Software Licensing Litigation
196 court cases over audits, licence scope, virtualization, support, resale, copyright and open-source licences. Each case links to the court's own judgment or docket, and lists the lessons it holds for licence managers. Read the overview.
196 cases
Copyright case (Court of Federal Claims and Federal Circuit, 2015-2026) in which a Defense Department contractor made tens of thousands of copies of 4DD's TETRA software, licensed per core and per seat, during agile development; the trial court voided the parties' true-up release because government officials had deleted copies and misreported counts, and awarded about USD 12.7 million, but in 2026 the Federal Circuit vacated the damages in part and remanded.
- Audit and overuse
- Copyright and IP
- Licence scope
- Virtualization
Lessons learned- A true-up settlement and release can be set aside if the customer's counts were misrepresented, so the count you certify must be one you have actually verified.
- Deleting copies while a true-up or audit is under way can be treated as concealment and spoliation, with sanctions.
- Copies made by contractors in development, test, backup and cloned virtual machines can count against a licence that prohibits copying.
- Where the vendor's own usage reporting is switched off for security reasons, the customer carries the whole burden of tracking deployments.
- List prices and contract prices do not automatically set infringement damages; courts may instead reconstruct the licence the parties would have agreed.
Advance Local Media v. Cohere is a pending 2025 suit in the Southern District of New York in which fourteen publishers allege that Cohere's Command models copied their articles for training and retrieval; in November 2025 the court denied Cohere's partial motion to dismiss, and discovery continues.
- Copyright and IP
Lessons learned- A court let claims proceed that a model's retrieval-augmented outputs, not only its training, can reproduce or closely paraphrase protected articles.
- Marketing a model for a use, such as summarising the latest news, was treated at the pleading stage as possible evidence of inducement.
- Investigator-obtained outputs were accepted at the pleading stage as evidence of typical third-party use, despite a terms-of-service objection.
- Logs of customer prompts and outputs became a discovery issue, so retention and sampling terms matter.
Andersen v. Stability AI is a pending class action in the Northern District of California in which artists allege that training and distributing Stable Diffusion infringed their copyrights; the court dismissed most claims in 2023 but in 2024 let the direct infringement, induced infringement and Midjourney Lanham Act claims proceed to discovery.
- Copyright and IP
Lessons learned- A claim that a trained model embeds compressed copies of its training images was allowed to proceed past the pleading stage, so the legal character of model weights is not settled.
- Distributing a model for free under an open licence did not by itself defeat a claim of induced infringement at the pleading stage.
- Claims that rest on the platform terms of a third party (DeviantArt) failed where the terms did not restrict the conduct complained of.
- Registration of the artist works matters: claims of artists who had not registered their works were dismissed.
Virginia state court case (Fairfax County Circuit Court, 2022; Court of Appeals of Virginia, 2024; Supreme Court of Virginia, 2026) in which a jury awarded Appian over US$2 billion against Pegasystems for trade secret misappropriation based on a contractor's access to Appian software and its partner documentation portal; the appellate courts upheld the finding of misappropriation but reversed the damages judgment and sent the case back for a new trial.
- Licence scope
- Competition
Lessons learned- Licence, partner-portal and trial terms that bar access by competitors and onward sharing of documentation are part of the evidence of reasonable secrecy measures.
- Access obtained through a licensee's employee or partner account for a purpose the licence does not allow can ground liability outside the licensee's own contract.
- Free trials and large numbers of registered users do not by themselves defeat secrecy when click-through terms limit use, but a court may treat user numbers as relevant evidence.
- Damages instructions in trade secret cases are reviewed closely; shifting the burden of proof on damages to the defendant was an error.
Copyright infringement suit (High Court of Delhi, CS(COMM) 49/2023) in which Bentley Systems used 'infringement hits' reported by its software's Phone Home Technology, an investigator's call and a lapsed licence history to show unlicensed use of STAAD.Pro and SACS by an engineering company; after the defendants failed to file a defence the court granted summary judgment on 2026-03-10, with a permanent injunction and costs of Rs. 5,55,087.
- Audit and overuse
- Copyright and IP
- Licence scope
Lessons learned- Usage reports generated by a vendor's own software can be the core evidence of unlicensed use, so an internal audit must cover the same machines and period.
- A lapsed subscription or a licence for a different product does not authorise continued use of a product.
- A notice to preserve evidence starts a documented enforcement sequence, and failing to put a defence on record can lead to summary judgment.
Pending US federal case, filed 2025-03-13, in which Celonis alleges that SAP restricts customers' extraction of their own SAP ERP data for third-party process mining, including through SAP Note 3255746 and licensing positions on indirect static read; monopolization, pricing and false advertising claims survived a motion to dismiss in 2025.
- Indirect access
- Competition
Lessons learned- How indirect static read and runtime versus full use licences apply to third-party tools that read SAP ERP data is contested.
- SAP Notes that restrict interfaces can affect whether an integration is permitted.
- Document the extraction method and licence type behind each third-party tool that reads ERP data.
- The rulings so far decide only whether claims may proceed, not whether SAP's policies are lawful.
English case (High Court, Technology and Construction Court, 2026) in which Corelogic, whose SurveyHub software connects to Landmark's DataWeb mortgage valuation platform through a 'Beta Interface' of listeners and RPA bots, sued for Landmark's failure to deliver the API promised in a 2016 access agreement agreed after a cease and desist letter; the court held that the agreement obliged Landmark to provide the API by March 2022 and awarded GBP 332,405.44 for the extra virtual machine costs of running the bots.
- Indirect access
- Licence scope
Lessons learned- Third-party tools that log in to a platform as users, including RPA bots, need an access right from the platform owner; here access began without one and ended in a paid agreement.
- Per-transaction access fees with self-reported counts and inspection rights are a form of indirect access licensing; keep the records.
- A promise to replace a temporary interface with a supported API is an obligation, and the cost of running the workaround can be recovered when it is not met.
- Track the term of access agreements; this one expired in 2022 without either party noticing until 2023.
- Keep contemporaneous records of costs you may claim; the unrecorded labour claim failed.
Federal lawsuit (D. Me., 2021-2026) in which Covetrus and its subsidiary Veterinary Data Services sought a declaration of non-infringement after an Actian audit led to a USD 13.5 million demand over installations, users, cores, cloud servers and service-bureau use of Data Integrator; the court let Actian pursue the parent company, held that a hyperlinked support policy was not part of the contract and that the EULA's survival clause kept key restrictions alive after breach, found the service-bureau clause ambiguous, and the parties reported a settlement in March 2026.
- Audit and overuse
- Licence scope
- Support and renewal
- Copyright and IP
Lessons learned- A parent company that runs a subsidiary's licensing and audit responses can be drawn into the subsidiary's licence dispute.
- Old EULAs that count 'CPUs' create disputes once multi-core and cloud machines are in use; map each metric to today's hardware.
- Service-bureau and third-party-use clauses can reach services delivered with the software, even if customers never touch it.
- A support policy only linked from a sales order may not bind the customer; check what each order actually incorporates.
- An earlier audit that found excess installs without complaint does not settle the question; it becomes evidence for both sides.
Pending copyright, DMCA anti-circumvention and breach of contract case (M.D. Fla. No. 8:26-cv-00705) in which DS SolidWorks alleges that its monitoring technology detected 271 uses of cracked SOLIDWORKS on two computers linked to a Tampa start-up, one of them a refurbished workstation bought on eBay with software advertised as fully licensed; the defendants plead good-faith reliance on the sellers, copyright misuse, independent-contractor status and failure to mitigate.
- Audit and overuse
- Copyright and IP
Lessons learned- Software pre-installed on second-hand or refurbished hardware carries no licence unless the seller can transfer one; the complaint treats such copies as infringing.
- In-product monitoring reports MAC addresses, user names, email addresses and Wi-Fi geolocation, which the vendor used to link use to an employer's business.
- Continued use after a vendor's first letter is pleaded as evidence of willfulness and enlarges the claim.
- Contractors who use their own machines for company work can still draw the company into a claim; record who supplies software for contractor work.
Copyright and trademark case (E.D. Mich. No. 2:09-cv-10534) in which Dassault Systèmes sued the operator of a CATIA training school who had bought one node-locked CATIA V5 licence and used it on about 20 classroom computers, relying on a reseller-sanctioned workaround; after a default judgment was reversed in 2011 and a first jury verdict was vacated in 2020, a 2024 retrial found willful copyright infringement, and a March 2026 final judgment awarded $444,612.50 and enjoined use of the CATIA mark.
- Copyright and IP
- Licence scope
Lessons learned- A node-locked licence is tied to one machine's identifier; replicating that identifier on other machines was the core of the copyright claim.
- Informal permission from a reseller or business partner is a fact question, not a licence; keep written terms from the publisher for any non-standard deployment.
- A willfulness finding changes the outcome: the retrial jury found willful infringement, which supported an award of attorneys' fees that the first trial did not produce.
- Disputes over a single licence can last for many years and include criminal referral, so resolve scope questions early.
Disney Enterprises and Universal sued Midjourney in the Central District of California in June 2025 alleging direct and secondary copyright infringement through its image service; Midjourney answered with fair use and other defences, the case was consolidated with a Warner Bros. suit, and it was in discovery in 2026.
- Copyright and IP
Lessons learned- A subscription service that generates content on request can be sued as a direct infringer, with secondary liability pleaded in the alternative if subscribers are said to be the direct infringers.
- Plaintiffs pointed to a service's own terms and content filters as evidence that it can control outputs.
- The defendant's pleaded defences include fair use, implied licence and the DMCA safe harbours, so the case may test how far those apply to image generation.
- Training code and data are contested in discovery, which affects what a vendor can be asked to produce.
Putative class action (N.D. Cal., filed 2022) by programmers alleging that GitHub Copilot and OpenAI Codex emit their open-source code without attribution or licence terms; in 2026 the Ninth Circuit affirmed dismissal of the DMCA section 1202(b) claim because the tools create new works rather than removing notices from copies, while breach of licence claims remain pending.
- Open-source licence
- Copyright and IP
Lessons learned- Open-source licence conditions such as attribution travel with the code; AI-generated suggestions that reproduce licensed code can raise the same obligations.
- The DMCA claim failed on the facts alleged, but the licence-based contract claims survived, so licence compliance remains the main exposure.
- Keep records of which AI coding tools are used and of settings such as filters that block suggestions matching public code.
- Pending
English case (High Court, Commercial Court, 2026) in which Intralinks sued its customer Nexans for about EUR 2.19 million of page-based overage and extension fees triggered by a large upload of Excel files to a virtual data room; the court rejected Nexans' jurisdiction challenge, finding that the work order signed through DocuSign incorporated an English-law master services agreement rather than the French version Nexans relied on, and the claim continues to trial.
- Licence scope
Lessons learned- Consumption metrics that convert files into billable units need the conversion rules in the contract, not only in sales conversations.
- When a vendor offers regional versions of its master terms, check which one the signed order actually incorporates before signing.
- A pricing framework or benchmark agreement does not govern an order unless the order says so.
- Monitor usage against included limits during the term; one upload can turn a fixed-fee service into a seven-figure invoice.
JJH Enterprises (trading as ValueLicensing) v Microsoft is a UK competition damages claim, pending as of 2026-09-30, in which the Competition Appeal Tribunal and the Court of Appeal decided preliminary copyright issues on the resale of pre-owned Windows and Office licences in ValueLicensing's favour.
- Resale and exhaustion
- Competition
Lessons learned- On the rulings so far, perpetual Windows and Office licences bought in volume and used as independent copies can be resold in smaller quantities.
- Do not rely on contract terms or vendor transfer forms to decide whether exhausted copies may be resold.
- Remove resold licences from entitlements and deactivate the matching installations, keeping evidence for later audits.
- Treat these rulings as provisional, because they are preliminary issues that may still be appealed and the competition questions are undecided.
Microsoft's terms for running its software on rival clouds have been the subject of a CISPE complaint to the European Commission (settled in 2024), a UK CMA market investigation that found an adverse effect on competition (2025), a pending UK collective damages claim certified in 2026, and wider cloud investigations by the CMA and the Commission.
- Competition
- Licence scope
Lessons learned- Record which version of Microsoft's hosting terms applied when each licence was acquired and deployed.
- Check the Listed Provider restrictions before moving Microsoft workloads to AWS, Google Cloud or Alibaba Cloud.
- Do not assume regulatory findings have changed licence rights until the Product Terms themselves change.
