I worked for a software company that required a hardware key (a device that plugged into the serial port) to be installed on a PC (any PC on the Network) inorder for the sofware to load. To my knowledge we never had a client complaint. We had some Extremely large international clients. We also put in software checks to see if the same single user serial number was running else on the network. The only problem was it worked to well. We forgot to exclude the DEMO version from the check. We had an international client that rolled out the demo version at about 30 sites one day. We got about 100 calls that day. They got a new demo version that afternoon.

Let them get a lawyer. Depending on the laws in your state and your license agreement, you should be well within your rights.

My question is, why don't they want a check to ensure that they are adhearing to the license agreement?