Please comment on this simple software protection schema

I was asked implement a licensing schema for our product. They are very expensive products with few customers sparsely distributed around the world and basically every one of them has a design environment (a windows application installed on single windows machines, from 1 to 150 client machines per customer) and a web server that hosts production environment (1 to 8 machines per customer). Our product is licensed for server usage so customers can use any number of clients; we've decided not to license the server part (because it's subject to SLA agreements) but only the client, because, after some time without capability to use the client the system becomes basically useless.

Our basic assumption is that the customer is "honest enough" and only thing we would like to cover is stopping the client design environment if not properly licensed with a time expiration license.

I've evaluated different licensing product and they are or too expensive or too difficult to manage, so I've come up with this simple solution:

• The license will be a simple signed XML file, signed using the standard XML Signature feature of w3c, using a private key that will be given to the admin department on a USB key; if they lose of copy it then the licensing schema will fail but it will be their fault
• The client will open the license file on startup and check its validity using a public key embedded in the binaries
• If license XML is valid and the data in it (expiration date and product name) are correct than the designer work; if not, an appropriate message will be shown

Any ideas about possible problems or how to improve the scenario?

I have yet to see a licensing scheme that wasn't broken in a few weeks provided there was sufficient interest. Your scheme looks very good (though be certain that if someone really wants to, they'll break it).

Whatever you do, you should follow Eric Sink's advice:

The goal should simply be to "keep honest people honest". If we go further than this, only two things happen:

1. We fight a battle we cannot win. Those who want to cheat will succeed.
2. We hurt the honest users of our product by making it more difficult to use.

Since you're implementing a license scheme for a program designed for corporate use, you can go even simpler and just keep some kind of id and expiration date along with a simple signature on the client and refuse to start if the license expired or signature failed. It's not that hard to break it, but no licensing scheme is and if you consider your customers honest, this will be more than enough.