- Monitor the pending UK and EU proceedings, which could lead to conduct requirements on licensing.
Pending patent, false advertising and trademark dilution case (D. Del., filed 2025) in which MongoDB, which licenses its database under the source-available SSPL, alleges that FerretDB's 'MongoDB alternative' built on PostgreSQL infringes four MongoDB patents and overstates compatibility; FerretDB counterclaims, and in September 2026 the court refused to dismiss its non-patent counterclaims.
- Open-source licence
- Competition
Lessons learned- A compatible alternative to a source-available product avoids the vendor's copyright licence but can still face patent and trademark claims.
- Treat claims that an alternative is a 'drop-in replacement' as a hypothesis to test against your own workloads, commands and tools.
- Source-available licences and patents are separate: the SSPL governs copying MongoDB's code, while patent rights reach independent implementations.
- Before standardising on an alternative, record which vendor tools, drivers and features it supports and which it does not.
Pending federal case filed 2025-11-25 in which o9 Solutions alleges that SAP and three former o9 executives misappropriated its confidential platform, roadmap, customer and sales information; in August 2026 a magistrate judge recommended denying all motions to dismiss.
- Competition
Lessons learned- Confidential platform design, roadmap and customer files held in a SaaS vendor's repositories are protected by confidentiality terms and access controls that the vendor must be able to show.
- Who may download or export planning-platform documentation, and when, is a control that customers and vendors can both be asked to evidence.
- Employee and contractor confidentiality agreements matter in competitor disputes as much as customer licence terms.
- A recommendation on a motion to dismiss decides only whether the pleaded claims are plausible, not whether the facts alleged are proved.
Royalty audit case (D. Or., 2022-2026) in which Rocket Software, after acquiring Uniface, claimed more than USD 2.5 million in underpaid royalties found by a KPMG audit of CollegeNET's SaaS products; the court rejected the copyright claim because the 'designated machines' term was a covenant, not a condition, and in 2026 held Rocket equitably estopped from recovering despite a jury verdict of breach.
- Audit and overuse
- Licence scope
- Copyright and IP
Lessons learned- A licensor that knows how a reseller reports and pays for years, and renegotiates on that basis, may be estopped from claiming the difference later in an audit.
- Ambiguous fee terms such as 'sale price' or 'maintenance' are read with the parties' course of dealing, so define them for subscription and SaaS revenue.
- A licence term is enforceable as copyright only if it is a condition of the licence; ordinary covenants, such as where software is used, give only contract claims.
- Limitation periods run from when the licensor knew or should have known, and a vendor's own marketing case studies can prove that knowledge.
- Audit findings by an outside firm do not settle the meaning of the contract; the customer can contest both the method and the motive.
In 2025 the European Commission opened an Article 102 TFEU investigation into four SAP practices in maintenance and support for on-premises ERP software, including the refusal to let customers end support for unused licences and reinstatement fees; on 2026-07-09 it made SAP's commitments binding for ten years, worldwide, without finding an infringement.
- Support and renewal
- Competition
- Licence scope
Lessons learned- SAP's commitments let customers split their on-premises ERP landscape into parts with different support providers or support levels, so a support review can now be done part by part.
- Shelfware has a new exit: customers can put unused licences in a separate part and stop SAP support for it, and can terminate licences in defined cases such as divestiture or a workforce reduction of 10% or more.
- Returning to SAP support after a period without it no longer carries a reinstatement fee, and back maintenance is reduced, which changes the cost of trying third-party support.
- Check the initial licence term in each order form: SAP committed not to restart it with every additional licence purchase.
- The commitments are enforced through a monitoring trustee and an internal SAP clearing structure, not through a court finding, so customers should raise disputes through those channels.
- Judgment
Federal suit (S.D.N.Y., 2015 to 2026) in which Syntel, a services subcontractor with access to TriZetto's Facets software and documentation, sued over unpaid rebates and was held to have misappropriated Facets trade secrets and infringed copyrights by using them to compete after a 2012 amendment removed its non-compete; the Second Circuit upheld liability in 2023 but vacated a USD 285 million avoided-cost award, and a 2025 retrial and 2026 amended judgment followed.
- Licence scope
- Copyright and IP
Lessons learned- Deleting a non-compete from a services contract does not by itself authorise use of the other party's confidential software and documentation to compete; the court read the confidentiality clauses as still binding.
- Access granted to a subcontractor to perform contracted services is not a licence to use the same materials for the subcontractor's own customers.
- Where a vendor's licences and third-party access agreements are routinely free or cheap for service providers, a damages claim based on the vendor's full development cost may fail.
- Destroying documents or devices during discovery can lead to sanctions that decide parts of the case; here two trade secrets were found misappropriated through a preclusion order.
US federal case, filed 2018-06-19, in which Teradata alleged that SAP unlawfully tied S/4HANA to SAP HANA database licences and misappropriated a Teradata trade secret; the Ninth Circuit revived both claims in 2024 and the parties settled in 2026 for a USD 480 million payment to Teradata.
- Competition
- Licence scope
Lessons learned- Know whether each SAP HANA licence is runtime or full use before connecting third-party analytics or data warehouse tools.
- Requirements to buy one product with another can be challenged as a contractual tie, although this case settled without a finding of unlawful conduct.
- Review marking requirements and IP ownership clauses in joint development and non-disclosure agreements.
Copyright and tortious-interference suit (D. Del., filed 2020) in which the Third Circuit held on 2026-09-29, on interlocutory appeal, that 2,243 Westlaw headnotes were original and that copying them into AI training memos for a competing legal-research platform was not fair use, affirming partial summary judgment for Thomson Reuters.
- Copyright and IP
- Competition
Lessons learned- Content that a vendor edits and annotates, such as headnotes, can be protected by copyright even where the underlying public-domain source is free to copy.
- A subscription or access arrangement is not a licence to use the content as AI training data; the Thomson Reuters terms separately bar training AI with their content.
- Copying done by a contractor or subcontractor on a customer's behalf can be attributed to the customer.
- Using protected material to build a product that competes with the original weighs against fair use, even when the tool never shows the material to its own users.
- Convenience is not a justification for copying: fair use arguments in technology cases tend to turn on whether copying was necessary.
Civil enforcement action (N.D. Cal., filed 2024) alleging that Adobe hid the early termination fee on its Annual, Paid Monthly plan and made cancellation difficult, in violation of ROSCA; resolved in April 2026 by a stipulated order with a $75 million civil penalty, $75 million in free services and disclosure and cancellation requirements.
- Licence scope
Lessons learned- Check whether a monthly-billed subscription is in fact an annual commitment, and what cancelling mid-term costs, before buying it.
- Record the plan type, term start date and fee method for each subscription so early-termination costs can be calculated.
- Terms shown only behind tooltips or hyperlinks were alleged not to be clearly disclosed; read the linked subscription and cancellation terms.
Pending 2025 copyright suit in the District of Delaware in which VMware alleges that Siemens used VMware software beyond its licences, based on a deployment list Siemens submitted with a support renewal request; a magistrate judge has recommended that the case stay in Delaware against the US Siemens entities.
- Audit and overuse
- Copyright and IP
Lessons learned- Reconcile deployment lists against entitlements before sending them to a vendor with a support renewal request.
- Read the forum, governing-law and IP-enforcement clauses of a licence agreement together when assessing audit exposure.
- Expect a vendor alleging unlicensed use to be able to sue for copyright infringement rather than breach of contract.
Bartz v. Anthropic is a 2024 to 2025 United States class action in which a federal court held that training on lawfully purchased books was fair use but that building a central library from pirated copies was not excused, certified a class, and then preliminarily approved a settlement worth about USD 3,000 per work.
- Copyright and IP
Lessons learned- Training a model on lawfully acquired copies was held to be fair use, but copies taken from pirate libraries were treated differently.
- The court assumed a market for licensing books for AI training could exist but held it is not one the Copyright Act entitles authors to exploit.
- Evidence of how a developer sourced training data, including internal discussion of licensing, was central to the ruling.
- A class settlement released past conduct up to a set date but not claims about future conduct or AI outputs.
Copyright case (Court of Federal Claims and Federal Circuit, 2016-2025) in which the US Navy installed Bitmanagement's BS Contact Geo on more than 429,000 computers under an implied floating licence conditioned on licence-server tracking; the Federal Circuit held that failing to meet the tracking condition made the copying infringement, but later affirmed damages of USD 154,400 based on actual use rather than copies made.
- Licence scope
- Copyright and IP
Lessons learned- A licence that allows unlimited installation in return for usage tracking can make the tracking a condition; if it fails, every copy may be unlicensed.
- The customer, not the vendor, was responsible for confirming that the agreed tracking actually worked.
- Damages followed the licensing model the parties would have negotiated: concurrent use, not copies installed.
- Agree licence terms in writing with the publisher, even when buying through a reseller.
US contract case in which a Texas federal court awarded BMC about USD 1.6 billion against IBM in 2022 for replacing BMC mainframe software at AT&T in breach of an outsourcing agreement; the Fifth Circuit reversed and rendered judgment in 2024, holding that the clause let IBM make the switch at the customer's request, and the Supreme Court denied review in 2025.
- Licence scope
- Competition
Lessons learned- Check the outsourcing or third-party access terms in each vendor agreement before an outsourcer operates, or migrates away from, that vendor's software.
- Keep a record showing that a decision to replace a vendor's product was the customer's own, because that finding decided the appeal.
- Read broadly, a clause that stops an outsourcer carrying out its client's own decision to replace software risked being an unenforceable restraint on competition.
- Judgment
2025 decision of the United States Court of Appeals for the Ninth Circuit in a class action over an auto-renewed ClassPass subscription, holding that the platform's sign-up screens did not give reasonably conspicuous notice of its terms of use and did not let the subscriber unambiguously assent to them, so the arbitration clause in those terms was not enforced.
- Licence scope
Lessons learned- A hyperlinked 'I agree to the Terms of Use' line in small grey text, away from the action the user is taking, may not give the notice a court requires.
- Notice and assent are separate tests: seeing the terms is not enough unless the user unambiguously agrees to them by an action that is explained as assent.
- Courts consider the whole sign-up flow screen by screen and will not add up separate notices on different pages to find assent.
- Wording on the page such as 'no commitments' and 'cancel anytime' can make a transaction look like a one-time purchase, which weakens the argument that the user should have looked for further terms.
- Pending
2024 action in the Northern District of California in which a technology licensor says its licensee distributed licensed software technology outside the licence and resisted a contractual audit; on 2025-07-18 the court held the contract claims timely under the discovery rule, let the audit-obligation claim proceed because the audit clause was ambiguous, and dismissed other counts with leave to amend.
- Audit and overuse
- Licence scope
- Copyright and IP
Lessons learned- An audit clause that speaks of 'products' in lower case alongside a defined term 'Licensed Products' can be read to reach more than the licensed devices, so define the audited scope precisely.
- A licensor that has no reason to suspect a breach is not required to audit its licensees regularly, according to the court; the limitation period can start when the licensee's disclosure reveals the breach.
- Encrypted, vendor-controlled software can make a licence breach hard for the licensor to detect, which affected when the clock started.
- Resisting an audit by arguing that part of the estate is out of scope can itself become a separate breach claim.
Copyright and breach-of-contract suit (N.D. Cal. 2024) in which Figma alleged that Motiff and two affiliated companies, one a former Figma Organization customer, reverse engineered and copied the Figma Platform in breach of Figma's Master Subscription Agreement; it settled in 2025 with a stipulated consent judgment under which the defendants agreed to stop distributing Motiff outside mainland China and to reimburse Figma's legal expenses.
- Copyright and IP
- Licence scope
Lessons learned- Reverse-engineering and derivative-work restrictions in a SaaS subscription agreement can support a breach of contract claim alongside copyright.
- A vendor may argue that a subscription agreement signed by one group company binds its affiliates whose staff used the accounts.
- Free accounts are bound by the vendor's terms too; the complaint alleged scraping through dozens of free accounts.
- A consent judgment after settlement decides nothing on the merits and is not precedent.
English Commercial Court claim (2023-2025) in which banking software vendor Finastra alleged that CRDB Bank breached a concurrent-user licence's 'multiplexing' prohibition by letting tens of thousands of banking agents reach its FusionBanking Essence core system through a single interface user, claiming about USD 23 million; in March 2025 the court refused a late amendment to add a second system, and no trial judgment was found.
- Indirect access
- Licence scope
Lessons learned- A concurrent-user definition that prohibits sharing a single access point can be the basis of an indirect-access claim when many external users reach the system through one interface user.
