if we were to stop using a CRM tool that we have or something, it would take us a year to move off of that thing. And we'd have to license the new one and the old one at the same time, and uh it just becomes becomes a mess. But um, there couldn't be a case more on point in in terms of what we see and do. Uh so Ed, thank you so much for the discussion. And we're gonna do the next one when we see the response from the FU response from because that's what I'd be writing right now.

Ed Heyburn 1:10:49

Right. Uh but I but I see they they generally have like uh a month to 45 days, but I think it's gonna ruin some people's Christmas while they're working on this answer.

Craig Guarente 1:11:00

Well, that's interesting. So if if this and I don't remember when it was filed, let's say it was filed on November 15th. Just I know it wasn't, but let's just and you have 45 days to respond. If I'm Broadcom, I'm taking 45 days to respond. Because it's gonna be after the renewal.

Ed Heyburn 1:11:16

I think the judge is gonna issue, he or she is gonna issue the issue the injunction first.

Craig Guarente 1:11:22

So what's gonna what do you think is gonna happen next? Is Broadcom gonna respond or is this gonna be settled?

Ed Heyburn 1:11:28

I I think that it's I I don't think the other parties have gotten their pound of flesh. And and then also, you know, the the the lawyers are gonna are I mean, lawyers are gonna lawyer, so they're gonna be like, oh no, we can't don't settle. We haven't billed enough hours. You know? And they're gonna want the depositions, you know, even though they may not even be relevant in a contract case, you know, to to to put it uh a CEO or or you know, somebody that was in your position. Have you did you ever have to testify in a in a deposition for Oracle?

Craig Guarente 1:12:02

I have I never testified in a deposition for Oracle, but I have testified as an expert witness in cases involving Oracle licensing.

Ed Heyburn 1:12:12

Okay.

Craig Guarente 1:12:12

And not with Oracle as parties. There were other parties to these uh to these cases. So it's just kind of interesting. Um, you know, it's uh implementers and technologists and Oracle customers and partners and things like that. So um yeah, it's nerve-wracking. You know, and it you know, it it wasn't even a deposition, it was testimony, you know, put your hand on the Bible and and uh you know, you're in a court. So um, but anyway, uh I appreciate everyone uh for sticking with us. This is a little longer than we normally do. We will have an update. Uh subscribe like and subscribe. Like and subscribe, baby, and leave a comment. Leave a comment. And if you're Broadcom's attorney, get on the show, man. We're nice people.

Ed Heyburn 1:12:58

Because it's not looking good right now, Broadcom. I think you better come on.

Craig Guarente 1:13:03

All right, Ed, thank you, and thank you all for joining the world's greatest podcast.