Updated 29th may 2012 for sql server 2012 (below)

Microsoft have changed the licence model for multiple passive machines, you can now only have one secondary passive failover per primary - see http://download.microsoft.com/download/7/3/C/73CAD4E0-D0B5-4BE5-AB49-D5B886A5AE00/SQL_Server_2012_Licensing_Guide_Apr2012.pdf

Personally I don't agree with this move, like previous editions you should be able to have multiple passive failovers.

-------------

If you were in any doubt at all that you need to license Standby / Passive Failover servers then the White Paper “Do Not Pay Too Much for Your Database Licensing” will settle those doubts.

I’ve had debate before people thinking you can only have a single instance as a standby machine, that’s just wrong; it would mean you could have a scenario where you had a 2 node active/passive cluster with database mirroring and log shipping (a total of 4 SQL Server instances) – in that set up you only need to buy one physical license so long as the standby nodes have the same or less physical processors (cores are irrelevant).

So next time your supplier suggests you need a license for your standby box tell them you don’t and educate them by pointing them to the white paper.

For clarity I’ve copied the extract below from the White Paper.

Extract from “Do Not Pay Too Much for Your Database Licensing”

Standby Server

Customers often implement standby server to make sure the application continues to function in case primary server fails. Standby server continuously receives updates from the primary server and will take over the role of primary server in case of failure in the primary server.

Following are comparisons of how each vendor supports standby server licensing.

SQL Server
Customers does not need to license standby (or passive) server provided that the number of processors in the standby server is equal or less than those in the active server.

Oracle DB
Oracle requires customer to fully license both active and standby servers even though the standby server is essentially idle most of the time.

IBM DB2
IBM licensing on standby server is quite complicated and is different for every editions of DB2. For Enterprise Edition, a minimum of 100 PVUs or 25 Authorized User is needed to license standby server.

The following graph compares prices based on a database application with two processors (dual-core) and 25 users with one standby server.

[chart snipped]

Note All prices are based on newest Intel Xeon Nehalem processor database pricing for purchases within the United States and are in United States dollars. Pricing is based on information available on vendor Web sites for Enterprise Edition.

Microsoft SQL Server Enterprise Edition
25 users (CALs) x $164 / CAL + $8,592 / Server = $12,692 (no need to license standby server)

Oracle Enterprise Edition (base license without options)
Named User Plus minimum (25 Named Users Plus per Core) = 25 x 2 = 50 Named Users Plus x $950 / Named Users Plus x 2 servers = $95,000

IBM DB2 Enterprise Edition (base license without feature pack)
Need to purchase 125 Authorized User (400 PVUs/100 PVUs = 4 X 25 = 100 Authorized User + 25 Authorized Users for standby server) = 125 Authorized Users x $1,040 / Authorized Users = $130,000

https://sqlblogcasts.com:443/blogs/tonyrogerson/archive/2011/10/21/you-do-not-need-a-separate-sql-server-licence-for-a-standby-or-passive-server-this-microsoft-white-paper-explains-all.aspx