- Quantifying such a claim depends on reconstructing historic concurrency from logs, which requires experts to make assumptions.
- Replacing the integration layer does not end the question; the vendor sought to extend its claim to the successor system.
- Vendors and customers should define the systems in dispute early; a late attempt to widen the claim was refused.
Getty Images v. Stability AI is an English High Court case decided on 2025-11-04 in which Getty Images abandoned its training and output copyright claims, failed on secondary infringement because Stable Diffusion's weights are not an infringing copy, and won only limited trade mark findings on watermarks generated by early model versions.
- Copyright and IP
- Licence scope
Lessons learned- An AI model that does not store or reproduce the works it was trained on was held not to be an infringing copy under the UK secondary infringement provisions.
- Where training took place outside the UK, a UK copyright claim about training could not be pursued, and the claimants abandoned it.
- Whether a licensee holds an exclusive licence depends on the wording of each agreement, and sample agreements in the case came out differently.
- Model weights offered under an open licence on public pages did not require users to read or accept that licence on the pages examined.
2025 judgment of the Technology and Construction Court that Winsopia, a UK subsidiary of LzLabs, breached its IBM customer agreement by reverse engineering IBM mainframe software to develop the Software Defined Mainframe, that LzLabs and its main investor procured the breaches and conspired, that the Software Directive did not excuse the acts, and that IBM validly terminated; the court later enjoined sale of the product and the Court of Appeal refused permission to appeal.
- Licence scope
- Audit and overuse
- Copyright and IP
Lessons learned- Licence restrictions on reverse engineering, use outside the licensee's enterprise and use beyond the designated machine were enforced as written, subject only to narrow statutory exceptions.
- The statutory right to observe, study and test a program does not cover decompilation, systematic analysis of compiler output or copying of source code outside the licence.
- A refusal to answer a valid audit request was itself a breach that supported termination.
- Directors and investors who direct a licensee's breaches can be personally liable.
Federal litigation (D.N.J., 2017-2025) in which IQVIA alleged that Veeva misused data it obtained under third-party access agreements, and Veeva counterclaimed that IQVIA restricted third-party access to its data to protect its monopoly; the courts denied motions to dismiss on both sides, split the trade secret and antitrust claims in 2024, and the parties settled in August 2025 with dismissal with prejudice and new data access agreements.
- Licence scope
- Competition
Lessons learned- Where a data licence requires a separate third-party access (TPA) agreement before another vendor's software may use the data, record which tools have a TPA and which do not.
- A vendor's decision to stop signing TPA agreements can leave a customer unable to use licensed data in its chosen software, so ask what rights you have if the data owner withdraws.
- Allegations that a vendor used licensed data beyond the purpose of the licence were litigated for eight years without a trial; keep records of what each integration does with licensed data.
- A settlement between two vendors can change what you may do with licensed data, so re-read data and software terms after such a deal.
Kadrey v. Meta Platforms is a 2023 to 2025 United States case in which a federal court granted Meta summary judgment on fair use for training Llama on 13 authors' books, while holding that authors are not entitled to a market for licensing their works as AI training data and leaving a torrenting distribution claim open.
- Copyright and IP
Lessons learned- Fair use is decided on the evidence in each case, and the court stressed that its ruling does not mean AI training on copyrighted works is lawful in general.
- The court treated a lost market for licensing works as AI training data as not a harm the plaintiffs are entitled to protect, but treated market dilution from competing outputs as the central question.
- Meta's own documents showed it tried to license books, then used shadow-library copies after licensing proved difficult, which is part of the record on how training data is sourced.
- How data is acquired, for example by torrenting, can be a separate issue from how it is used.
After complaints by Slack and alfaview, the European Commission preliminarily found that Microsoft had tied Teams to its Office 365 and Microsoft 365 business suites since at least April 2019; on 2025-09-12 it made Microsoft's commitments binding, requiring cheaper suites without Teams, switching rights for long-term licences, interoperability and data portability, without a finding of infringement.
- Competition
- Licence scope
Lessons learned- Suites without Teams must be offered in the EEA at an appreciably lower price, and the price gap was widened after the market test, so compare both versions at each renewal.
- Customers with long-term licences gained the right to switch to suites without Teams, so the switch need not wait for the end of the agreement.
- Microsoft committed not to give higher discounts on Teams or suites with Teams than on suites without Teams, which matters when negotiating bundle discounts.
- A bundle can be challenged under competition law even when the bundled product carries no separate price, as the Commission's tying concern shows.
- Judgment
N.D. Cal. case (2018 to 2025) in which the court held that the AGPLv3 'further restrictions' clause did not let licensees strip the Commons Clause that the licensor Neo4j Sweden had added, so advertising the ONgDB fork as free and open source was false; the Ninth Circuit affirmed the preliminary injunction in 2022 and judgment for Neo4j was entered in 2024.
- Open-source licence
- Licence scope
- Copyright and IP
Lessons learned- A licensor can attach its own additional restrictions to an AGPL-based licence; the court read the AGPLv3 'further restrictions' clause as binding licensees, not the licensor.
- Check the exact licence file of each version of an 'open core' product; licences can change between releases.
- Removing licence and copyright notices from redistributed code led to DMCA liability for altering copyright management information.
Oracle USA, Inc. v. Rimini Street, Inc. and the related Rimini Street, Inc. v. Oracle International Corp. are the long-running United States cases over how far Oracle's license terms allow a third-party support provider to copy Oracle software, which ended in a confidential settlement in July 2025.
- Support and renewal
- Licence scope
- Copyright and IP
Lessons learned- Before engaging third-party support, compare the copying and hosting clauses in each product's licence with the provider's working practices.
- Copies made under one customer's licence to serve other customers were held not to be permitted by the Oracle licences at issue.
- Location clauses in a licence can restrict where copies of the software may be made.
- Licence terms differ by product line, so each product's agreement should be reviewed separately.
S.D. Tex. case (2023 to 2026) in which a customer stopped paying a 36-month Software as a Service agreement before go-live; the court held that subscription fees started on 'initial use' during implementation, enforced a clause accelerating all fees for the remaining term on termination for breach, and awarded the vendor $1,437,426.
- Licence scope
Lessons learned- Subscription fees can start before go-live; here "initial use" meant the first login for implementation, configuration and training, not productive use.
- A clause making all fees for the rest of the term payable on termination for breach was enforced as an acceleration of agreed payments, not a penalty.
- Stopping payment without using the agreement's termination mechanism left the customer liable for the full 36-month term.
- Defences such as a penalty argument must be raised early; the court noted the customer raised it only after discovery closed.
2025 interim relief judgment of the District Court of The Hague ordering VMware LLC and Broadcom Inc. to provide exit support for Rijkswaterstaat's perpetually licensed VMware products for up to two years from 2025-07-23, at the annual fee Rijkswaterstaat proposed, on penalty of EUR 250,000 per day up to EUR 25 million.
- Support and renewal
Lessons learned- Record the vendor's published lifecycle and support-period commitments at the time of purchase, because the court treated them as a basis for the customer's expectations.
- Start exit planning as soon as a vendor changes its model; a migration estimated at two to three years left the customer with no real choice when the support contract ended.
- Identify which legal entity licenses and supports the software, since the court rejected the claim against the local sales entity.
- Put commitments on support continuation and exit assistance in the contract instead of relying on a general duty of care.
- Judgment
Dutch copyright and licence-scope dispute (The Hague District Court 2023, The Hague Court of Appeal 2025) in which SDL claimed more than EUR 2 million from the Dutch State after a compliance review of its Tridion software; both courts read 'unlimited' enterprise licences as allowing multiple installations across the ministries' IT environments, construed doubts against SDL as drafter, and awarded nothing.
- Licence scope
- Audit and overuse
- Copyright and IP
Lessons learned- Read 'unlimited' or enterprise grants together with the order form tables; the courts let the word 'unlimited' override a standard backup-copy restriction.
- Doubts in vendor-drafted licence terms may be resolved against the vendor as drafter.
- Merger and changed-circumstances clauses, not general use restrictions, were the agreed mechanism for repricing growth.
- Use outside the licensed organisation's own internal needs can still be a breach; the State admitted ten such publications.
Software Freedom Conservancy v. Vizio is a pending California lawsuit in which a device purchaser, not a copyright holder, seeks to enforce the source-code obligations of the GNU GPLv2 and LGPLv2.1 as a third-party beneficiary of those licences.
- Open-source licence
Lessons learned- Ship complete corresponding source code, or a valid written offer for it, with devices that contain GPL or LGPL components.
- Treat source-code offers shown in a product's menus as commitments that purchasers may try to enforce in contract.
- Plan for copyleft enforcement by parties other than copyright holders, since the court allowed that question to go to trial.
Federal copyright and contract suit (N.D. Cal., filed 2022) in which a jury found that Cribl infringed Splunk's copyright in Splunk Enterprise and breached the Splunk General Terms but not its partner licence, the court held that copying Splunk Enterprise to reverse engineer, test and troubleshoot interoperability was fair use while copying it for marketing was not, and Splunk was awarded one dollar in nominal damages and an injunction; Splunk appealed to the Federal Circuit in 2025.
- Licence scope
- Copyright and IP
- Competition
Lessons learned- A general click-through licence such as the Splunk General Terms applies alongside any partner agreement and can be breached even when the partner agreement is not.
- Internal Business Purpose and competitive-use restrictions are enforced: using a vendor's software to market a competing or complementary product was not a fair use.
- Copying software to reverse engineer, test and troubleshoot interoperability with an uncopyrightable protocol was held a fair use, and the licence's reverse-engineering exception for statutory rights preserved that use.
- Ambiguities in vendor-drafted licence restrictions were construed against the drafter.
- Liability can be found with only nominal damages, but an injunction can still impose a compliance programme with usage logs.
Federal DMCA and contract suit (N.D. Cal., 2024-2025) in which Synopsys alleged that Sunlune, a licensed customer, used counterfeit licence keys to run more copies of three licensed tools, and one unlicensed tool, than it had paid for; after a TRO, a stipulated preliminary injunction and a pro se answer that was struck, the court entered a default judgment of USD 27,500,000 in statutory damages and a permanent injunction, and refused to vacate it.
- Licence scope
- Copyright and IP
Lessons learned- Using counterfeit licence keys to exceed purchased seats, or to run a product that was never licensed, is pleaded and treated as circumvention of an access control, not only as a contract overuse.
- Statutory damages under the DMCA are counted per act of circumvention, so an overuse that was logged thousands of times can produce a very large exposure.
- A company cannot answer a federal complaint without a lawyer, and deleting shell history or logs after a restraining order was cited as part of the grounds for the maximum award.
- Pending
X Corp. v. Bright Data is a 2023 to 2025 United States case in which a federal court held that state-law contract and tort claims based on scraping and selling public data were preempted by the Copyright Act, allowed only narrow access-based claims to be repleaded, and sustained Bright Data's antitrust counterclaims against X's terms.
- Licence scope
- Copyright and IP
- Competition
Lessons learned- Terms of service that restrict copying or scraping of content the platform does not own may be preempted by copyright law when enforced as state-law claims.
- A platform that sells access to the same public data it forbids others to scrape can face competition counterclaims.
- A party cannot unilaterally amend a contract midway through litigation concerning that contract.
- Claims based on circumventing technical access controls were treated separately from claims based on scraping public pages.
Federal copyright suit (D. Del., No. 1:24-cv-00925, filed 2024-08-08) in which Anaconda alleges that Intel kept using and distributing the Anaconda Distribution and conda packages in its AI Analytics Toolkit after its paid licences lapsed, and Intel answers that it holds licences, that the packages were offered as always free, and that Anaconda failed to use the contractual dispute process; the retrieved court record ends with Intel's answer.
- Copyright and IP
- Licence scope
Lessons learned- When a paid licence lapses, decide in writing which downloads, mirrors and copies must stop and which licence, if any, covers what remains.
- Do not treat a vendor's statement that some channels are free as covering the vendor's own curated packages; the terms and the channel decide.
- Redistributing a vendor's packages in your own product or repository needs an explicit distribution or embedding right, separate from internal-use rights.
- Check the dispute-resolution clause of the services agreement: a defendant may argue that a suit is premature if the process was not followed.
2024 New York Supreme Court action in which AT&T sought to compel Broadcom and VMware to honour a contractual option to renew support for perpetually licensed VMware software; the parties reported a settlement in principle and terms were not published.
