Thanks - that just opens up more questions, though.
Audited for what? Was there some contract you had signed? What could they do, and how did they get away with this setup? What exactly were they licensing? The "right" to hook up clients to a server doesn't seem like something M$ has any say in.
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If you don't have more info that's fine. This is just baffling to me. I know server licenses are typically extra-idiotic anyway, but this sounds like a whole "new" End of Ownership type thing I'm unfamiliar with.