- Support and renewal
Lessons learned- The wording and deadline of a support renewal option decide whether later renewals remain available.
- General End of Availability or retirement rights in incorporated online policies can be invoked against negotiated renewal options.
- Perpetual licence rights and support entitlements should be tracked as separate contracts.
- Complete entitlement records are the basis of any argument over renewal rights.
- Judgment
French case in which the Cour de cassation held in 2022 that a software author may sue for copyright infringement (contrefaçon) when a licence clause is breached, and the Paris Court of Appeal in 2024 found that Orange infringed the GPLv2-licensed Lasso library and ordered it to pay EUR 800,000 in damages.
- Open-source licence
- Copyright and IP
Lessons learned- Under French law, following the CJEU's IT Development ruling, breach of a software licence clause can be pursued as copyright infringement, with its stronger evidence and damages rules.
- Delivering GPL code inside a system built for a client counted as distribution, which triggers the source code and licensing conditions.
- Credit the author of open-source components; failing to name the author was treated as an infringement of moral rights.
2022 Southern District of New York suit in which IBM alleged that Micro Focus copied and reverse engineered CICS Transaction Server software; the court held IBM's contract claim preempted by the Copyright Act, and the case was dismissed with prejudice by stipulation in July 2024.
- Copyright and IP
- Licence scope
Lessons learned- The enforceability of contractual bans on reverse engineering can depend on the US circuit and on how the claim is framed.
- Developer and partner program agreements carry their own use restrictions, separate from production licence terms.
- A settlement between vendors can change the software that customers license.
English case (High Court, Commercial Court, 2024) in which LivePerson's former German referral and resale partner sought to add a claim for statutory commercial agent compensation; the court held that LiveEngage, licensed as hosted SaaS for renewable twelve-month terms, was a service supplied temporarily rather than a sale of goods, distinguished the Software Incubator ruling on perpetual licences, and refused the amendment.
- Resale and exhaustion
Lessons learned- A renewable twelve-month SaaS subscription was treated as akin to a rental, not a sale, even though customers almost always renewed.
- Hosted software with vendor-run services was characterised as a service, not goods, which kept the partner outside the Commercial Agents Regulations.
- A partner that buys and resells in its own name is a distributor, not an agent, even if the vendor controls pricing and customer terms in practice.
- Vendors moving from perpetual licences to subscriptions change the legal character of their channel relationships as well as of their customer contracts.
US copyright, contract and fraud suit in which Lynwood Investments, as assignee of Rambler, claimed rights in NGINX software written while its creator worked at Rambler; the district court dismissed it in 2022, and in 2024 the Ninth Circuit affirmed most dismissals but revived the copyright claim over NGINX Plus code developed at Rambler, while holding that no breach of the open source NGINX licence was pleaded.
- Copyright and IP
- Open-source licence
- Licence scope
Lessons learned- A claim that a commercial product exceeds an open source licence must identify the licence term that was breached; the BSD-style NGINX licence did not itself bar commercial use.
- Ownership of code written during employment can be contested years later under another country's law, and limitation periods may start from inquiry notice rather than from full discovery.
- Software that existed only as ideas is not protected by copyright; claims have to identify the specific code allegedly copied, and version-control commit dates were treated as a way to do so.
- Acquirers of software companies can be named in claims about the target's origins, so provenance of code and employee invention terms matter in due diligence.
Meta Platforms v. Bright Data is a 2023 to 2024 United States case in which a federal court held on summary judgment that Facebook and Instagram terms of use did not prohibit a former account holder from scraping public pages while logged off, so Meta's breach of contract claim failed.
- Licence scope
Lessons learned- Terms of use bind those who use the service, so a prohibition on automated collection may not reach conduct by someone who is logged off.
- A survival clause that is meant to govern a former user may be read narrowly if it has no time limit.
- Defeating anti-bot measures such as CAPTCHAs on public pages was treated differently from entering a password-protected area.
- Terms that restrict selling data obtained from a service may not survive account termination unless they say so.
English case (Technology and Construction Court, 2023 and 2024) in which a reseller's claim of about USD 312.7 million against Pinewood Technologies, the developer of a dealer management system, was largely struck out because the reseller agreements excluded liability for lost profits and reliance costs; the court also gave Pinewood summary judgment for unpaid per-user fees, holding that a no set-off clause applied.
- Resale and exhaustion
- Licence scope
Lessons learned- Exclusion clauses covering loss of profit and reliance costs can remove almost all of a reseller's claim against the software developer, even for non-performance.
- A no set-off clause means fees for user accounts must be paid in full while a dispute with the vendor continues.
- Negotiating some clauses of a vendor's draft can take the whole agreement outside the standard terms protection of the Unfair Contract Terms Act 1977.
- Obligations to keep software compliant with local law or OEM standards need their own remedies if they matter commercially.
Federal trade secret and copyright case (N.D. Cal. and Ninth Circuit, 2019 to 2024) in which a jury found that Vade and its former CTO, a former Cloudmark executive, misappropriated Cloudmark trade secrets and infringed Proofpoint and Cloudmark copyrights; judgment of $13,495,659 for unjust enrichment was entered against Vade, while exemplary damages, a permanent injunction and attorney's fees were refused and the Ninth Circuit affirmed in 2024.
- Copyright and IP
- Competition
Lessons learned- Source code and design documents are protected both as trade secrets and as copyright works; a vendor can enforce both against a competitor that hires its staff.
- A trade secret claim needs the secrets identified precisely; Proofpoint's early preliminary injunction failed for want of that identification.
- A damages award for past use does not by itself bring an injunction; the court required proof of continuing use before restricting Vade's products.
- Customers of a product found to contain misappropriated code are not parties to such a case, but should note any disposition order affecting the code they run.
Federal copyright, patent and contract suit (N.D. Cal., filed 2020) in which the court granted Synopsys summary judgment that Real Intent breached licence restrictions on incorporating licensed software into its own products and on accessing an unlicensed library, but held Real Intent's copying of command syntax a fair use and left the competitive-purposes restriction for trial.
- Licence scope
- Copyright and IP
- Competition
Lessons learned- Licence restrictions on incorporating licensed software into other software apply even when the licence was granted for an interoperability purpose.
- A licensee that also competes with the licensor is bound by the same restrictions as any customer; a 'competitive purposes' restriction needs evidence of the actual use, and was not decided on summary judgment.
- Components shipped in an installer but not listed as licensed products can be outside the licence: using them was held a breach.
- Contract claims about the use of licensed software were not preempted by the Copyright Act, and nominal damages can satisfy the damages element.
Petition to confirm an arbitral award (S.D.N.Y., 2023-2024) in which the court confirmed an award finding that Shanghai Yunkuo Information Technology (ENCOO Tech) misappropriated UiPath's RPA source code as trade secrets and breached a 2020 settlement agreement by not submitting its code for third-party review, and entered judgment of USD 71,692,756.43 with an injunction and five years of twice-yearly source code reviews.
- Copyright and IP
- Competition
Lessons learned- Source code is protected as a trade secret only if the owner keeps it non-public and takes strong measures to protect it; those measures were part of what the arbitrator relied on.
- A settlement that includes a third-party source code review gives the software owner a contractual remedy if the review is not allowed by the deadline.
- Arbitration clauses can reach the original misappropriation claims as well as breaches of the settlement, depending on their wording.
- Hiring staff from a competitor and shipping similar code soon afterwards can be treated as evidence of copying; document independent development.
Federal lawsuit (S.D.N.Y. then E.D. Mich., filed 2022) in which the licensor of the NearPoint email-archiving software claimed about USD 218,000 from a Michigan health system that reported archiving 12,930 mailboxes with 7,473 licences; in 2024 the court refused to dismiss the breach of contract claim, holding that the click-through EULA plausibly formed a contract and that order forms for 'mbox licenses' plausibly limited each licence to one mailbox.
- Audit and overuse
- Licence scope
Lessons learned- The licence metric may be defined only in order forms or invoices, not in the EULA; keep every order document with the licence record.
- Click-through acceptance by employees during installation can bind the organisation, and repeated installations can be treated as repeated assent.
- A true-up purchase can later be cited as evidence that the customer understood the metric and knew it was over-deployed.
- Answers given in an audit inquiry can become the basis of the vendor's claim; verify counts before reporting them.
- Dropping support does not end audit exposure for perpetual licences.
Federal suit (D. Minn., 2016 onward) in which FICO terminated a perpetual enterprise-wide Blaze Advisor licence after the 2016 Chubb and ACE merger, sued for breach and copyright infringement, won a jury verdict on infringement, and then saw a USD 40 million damages award cut back through remittitur and a retrial; the appeal on remedies was pending in the Eighth Circuit when the record was reviewed.
- Licence scope
- Copyright and IP
- Audit and overuse
Lessons learned- A change-of-control clause that deems a merger an assignment can end a perpetual licence if consent is not obtained; read it before any merger, not after.
- A vendor may terminate and sue even when the licensee runs the software on only a few applications; the dispute then turns on the value of the licence, not on the extent of use.
- Damages for continued use after termination are measured against what the vendor actually charged similar customers, which here capped the award far below the vendor's list-price theory.
- A definitions section that defines a term nobody uses in the operative clauses did not create a territorial restriction.
Dutch summary proceedings (Amsterdam District Court, 2023) in which telecoms operator KPN asked the court to force Broadcom's CA Europe to extend its software licences and support at a price reflecting a 90% fall in usage; the court refused all relief, holding that the vendor was free to set renewal terms and that the audit KPN had agreed to was the starting point.
- Licence scope
- Support and renewal
- Audit and overuse
- Competition
Lessons learned- Start renewal or exit negotiations well before a licence term expires; the court put the cost of a late migration on the customer.
- A vendor is generally free to set the price, minimum term and sales channel of a new licence term, and need not price it in line with reduced usage.
- An audit the customer agreed to will be the starting point for the licence position, even if the customer disputes the measurement method.
- A grace period after expiry is not necessarily a contract extension, and usage during it may be priced from the expiry date.
Oracle sued third-party support provider Terix in 2013 and Hewlett Packard Enterprise in 2016 over downloading and installing Solaris patches for servers not under Oracle support; Terix agreed to a stipulated judgment of $57.7 million with an injunction in 2015, and a jury found HPE liable in 2022 before the parties dismissed the case in 2023.
- Support and renewal
- Copyright and IP
- Licence scope
Lessons learned- Access to patches and updates can be tied to an active support contract per server; using one contract's credentials for other servers was held to fall outside the licence.
- A third-party support provider's practices can create liability for the customer's own contracts and for the provider's partners, so ask how patches are obtained.
- Suspicion of misuse starts limitation periods running, for vendors and customers alike.
Litigation from 2010 to 2023 in which SAS Institute claimed that World Programming's software, written to run programs in the SAS Language, infringed its copyright and breached the Learning Edition licence; the CJEU held in 2012 that functionality, programming languages and data file formats are not protected as computer programs and that a licensee may observe, study and test a program, the English Court of Appeal dismissed SAS's appeal in 2013, and the US Federal Circuit affirmed dismissal of SAS's non-literal copyright claim in 2023.
- Copyright and IP
- Licence scope
Lessons learned- In the EU a licensee may observe, study and test a program to learn its underlying ideas while doing what the licence permits, and licence terms cannot remove that right.
- Functionality, programming languages and data file formats are not protected as computer programs in the EU, but copying a manual's text can still infringe.
- The same conduct can lead to different results in different countries, so check the governing law and forum of each licence.
Copyright suit (High Court of Singapore, [2023] SGHC 50) in which Siemens Industry Software sued Inzign, a licensed NX customer, after the software's automatic reporting function detected an unauthorised copy that an employee had installed on an unsecured company laptop; the court found the company not primarily liable but vicariously liable, assessed damages at S$30,574 against a claim of S$259,511, refused additional damages and granted a permanent injunction.
- Audit and overuse
- Copyright and IP
- Licence scope
Lessons learned- An existing licence does not cover extra copies: a single-user module licence did not authorise a second, concurrent installation.
- An employer can be vicariously liable for an employee's unauthorised installation even when it did not authorise the copy itself.
- A written anti-piracy policy is not enough without supervision, reminders and control of every device, including unregistered ones.
- Preserve evidence before uninstalling an unauthorised copy, because the court will otherwise estimate what was used.
Federal copyright, DMCA, contract and Lanham Act suit (N.D. Cal., 2021-2022) in which Cadence alleged that Syntronic AB, a Swedish design house, its US subsidiary and its Beijing centre used cracked Cadence licence files, evidenced by phone-home reports from at least 64 machines and USD 8.3 million of avoided licence fees; the court allowed service on the Beijing company through its US counsel, struck the defences, ordered 24 reformatted computers shipped to the US for inspection despite a Chinese privacy-law objection, and the case settled before trial.
- Licence scope
- Copyright and IP
Lessons learned- A statement that software was used on behalf of a customer who supplied the licences does not answer a vendor's usage records unless the licences can be shown, machine by machine.
- A click-through licence with a California forum clause was one of three routes Cadence used to bring foreign group companies into a California court, along with alter ego and purposeful direction.
- Recycling or reformatting machines after notice of a dispute led to an order to ship 24 computers from China for inspection, and a Chinese data-protection objection raised late did not stop the order.
- The suit relied on three separate source types: the licence agreements, the vendor's phone-home reports and the defendant's own statements in correspondence.
N.D. Cal. copyright case (2019 to 2022) in which Elastic alleged that floragunn copied security code from X-Pack, published under the source-available Elastic License, into its competing Search Guard plugin; the case settled in 2022, with Amazon and AWS also party to the settlement agreement, and was dismissed with prejudice.
- Copyright and IP
- Licence scope
Lessons learned- Source being publicly visible is not a licence to use it: read what the source-available licence permits before copying or deploying code in production.
- Check how third-party plugins and add-ons were built; the vendor alleged that users and cloud services distributing the plugin were also infringing.
- Where one repository mixes files under an open-source licence and a proprietary or source-available licence, confirm the licence file by file.
Trademark and false advertising case (N.D. Cal., 2019-2022) in which Elastic alleged that Amazon's use of the ELASTICSEARCH name for its managed service and Apache 2.0 distribution confused customers; it was settled and dismissed without prejudice in February 2022, a year after Elastic moved Elasticsearch and Kibana from Apache 2.0 to SSPL and the Elastic License.
- Open-source licence
- Competition
Lessons learned- An open source licence covers the code, not the product name; trademark rules decide what a fork or managed service may be called.
- A vendor can change the licence of maintained branches between releases, so record the licence of each version you deploy, not just the product name.
- Check whether a managed service is the vendor's own offering or a third party's, because features, support and licence terms can differ.
California case in which the courts held that a 2010 settlement agreement required Oracle to continue to offer its product suite on HP's Itanium servers until HP stopped selling them; a jury awarded HP $3.014 billion in 2016, the Court of Appeal affirmed in 2021, and the Supreme Court of the United States denied review in 2022.
- Support and renewal
- Licence scope
Lessons learned- A short, general commitment in a settlement or side agreement can be enforced as a binding obligation to keep offering software on a platform.
- A vendor can keep supporting existing releases on a platform while ending new releases for it; check which of the two your contracts actually promise.
- Platform support disputes can outlast the hardware generation they concern, so plan migrations on the assumption that litigation will not resolve the question in time.
Dutch contract dispute (2013-2022, two Supreme Court rulings) in which the assignee of software supplier Aquila claimed licence fees and EUR 20 million in contractual penalties because pension administrator MN Services used Aquila's software for pension funds whose administration it took over without notifying Aquila; MN had to pay EUR 700,000 in licence fees and penalties mitigated to EUR 500,000.
- Licence scope
- Audit and overuse
Lessons learned- Clauses that charge a fee when the licensee takes over, merges or combines with another organisation and uses the software there can be triggered by taking over a client's operations.
- A written notification duty backed by a weekly penalty is enforceable even if the supplier learned of the change in other ways.
- Courts may mitigate a contractual penalty that is grossly out of proportion to the loss, but will not set it aside.
- Each new combination is assessed on its own facts; a later claim against the same licensee failed.
Federal breach-of-contract and copyright suit (D. Del., 2015-2022) in which Micro Focus alleged that Insurance Services Office distributed applications built with Net Express to its customers without buying deployment licences; the court let the click-through EULA claims go to a jury, held that the installing company bears the risk of an employee's click-to-accept, and the case ended by stipulated dismissal before trial.
- Licence scope
- Audit and overuse
- Copyright and IP
Lessons learned- Click-to-accept licences presented when installing upgrades and service packs can be enforced against the company, even if a junior IT employee clicked.
- Shipping applications built with a development tool to customers can require separate runtime or deployment licences.
- Keep copies of every EULA version accepted at installation, mapped to the installed version.
- Missing order forms do not necessarily defeat a vendor's claim under the licence grant.
Federal declaratory judgment action (D. Minn., 2020-2021) in which Fairview Health Services challenged a USD 4.18 million audit claim by Quest Software and One Identity for 69,064 Active Roles licences; the court held that later quotations bound Fairview to Quest's 2013 terms only for the licences they covered, so the 2013 forum clause did not move the case to Texas, and that over-deployment beyond a quantity-limited licence could be copyright infringement despite a true-up clause. The case was dismissed in October 2021 after a stipulation.
- Audit and overuse
- Licence scope
- Support and renewal
- Copyright and IP
Lessons learned- Signing a quotation that incorporates new terms may change the terms only for the items on that quotation, not for licences bought earlier.
- Maintenance renewals and licence grants can sit under different agreements; keep the agreement that governs each licence purchase.
- A true-up clause does not by itself make over-deployment licensed; it can coexist with a copyright claim.
- Ending maintenance can be followed by an audit, so check deployments against entitlements before giving notice.
- Audit clauses that price shortfalls at current list price plus maintenance and fees can make a shortfall far more expensive than the original licences.
Google LLC v. Oracle America, Inc. is the 2021 United States Supreme Court decision holding that Google's copying of about 11,500 lines of Java SE API declaring code into Android was a fair use as a matter of law.
- Copyright and IP
Lessons learned- The case concerned reimplementation of an API, not the terms on which Oracle licenses Java SE to end users.
- Whether API declaring code is copyrightable remains undecided by the Supreme Court.
- Fair use depends on the facts of each case and is not a general permission to copy interfaces.
Copyright case (Federal Court of Australia, [2021] FCA 615; appeal dismissed, [2021] FCAFC 206) in which QAD sued SPC, the buyer of the SPC food business, for using QAD's ERP software after completion without paying the fee QAD required to consent to transfer of the seller's non-transferable licence; the court found an implied licence that ended when SPC refused to pay, and awarded A$662,428.80 in compensatory damages (the transfer fee plus a year's maintenance) and A$500,000 in additional damages.
- Licence scope
- Copyright and IP
- Support and renewal
Lessons learned- Buying a business does not transfer a non-transferable software licence; the buyer needs the vendor's consent or its own licence.
- A vendor's patience during negotiations can amount to an implied licence, but one limited to the conditions under which it was given.
- Continuing to use software after refusing the vendor's terms can lead to additional damages for flagrant infringement.
- Check in due diligence which licences need vendor consent to transfer, and allocate the cost of that consent in the sale agreement.
Long-running US federal case in which SCO alleged that IBM misused UNIX code from the Project Monterey joint development and contributed it to Linux; after SCO lost its claim to own the UNIX copyrights, the case ended in a 2021 settlement of $14,250,000 approved by the Delaware bankruptcy court.
- Licence scope
- Copyright and IP
- Open-source licence
Lessons learned- Verify that a party asserting licence or copyright claims owns the rights it relies on.
- Review field-of-use limits and release-dependent grants in joint development agreements before reusing contributed code.
- Expect that exceeding a licence may give rise to tort claims as well as contract claims.
- Record the provenance of code contributed to or taken from open-source projects.
English and EU case (High Court 2016, Court of Appeal 2018, Court of Justice of the European Union 2021) in which a sales agent for CA's release automation software claimed statutory compensation after CA terminated its agency; the Court of Appeal held that electronically supplied software was not 'goods', but the CJEU ruled that supplying software by download for a fee with a perpetual licence can be a 'sale of goods', after which the parties settled.
- Resale and exhaustion
Lessons learned- Under the EU rule, supplying software by download for a fee with a perpetual licence can be a sale of goods, which brings intermediaries selling it within commercial agency protection.
- Vendors terminating sales agents or referral partners for perpetual licences should expect a possible statutory compensation claim on top of contract damages.
- The perpetual licence was central to the ruling; later English decisions treat time-limited subscriptions differently.
- Partner agreements should state whether the partner acts as agent or as buyer and reseller, and that choice should match practice.
- Judgment
Preliminary ruling of the Court of Justice of the European Union (6 October 2021, C-13/20) in a dispute between software developer Top System and its public-sector licensee: a lawful acquirer may decompile a program to correct errors affecting its operation, including by disabling a malfunctioning function, without meeting the interoperability conditions of the decompilation exception, but only as far as necessary and subject to any contractual terms.
- Licence scope
- Copyright and IP
- Support and renewal
Lessons learned- A licence cannot remove every possibility of correcting errors, but it can organise how errors are corrected, for example by reserving corrective maintenance to the vendor.
- Decompilation for error correction is not 'necessary' where the source code is lawfully or contractually available to the licensee.
- Code obtained by decompiling may be used only to correct the errors, not for other purposes.
- Where support disputes leave a licensee unable to use software, the error-correction exception may be relevant, within strict limits.
Copyright case (Federal Court of Canada, 2021 FC 63) in which Trimble and its Canadian reseller obtained default judgment against Quantum Dynamics and its director after anti-piracy telemetry in Tekla Structures recorded 335 unlicensed use events on six devices; the director had admitted the use and signed a licence agreement but never paid, and the court awarded C$212,931 in damages based on a perpetual licence and maintenance per device, C$50,000 in punitive damages and a permanent injunction.
- Audit and overuse
- Copyright and IP
Lessons learned- Telemetry that records device, user, network and location data can be enough to prove unlicensed use inside a company's premises.
- Damages were assessed per device used, at the price the vendor had quoted, not per use event.
- Admitting use, promising deletion and then continuing to use the software supported punitive damages.
- A director personally involved in the use can be held jointly liable with the company.
Qui tam case filed in 2013 alleging that IBM, with Deloitte, presented the IRS with an audit claiming USD 91 million in over-deployment charges to secure a 2012 enterprise licence renewal; the district court dismissed it in 2019, and in 2021 the D.C. Circuit held that but-for causation is required but that the fraudulent inducement claims were adequately pleaded and could proceed.
- Audit and overuse
- Licence scope
Lessons learned- A licence compliance audit run by the vendor, or by a firm it engages, can itself become the subject of a dispute if its assumptions are challenged, so record the counting assumptions behind any audit finding you are asked to accept.
- The complaint alleged that licences were counted as in use on discontinued servers and that floating licences were assumed to be used concurrently by people who did not use the software, which are the kinds of assumption a customer should test.
- Where an audit claim is followed by an offer to waive charges if a new contract is signed, the link between the audit and the renewal is what the litigation turned on.
- Continued payment under a renewed licence can be argued as showing that a customer did not treat an alleged misstatement as important, but the appeals court held that this did not defeat the claim at the pleading stage.
Federal copyright case (S.D. Tex., 2019-2020) in which Embarcadero sued NCR over unlicensed RAD Studio, Delphi and C++Builder downloads that its licence tracking had linked to the NCR corporate domain; the court granted NCR summary judgment because every download was made by staff of foreign NCR subsidiaries outside the United States.
- Copyright and IP
- Audit and overuse
Lessons learned- Vendor licence telemetry can tie installations on a group's shared corporate domain to the parent company; inventory and licence position must cover foreign subsidiaries too.
- Trial and Community Edition downloads by individual employees can trigger a licence violation notice to the whole group.
- Where an installation physically sits, and which group entity the user works for, can decide which law and which contracting party apply.
- A notice of licence violation is not proof of infringement; answer it with facts about entities, locations and licences held.
Case filed in 2020 in which eScholar said the Nebraska Department of Education, after ending its 2004 Uniq-ID licence, built a replacement that copied the licensed software; in October 2020 the court dismissed the copyright and trade secret claims against the department on sovereign immunity grounds, allowed the contract claim and the claims against two officials for injunctive relief to proceed, and refused a preliminary injunction.
- Licence scope
- Copyright and IP
Lessons learned- A forum selection clause in a licence can be enough for a public customer to be sued in federal court on the contract, but the court held it did not extend to separate copyright and trade secret claims against the state.
- When a public body ends a licence and moves to a replacement, the vendor can argue the replacement copies licensed screens, data fields and layout, so keep clean records of how a replacement was built.
- Termination terms matter: here the customer announced non-renewal in January 2020 with retroactive effect to 1 November 2019, and the vendor then asked for rescission and damages.
- A preliminary injunction was refused because the harm was speculative and compensable in money, and shutting down a student tracking system would harm the public.
Case filed in 2019 in which KaZee said the University of Texas Medical Branch used PEARL at sites outside the correctional health programme its Master License covered, demanded USD 20 million in licence fees and then terminated; in 2020 the court held that the federal copyright claim could proceed against the university's officers despite sovereign immunity and left the dispute over whether the licence was validly terminated for the injunction stage.
- Licence scope
- Copyright and IP
Lessons learned- A licence limited to named sites or programmes is enforced as a scope limit: use at other sites was pleaded as copyright infringement, not only as a contract breach, and the court accepted federal jurisdiction over that claim.
- A public body's sovereign immunity does not necessarily stop a vendor suing its officers for an injunction against ongoing unlicensed use, so immunity is not a safe answer to a scope dispute.
- Records of where the software is actually in use matter: the university's own list of sites and its legal department's early reading of the licence were part of the vendor's account.
- Whether a vendor validly terminated a perpetual licence, and what the licence permits after termination, became the central issue and should be settled before a dispute, not after.
Federal breach-of-contract and copyright suit (D. Md., 2016-2020) in which Micro Focus claimed after a 2015 audit that Express Scripts had over-deployed 10,000 'Authorized User' Rumba licences by publishing Rumba to 35,236 employees through Citrix; the copyright claim failed because the plaintiff did not own the copyright, and a jury found that the parties had not agreed to buy and sell Workstation Licenses, so judgment was entered for the customer.
- Audit and overuse
- Licence scope
- Copyright and IP
Lessons learned- A licence metric named on an order form but not defined in the EULA is ambiguous, and both sides' emails and conduct become evidence.
- A vendor that sues on one licence theory may not be allowed to switch to another at trial.
- Internal notes admitting non-compliance can be used against the customer, even when it later wins.
- Whether users who can reach software but cannot log in to the back-end system count as users is a live question; record who can actually use it.
- Only the copyright owner, or an exclusive licensee, can sue for infringement; check which group entity owns the rights.
Preliminary discovery case (Federal Court of Australia, [2020] FCA 901) in which Siemens Industry Software obtained an order requiring Telstra to disclose the account holders behind 20 IP addresses that the automatic reporting function in NX and Solid Edge had linked to cracked copies, subject to limits on how Siemens could use the information and an undertaking not to pursue non-commercial individual users.
- Audit and overuse
- Copyright and IP
Lessons learned- An embedded reporting function that cannot be switched off can be the evidence a vendor uses to obtain a court order identifying a business behind an IP address.
- Cracking a licensed product to unlock unlicensed modules was treated as a reasonable basis for a copyright claim, because running the software reproduces it.
- Being licensed for some modules does not cover the others: the court described the main concern as licensees cracking software to reach modules they had not paid for.
- Courts limit how identity information from an ISP may be used, so the vendor's first contact after such an order is likely to be a settlement letter, not a lawsuit.
Federal DMCA suit (S.D. Cal., 2019-2020) in which Synopsys alleged that a San Diego chip startup used counterfeit licence keys more than 15,000 times; the court granted a preliminary injunction on 2019-08-15, rejecting the startup's argument that a Chinese business partner had supplied a licence and its extraterritoriality objection, denied expedited discovery, and the case was dismissed with prejudice after a settlement.
- Licence scope
- Copyright and IP
Lessons learned- Believing that a business partner supplied a valid licence does not answer a claim of circumvention if counterfeit keys were used to reach the software.
- Running the software on servers in another country does not take circumvention by a US-based company outside US law if the access was by people in the United States.
- An engineering project that depends on the software is not a reason for a court to keep an injunction away; the court called that argument audacious.
- A litigation hold already in place can lead a court to deny forensic imaging on an expedited basis, but the court still ordered evidence to be preserved.
Federal DMCA and copyright suit (N.D. Cal., 2019-2020) in which Synopsys alleged that InnoGrit, licensed to use Synopsys software in Shanghai, ran it on computers in San Jose by altering their host identifiers and downloaded crack files and key generators; the court granted a preliminary injunction and held that altering host IDs to defeat a licence key can be circumvention under the DMCA, and the case ended in a stipulated permanent injunction.
- Licence scope
- Copyright and IP
Lessons learned- Running licensed software outside the licensed site can be more than a breach of contract if the licence key's host ID check is defeated.
- Changing MAC addresses or other host identifiers to match a licence file is treated as circumvention, not merely use of a valid key.
- Downloading crack files or key generators onto company systems can itself support a DMCA trafficking claim.
- Control who can install engineering tools and what they download; one employee's actions were attributed to the company.
- Judgment
English case (High Court, Intellectual Property List, 2019) in which 77m built Matrix, a geocoded address dataset meant to compete with Ordnance Survey's AddressBase, from licensed and open data; the court held that 77m breached the permitted-use terms of several data licences, including by scraping 3.5 million addresses, and that its use of that data infringed database rights held by Ordnance Survey and GeoPlace.
- Licence scope
- Copyright and IP
Lessons learned- Permitted-use clauses in data licences are enforceable: using licensed data for a purpose beyond the one stated is a breach.
- Data obtained by scraping a service in breach of its terms is unlicensed, and so is anything built from it.
- Rights holders upstream of your licensor can enforce their own rights if you exceed the licence you were given.
- How a restriction is worded matters: data derived from licensed material was outside one licence's restriction but inside another's.
Federal copyright, DMCA and contract suit (N.D. Cal., 2017-2019) in which Cadence alleged that Pounce Consulting and its Mexican affiliate ran Allegro, OrCAD and PSpice with cracked licence files and licence manager; Cadence's call-home data identified over 6,900 unauthorised uses on 26 machines, and after both defendants defaulted the court entered a USD 6,983,178.29 judgment, an injunction and about USD 2.1 million in fees.
- Licence scope
- Copyright and IP
Lessons learned- Software that is installed by clicking through a licence agreement binds the installer, even when no invoice or licence was ever purchased, and the same agreement can carry a fee-shifting clause.
- Licence-manager call-home records that tie machines to company domains, e-mail addresses and machine names can identify the user of a cracked licence file and count the unauthorised uses.
- One claim, three measures of loss: the court awarded lost licence fees with contractual interest, disgorged profits and per-incident statutory damages for circumvention.
- Using engineers on client projects with cracked tools exposes the profit earned on those projects, not only the licence fee that would have been paid.
German copyright action (Hamburg, 2015 to 2019) in which a Linux kernel developer claimed that VMware's ESXi kernel was a derivative work of Linux distributed without complying with GPL-2.0; the Hamburg District Court dismissed it in 2016 because the plaintiff had not sufficiently shown which of his protected code VMware used, the appeal was dismissed in 2019, and VMware said it was working to remove vmklinux from vSphere.
- Open-source licence
- Copyright and IP
Lessons learned- Keep a record of which open source components, and whose code, ship in each product release, because proof of what was copied decided this case.
- Treat a kernel module that combines GPL code with proprietary code as a licence risk to be designed out, not argued about later.
- A win in court on procedure does not end the compliance question; VMware still announced it would remove the disputed module.
- Judgment
Preliminary ruling of the Court of Justice of the European Union (18 December 2019, C-666/18) in a dispute between software publisher IT Development and its licensee Free Mobile: breach of a licence clause relating to the copyright in a program is an 'infringement of intellectual property rights' under the Enforcement Directive, so the publisher must have the directive's remedies whatever liability regime national law applies.
- Licence scope
- Copyright and IP
Lessons learned- In the EU, a licensee that uses software outside a licence clause protecting the copyright can face the Enforcement Directive's remedies, not only contract damages.
- The referring court listed exceeding user counts, processor limits and trial periods as examples, but the ruling decided only unauthorised modification.
- Licence clauses reserving modification rights to the vendor are enforceable restrictions on the licensee.
- Whether the claim is framed in contract or tort remains a matter of national law.
CJEU Grand Chamber ruling (2019, C-263/18) that supplying an e-book by download for permanent use is a communication to the public under Article 3(1) of Directive 2001/29, not a distribution, so the exhaustion rule in UsedSoft for software does not allow resale of e-books.
- Resale and exhaustion
- Copyright and IP
Lessons learned- The UsedSoft exhaustion rule applies to computer programs under the Software Directive; it does not extend to other downloaded content such as e-books.
- For mixed products, identify whether the asset is a computer program or other content before relying on resale or transfer rights.
- A licence limited to reading on the user's own equipment was treated as not covering a wider public reached by resale.
Dutch summary proceedings (The Hague District Court, 25 June 2019) in which Exact's Cuban distributor PAM International challenged Exact's termination with immediate effect, including the end of maintenance, new licence keys and portal access for end users, ahead of Exact's acquisition by KKR; the court held that immediate termination of a 23-year relationship was unreasonable, rejected force majeure based on US sanctions on Cuba, and ordered Exact to keep performing.
- Support and renewal
- Resale and exhaustion
Lessons learned- A change of ownership at the vendor can end distribution, maintenance and licence-key supply; ask what happens to support if the vendor is sold.
- End users kept perpetual licences, but losing updates, bug fixes and support made continued use risky, as the court accepted.
- Under Dutch law a long-running agreement without a notice clause can be terminated, but reasonableness may require a long notice period or a weighty reason.
- Updates the vendor has supplied for years can become an obligation even where a written contract says otherwise.
- The court treated sanctions exposure created by the vendor's own owner as the vendor's risk, not force majeure.
Contract suit (High Court of Singapore, [2019] SGHC 131) in which trading software vendor Patsystems recovered US$604,340.68 in unpaid support and maintenance invoices from its licensee, an Indonesian commodity and derivatives exchange, which had withheld payment over software problems; the court held that a sales director's emails offering to let the customer hold back fees were non-binding goodwill gestures, rejected promissory estoppel, and dismissed the customer's counterclaim for a refund of the US$1.5 million licence fee.
- Support and renewal
Lessons learned- Withholding maintenance fees over software problems is risky unless the contract's dispute and remedy procedures are followed.
- A vendor representative's emails offering to defer fees may be treated as negotiation or goodwill, not a binding variation.
- Going live can amount to acceptance of the software, which limits later claims to reject it.
- Use the contractual non-compliance and fee-refund process in writing, and follow it through.
Federal declaratory-judgment and copyright suit (S.D.N.Y., 2016-2019) in which LexisNexis's parent RELX challenged an Informatica audit that claimed USD 7.7 million for historical CPU-core overdeployment of B2B Data Exchange on servers set up by Informatica's own consultant; the court suspended Informatica's licence termination pending a ruling, denied cross-motions for summary judgment because of disputed facts, and the case was dismissed after the parties reported a settlement.
- Audit and overuse
- Licence scope
- Copyright and IP
Lessons learned- An audit can look back years and price the highest historical deployment, not the position on the audit date.
- Reducing licence counts without reducing deployment turns a cost saving into an audit finding.
- Installation and licensing advice from the vendor's own consultants does not shift compliance responsibility unless the contract says so.
- A termination clause that requires destroying all copies gives the vendor leverage over undisputed perpetual licences too.
- Define the metric in the contract; a court found disputed facts even on what CPU cores meant here.
Federal DMCA anti-circumvention and fraud suit (N.D. Cal., 2017-2019) in which Synopsys alleged that Ubiquiti, after obtaining evaluation licences, used counterfeit licence keys about 39,000 times, as recorded by 'phone-home' data in the software; Ubiquiti counterclaimed that the hidden monitoring breached a non-disclosure agreement and computer-abuse laws, and the case ended in a consent judgment and permanent injunction.
- Copyright and IP
- Licence scope
- Audit and overuse
Lessons learned- Using cracked or counterfeit licence keys can be pleaded as circumvention under the DMCA, separate from ordinary over-use.
- Licensed software may report usage, host and user data to the vendor, and that data can become the vendor's evidence.
- Phone-home data records the server where software runs, not necessarily where the user sits.
- Counterclaims attacking a vendor's monitoring need concrete harm; they were dismissed here for failure to plead loss.
- Judgment
Dutch interim-relief case (Amsterdam District Court, 15 February 2019) in which a radio-scheduling software vendor demanded that a Swedish radio group stop using its software for 26 stations above the 72 licensed; the judge held that the extra stations needed a reasonable extra fee, but refused the order because the vendor had threatened a full shutdown and never named a price.
- Licence scope
- Audit and overuse
Lessons learned- Where a licence prices use by number of stations or sites, adding more without a price is outside the licence, even if the software makes it easy.
- A vendor's silence while the customer adds units can be read as agreement to a reasonable extra price, not as agreement to free use.
- A vendor that threatens to switch off the whole service over a partial overuse can lose interim relief.
- Before cutting service, the vendor should first name a specific reasonable extra price and wait for a clear refusal.
Federal litigation (D.N.J. and 3d Cir., 2006-2018) in which Avaya sued an independent maintenance provider for using maintenance logins on customers' PBX systems and the provider counterclaimed for antitrust violations; a US$60 million trebled jury award against Avaya was vacated in 2016 because the licence contracts had been wrongly construed as a matter of law, and the case was dismissed with prejudice by stipulation in 2018.
- Support and renewal
- Licence scope
- Competition
Lessons learned- Whether a customer's licence lets a third-party maintainer use licensed maintenance software is a question of contract wording and can be a jury question.
- Clear restrictions in the sales contract at the time of purchase weigh heavily against aftermarket antitrust claims.
- Patches offered freely to all owners are not tied to maintenance; tying patches to paid support disclosed at the time of sale did not create liability.
- Settled
N.D. Ill. case (2017 to 2018) in which type foundry Berthold alleged that Target exceeded a 10-computer, internal-use desktop font licence by sending font files to an outside design agency and embedding the fonts in distributed PDFs, and breached the licence's compliance-certification clause; the case settled and was dismissed with prejudice.
- Licence scope
- Copyright and IP
- Audit and overuse
Lessons learned- A desktop font licence bought for a few hundred dollars may limit use to named computers and internal purposes; sending font files to an agency or embedding them in published documents can fall outside it.
- Font licences often include a compliance clause requiring the licensee to document and certify its use on request; a one-line assurance was pleaded as a breach.
- Automatic termination clauses can turn a dispute over one use into a claim that the whole licence has ended.
- Track which brand fonts are used by agencies and in external materials, and buy the licence type that covers those uses.
English High Court decision (23 February 2018) in which car dealer group Blade, which had migrated away from Reynolds & Reynolds' dealer management system, sought a mandatory interim injunction to remove a remote lock the vendor had applied to the software holding its historic data; the court refused, finding damages an adequate remedy, no high degree of assurance on Blade's case that it could exit a five-year minimum term, and a six-month delay in applying.
- Support and renewal
- Licence scope
Lessons learned- Check minimum-term and termination clauses before signing amendments or discount offers, especially when planning a migration.
- Before leaving a system, secure an export of historic data in a readable form or continued read-only access.
- A vendor may remotely disable software in a payment or termination dispute, and the courts may not order it restored on an interim basis.
- Delay in going to court weighs against urgent relief.
- Judgment
Second Circuit case (2018) holding that ReDigi's platform for reselling lawfully purchased digital music files infringed the reproduction right, because each transfer fixed the file in a new material object, and that the first sale doctrine and fair use did not excuse it.
- Resale and exhaustion
- Copyright and IP
Lessons learned- In the United States, the first sale doctrine does not let a buyer resell a digital file by transmitting it, because the transfer makes a new copy.
- Delete-on-transfer technology did not avoid infringement; the court looked at whether a new copy was fixed on the recipient's device.
- Treat claims that downloaded content or software can be resold with caution unless the licence or a specific ruling permits the transfer.
US copyright case in which Cisco claimed that Arista copied hundreds of multi-word commands from the Cisco IOS command-line interface; a 2016 jury found infringement excused under the scenes a faire doctrine and judgment was entered for Arista, and after a 2018 global settlement the judgment was vacated on the parties' joint motion while Cisco's Federal Circuit appeal was pending.
- Copyright and IP
- Competition
Lessons learned- Command sets and user interfaces can be the subject of copyright claims even where the underlying code is not alleged to be copied.
- A trial win can be traded away in settlement, so a vacated judgment is not a precedent to rely on.
- Settlements between vendors can oblige one of them to change its product, which affects customers' scripts and tooling.
High Court judgment (Manchester, 2018) on a software licence under which a council paid a fixed fee plus a 7.5 percent contingency fee on business-rate increases 'supplied' by the licensor's RV Hunter database; the court held that the fee was due only where the council's use of the database was the effective trigger for its report to the Valuation Office Agency, rejected a claimed extension of the licence term, and gave judgment for GBP 378 of more than GBP 1 million claimed.
- Licence scope
Lessons learned- Usage-based or success-based fees in a licence need a clear trigger; vague words such as 'supplied' leave the licensor to prove that the licensee actually used the product to produce the result.
- Access logs decide usage disputes, so know what the vendor's system records about each user's activity.
- A licence for a fixed term ends on its expiry date unless a new contract is made; correspondence about winding down use does not extend it.
- Carry out notification or exclusion duties in the licence promptly, because they can shift the burden of proof to the customer.
Federal breach-of-contract and copyright suit (N.D. Cal., 2017-2018) in which TIBCO, relying on a 2016 audit by KPMG, alleged that GAIN Capital kept deploying TIBCO Enterprise Message Service and TIBCO Hawk after its enterprise periods had fixed its licence counts; the court let GAIN take discovery of KPMG's audit methodology and TIBCO's instructions to the auditor, and the case was dismissed with prejudice by stipulation.
- Audit and overuse
- Licence scope
- Copyright and IP
Lessons learned- An enterprise period that ends by freezing the deployed count turns the count on the last day into the licence limit.
- Report end-of-term deployments accurately and keep the evidence, because later growth is measured against that report.
- A customer that disputes an audit can seek the auditor's methodology and the vendor's instructions to the auditor.
- Delaying an audit can itself be pleaded as a breach of the implied covenant of good faith.
- Buying a licence after an audit does not settle the audit claim unless the agreement says so.
Federal contract case (D. Neb. and 8th Cir., 2014-2017) in which ACI Worldwide, which licensed fraud-detection technology and paid a royalty on each customer sublicence, bought out the licensor's rights and declared the licence terminated; the Eighth Circuit held that the amendment cutting post-termination royalties was invalid against the assignee, but that the termination itself was valid.
- Licence scope
Lessons learned- Check whether a licence you depend on has royalty or payment rights assigned to a third party, because that party's consent may be needed to change them.
- A termination right triggered by the licensor's insolvency or asset transfer can still be used years later, so read what events trigger it.
- Buying out the licensor does not by itself extinguish payment obligations that were assigned to someone else.
- Terms covering what survives termination, such as royalties on existing sublicences, matter as much as the grant.
Artifex Software v. Hancom is a 2016 to 2017 United States case in which a federal court held that the GNU GPL could be enforced as a contract as well as a copyright licence, and that the price of the licensor's commercial licence could be used to value damages, before the parties settled on confidential terms.
- Open-source licence
- Copyright and IP
Lessons learned- Using GPL code without a commercial licence can create a contract through conduct, without a signature.
- Where code is dual-licensed, a copyleft breach may be valued at the price of the commercial licence.
- Records of which licence is relied on for each embedded open-source component are relevant evidence.
- The rulings were interlocutory and the case settled, so they are not appellate precedent.
- On appeal
2017 antitrust case in which a data integrator asked a federal court to keep CDK Global and Reynolds and Reynolds from blocking its access, with dealer log-in credentials, to dealer data in their licensed dealer management systems; the district court granted a preliminary injunction on 2017-07-14 and the Seventh Circuit set it aside on 2017-11-06.
- Competition
- Licence scope
Lessons learned- A licence that forbids third-party access to the system, or that bars sharing log-in credentials, is the contractual basis a vendor uses to block automated integrations, so read those clauses before building an integration on a customer's own credentials.
- Owning your data does not by itself give you a right to extract it by any technical route: both courts treated the dealer's ownership of the data and the vendor's control of the system as separate questions.
- Vendors that sell both the core system and a paid integration interface can change access terms and prices; check whether your contract guarantees a data export route and what it may cost.
- Exclusive-interface clauses in vendor and customer contracts were part of the antitrust allegations, so a change to an open or closed access model is a point to raise at renewal.
Dutch civil case (The Hague District Court, 15 March 2017) in which the Dutch police sought repayment of EUR 2,961,029.11 paid in 2008 for 13,656 Office Professional Work at Home licences reported in error under a Microsoft Select Agreement; the court held that the report counted as an order, that the fee is owed for the right of use whether or not the software is used, and that Microsoft had no duty to check the order or refund unused licences.
- Licence scope
Lessons learned- A licence report under a volume agreement can be a binding order; check counts before they leave the organisation.
- Licence fees pay for the right to use, so unused licences are still owed.
- Answer vendor questions about unusual order volumes; silence counted against the customer.
- A goodwill credit for an earlier mistake does not create a right to the next one.
- Oral side arrangements, such as an annual true-up under a Select Agreement, need to be in a signed amendment.
Milestone Systems A/S petitioned the S.D.N.Y. in 2016 to confirm Danish Institute of Arbitration awards against OEM partner On-Net Surveillance Systems, which had incorporated Milestone software in its own VMS; after OnSSI's own suit against Milestone was voluntarily dismissed, the court entered a confirmation judgment on 2017-05-17 and a consent judgment on 2017-07-12 that, according to Milestone's counsel, bars OnSSI from distributing or integrating Milestone software in the United States.
- Licence scope
- Resale and exhaustion
Lessons learned- Map which of your products embed a supplier's software under an OEM licence, because the end-user rights depend on that agreement staying in force.
- Read the dispute resolution clause of OEM and reseller agreements; here a Danish arbitration decided the dispute and a US court only enforced it.
- Watch for minimum purchase and payment obligations in OEM deals, since breach can end the right to distribute the embedded software.
- When a supplier or OEM partner relationship ends, confirm in writing what happens to licences already sold to end customers.
Trade secret suit (E.D. Mich., filed 2007) in which a jury found that Altair and former MSC employees misappropriated three trade secrets of MSC's ADAMS/Solver for Altair's MotionSolve and awarded USD 26.1 million; the court set the award aside as excessive, later excluded MSC's damages expert, granted Altair summary judgment on damages in 2017 and entered final judgment, and the parties' cross-appeals were referred to Sixth Circuit mediation.
- Competition
Lessons learned- Altair's standard licence agreements indemnify customers against patent and copyright claims only; trade secret claims are not named.
- Liability findings and damages are separate: a software IP owner must still prove, with admissible evidence, what the misappropriated features were worth.
- Check the final docket, not the verdict headline, before treating a vendor dispute as settled law or a supply risk.
Commercial arbitration commenced by SAP America on 2017-02-21 against Anheuser-Busch Companies under a 2010 software licence agreement, alleging unlicensed direct and indirect use of SAP systems and seeking damages potentially over USD 600 million; the parties settled on 2017-06-30.
- Audit and overuse
- Indirect access
- Licence scope
Lessons learned- Include users and systems that reach SAP data through non-SAP software in the licence position for an SAP estate.
- Base the SAP licence position on the specific agreement and all its amendments rather than on general vendor policy documents.
- Check the dispute resolution clause, because arbitration keeps the arguments, evidence and settlement terms private.
- Expect an under-licensing claim to seek changes to the agreement as well as damages.
English High Court judgment of 16 February 2017 holding that Diageo's customers and sales staff who reached mySAP ERP through Salesforce-based systems and SAP PI were using or accessing the software indirectly and needed Named User licences under Diageo's 2004 licence agreement.
- Indirect access
- Licence scope
Lessons learned- Count people who reach SAP ERP through third-party front ends and integration middleware when assessing a Named User position.
- Do not assume that an engine or middleware licence covers the users whose actions generate its traffic unless the contract says so.
- Read the contract's own definitions of user, use and access, because they decided the outcome.
- Check how the contract prices new channels that its user categories did not anticipate.
Ontario breach-of-licence and copyright case (Ontario Court of Appeal, 2016 ONCA 217) in which the owners of the Xenos d2e software sued their licensee Symcor for use on more servers, other operating systems and other databases than licensed; the courts held that the licence was enterprise-wide with no per-server limit, but that the 'Hardware Platform: AIX' entry in the product schedules restricted use to AIX, and sent Symcor's estoppel defence, based on the vendor's support staff and account managers knowing of the Windows use, to trial with damages.
- Licence scope
- Copyright and IP
- Support and renewal
Lessons learned- A licence count does not imply a per-server metric unless the agreement says so.
- Platform and database entries in an order schedule can be licence restrictions, not just descriptions.
- Vendor support of out-of-scope deployments can support an estoppel defence when account managers know of the use.
- Asking the vendor to confirm entitlements creates a record that the court may treat as confirming the licence scope.
- Judgment
English case (High Court, 2015; Court of Appeal permission refused 2016) in which AFD Software claimed millions of pounds from its customer DCML after finding in 2010 that its postcode software, licensed for under GBP 2,000 a year on a certificate naming one licensed computer, was used on a central server reached by dealerships across the country; the trial judge found that DCML had honestly and fully described its intended use when buying, dismissed the claim, and the Court of Appeal refused permission to appeal.
- Licence scope
- Copyright and IP
Lessons learned- A vendor that sells on the basis of a phone call bears the risk of what was said; write down the intended use and the metric that prices it.
- A licence certificate stating one licensed computer did not override the court's finding of what the buyer told the vendor before purchase.
- Customers should describe deployment architecture (central server, remote sites, terminals) when buying, and keep a record that they did.
- Licence models that price public web, internal network and multi-terminal use differently need the buyer's architecture to be confirmed before sale.
Federal lawsuit (W.D. Wis., 2015-2016) in which Epic Systems sought a declaration that its extranet deployment of Attachmate Reflection software was licensed after an audit claimed more than 190,000 users could reach it; the court held that licence 'use' required actual access, not mere ability to access, rejected a USD 66 million damages theory based on potential users, and let Epic's good-faith claim against the audit go to trial before the case settled.
- Audit and overuse
- Licence scope
- Copyright and IP
Lessons learned- Read the licence definition of 'use': here it meant actual installation or access, so users who merely could reach the software did not need licences.
- A concurrent-use licence needs enough licences for actual peak concurrent use, not for every user who could connect.
- Keep monitoring and usage records that match the licence's monitoring and reporting duties, because vague duties become trial issues.
- Record in writing what the sales team says a licence covers; oral assurances become a credibility contest.
- Installing software on servers can need its own entitlement even when the end devices are licensed.
Federal class action (D. Minn., 2011-2016) alleging that Symantec and its online retailer Digital River pre-loaded a paid download-insurance add-on into shopping carts without telling buyers that Norton could be re-downloaded without it; a nationwide class was certified, summary judgment was denied, and the case settled for USD 60 million.
- Support and renewal
Lessons learned- Ancillary services sold alongside a licence, such as extended download access, are judged by what the point-of-sale text told buyers, not only by the licence terms.
- A pre-selected add-on in a shopping cart that the buyer must remove can be pleaded as deceptive if free alternatives are not disclosed.
- Courts treated the vendor and its e-commerce operator as separately answerable for the checkout content.
- Licence records should show which entitlements (re-download, support, serial key retrieval) were included in the base price and which were sold separately.
Case filed in 2014 in which Learning Technology Partners claimed that the University of the Incarnate Word breached a 2004 agreement for its IZIO learning platform by using Blackboard, enrolling students without paying the per-student rate and integrating third-party software; the court denied the university partial summary judgment in 2015 and, after a jury trial, entered judgment for the university on the vendor's claims, and for the vendor on the university's counterclaim, in March 2016.
- Licence scope
Lessons learned- A per-student fee schedule is a counting rule: the vendor said students outside the covered programmes were using the platform without the full fee, and the dispute turned on which groups the agreement covered.
- Informal emails and an account manager's help setting up courses were argued as a modification of the contract, which left the question of the manager's authority for trial.
- An exclusivity clause tied to a discount can be argued as a breach when the customer pilots or switches to a competing platform before the term ends.
- A customer that terminates early and pays an estimate of the remaining fees should say in writing what the payment settles, because the vendor disputed that cashing the cheque accepted the estimate.
In Ranks and Vasiļevičs (C-166/15, 12 October 2016) the Court of Justice of the European Union held that the first buyer of a program copy with an unlimited licence may resell that copy and licence, but may not hand over a back-up copy without the rightholder's authorisation when the original medium has been damaged, destroyed or lost.
- Resale and exhaustion
- Copyright and IP
Lessons learned- Keep purchase records and the chain of transfer for second-hand licences, because the acquirer must prove lawful acquisition.
- Track perpetual licences and their proof of purchase rather than only the physical media.
- Do not treat a self-made back-up copy as a resaleable substitute for a lost or damaged original.
- Judgment
2016 decision of the United States Court of Appeals for the Seventh Circuit holding that a customer who clicked an 'I Accept' button on TransUnion's purchase website did not agree to the service agreement and its arbitration clause, because the page gave no reasonable notice that the click meant assent to those terms and told the customer the click meant something else.
- Licence scope
Lessons learned- A click on an acceptance button binds the user only if the page gives reasonable notice that the click means agreeing to the terms.
- Terms in a scroll box or behind an unlabelled link are not enough on their own to create a binding contract.
- If the text next to the button says the click does something else, such as authorizing a data request, it can undo any notice of the terms.
- Notice of the terms must be given before the user commits, not found by searching the site afterwards.
Ninth Circuit case (2015) holding that a reseller raising the first sale defence must first show lawful acquisition of genuine copies, after which the copyright owner must prove a licence rather than a sale; Adobe lost because it did not produce the actual licence agreements.
- Resale and exhaustion
- Copyright and IP
Lessons learned- A vendor that says its software is licensed, not sold, must be able to produce the specific licence terms that applied when each copy first changed hands.
- Buyers of second-hand or surplus software should keep invoices and supplier records showing lawful acquisition of genuine copies.
- Generic licence templates and general testimony did not prove transfer restrictions under the Vernor test.
Copyright and trade secret case (N.D. Cal. No. 5:14-cv-01409, with a parallel action in The Hague) in which Autodesk alleged that AutoCAD source code had been used to develop the competing ZWCAD+ product; ZWSoft denied copying and counterclaimed, but in November 2015 the parties settled, with ZWSoft acknowledging that an employee had improperly used AutoCAD intellectual property and agreeing to stop selling or licensing ZWCAD+ in all markets.
- Copyright and IP
- Competition
Lessons learned- Licences for a competing product can be withdrawn from sale overnight if its code is found to infringe; plan for supplier IP risk when choosing alternative CAD products.
- The claim was about copied source code, not about similar interfaces or commands; shared bugs and code idiosyncrasies were the alleged evidence.
- Source code disputes are slow and costly: the parties cited expert code review, translation and depositions abroad as reasons to settle.
- Judgment
In Green-IT (I ZR 4/14, 19 March 2015) the German Federal Court of Justice held that a reseller may resell an exhausted copy of a program by passing on its product key, but that the buyer may lawfully download and install the program only if the reseller has made its own copies unusable, so a reseller that kept the disc was enjoined.
- Resale and exhaustion
- Copyright and IP
Lessons learned- Resale of a product key can be lawful, but the buyer's right to download depends on the seller having made its own copies unusable at the time of sale.
- The reseller carries the burden of proving that its copies were made unusable; a generic destruction certificate was not enough.
- Keep the evidence of a second-hand licence chain, including proof that the seller's copies were removed.
Dutch civil case (Midden-Nederland District Court, judgment of 25 March 2015) in which a Canadian software vendor sued a Dutch customer and the company it passed the software to; the court treated the perpetual, paid-up web licence as a sale under the UN Sales Convention, held the licence's ban on transferring rights void after UsedSoft, and rejected every claim.
- Resale and exhaustion
- Licence scope
- Copyright and IP
Lessons learned- A licence that is paid for once, has no end date and is delivered by download can be treated as a sale, so a contractual ban on transfer may not hold in the EU.
- A transferee may rely on the rights in the original licence, but is bound by its other terms.
- Read each restriction as written: a ban on integrating the software into any software product sold or offered to a third party was read as covering only integrated software that is sold on.
- Using licensed software to provide a service to customers is not renting or lending it, unless the customers can operate the software themselves.
Case filed in 2008 in which a distributor said SAP and its channel partners sold it 80 and then 40 SAP Business One user licences while representing that the ERP software could serve hundreds of users; the court dismissed the contract and negligence claims against SAP in 2011 but let the fraud and misrepresentation claims proceed, and in 2014 denied SAP summary judgment, with trial set for February 2015.
- Licence scope
Lessons learned- Marketing papers that describe the number of users a product supports can be used against the vendor in a fraud claim, even where the licence agreement is silent on user capacity.
- A contract that names a reseller as the seller does not bind the software publisher; the court dismissed the contract claim against SAP for the Development Agreement because SAP was not a party to it.
- A customer that relies on a reseller's statements should document whether the reseller had authority to speak for the publisher, because agency was a contested issue throughout.
- Counting licences is part of the evidence: the number of user licences actually bought (80 or 120) was itself disputed and had to be inferred from invoices and emails.
2015 action in the Superior Court of California, County of San Francisco, in which Mars asked the court to confine an Oracle licence audit to the audit clause of its 1993 licence agreement and to stop Oracle terminating its licences; Oracle had demanded data on VMware servers and clusters not running Oracle software. Mars moved to dismiss the action with prejudice on 2015-12-16, reportedly after an out-of-court settlement.
- Audit and overuse
- Virtualization
- Licence scope
Lessons learned- The audit clause in the licence agreement sets what the vendor may ask for; demands for data on systems that do not run the vendor's software can be challenged as outside its scope.
- Agree the audit process in writing (scope, data, scripts, timetable) before producing data, and keep a record of what was provided and when.
- Vendor policies on virtualization, such as Oracle's soft-partitioning rules, are separate from the signed contract, so check which document actually binds you.
- A termination threat during an audit is a contract issue that a court can be asked to restrain while the scope dispute is resolved.
Federal copyright and breach-of-contract suit (N.D. Cal., 2014-2015) in which TIBCO alleged that Bank of America and Merrill Lynch overstated their end-of-term deployment report, stockpiled idle copies and kept copying TIBCO software after a three-year enterprise term; the court compelled arbitration under the parties' master agreement and dismissed the case, and TIBCO's appeal was dismissed with prejudice by stipulation.
- Licence scope
- Copyright and IP
Lessons learned- Under an enterprise term, the end-of-term deployment report is the document both sides will fight over.
- Decide before the term ends what counts as production, non-production or idle, because the vendor may say idle copies were never licensed.
- Hardware upgrades that add capacity can be alleged to create unlicensed copies even when the software count is unchanged.
- An arbitration clause in the master agreement can move a copyright claim out of court, including the question of what is arbitrable.
Linked US cases (2013 to 2015): a federal court in Texas held that a customer's claim that its vendor breached the GPL was not preempted by copyright law, and in California XimpleWare's copyright claims against Versata and Ameriprise over the GPL-licensed VTD-XML survived dismissal before the case settled in 2015.
- Open-source licence
- Copyright and IP
- Licence scope
Lessons learned- A GPL component embedded in commercial software can become the customer's problem as well as the vendor's.
- Ask software vendors which open-source components their products contain and under what licences.
- The court held that the GPL's source code obligation is a contractual promise with an extra element beyond copyright, so it was not preempted.
In UsedSoft III (I ZR 8/13, 11 December 2014) the Bundesgerichtshof held that Adobe's rights in resold Creative Suite 4 copies were exhausted, that a licence for several users of a server copy needs the first buyer's copy to be unusable, and that contract terms limiting the user group or purpose do not define intended use; it dismissed Adobe's claims against two of the defendants.
- Resale and exhaustion
- Licence scope
- Copyright and IP
Lessons learned- Exhaustion applies whether the vendor approves a number of discs or the making of copies by download, and a later contract limit on the user group does not undo it.
- For a multi-user licence of a server copy, the first buyer must make that copy unusable before the second buyer can rely on exhaustion.
- A volume licence that allows several separate copies can be resold in parts if the first buyer makes the same number of copies unusable.
- Terms that limit software to a certain group of users or a purpose, such as education, do not define the intended use that the second buyer may exercise.
- A notary's confirmation about the first buyer's declaration is not enough proof that a copy was made unusable.
Federal declaratory judgment action (E.D. La., 2013-2014) in which Entergy Services admitted over-deploying Attachmate terminal emulation software after a 2013 audit but disputed a claim of more than USD 1.7 million priced at 2013 licence fees plus 12 percent interest; the court held that an audit claim computed as price times quantity is liquidated and can carry prejudgment interest, granted Attachmate partial summary judgment on copyright liability for four products, and the case was later recorded as settled.
- Audit and overuse
- Copyright and IP
Lessons learned- An audit shortfall priced as licence price times number of over-deployed copies can be treated as a liquidated sum that carries prejudgment interest.
- Interest can be claimed even when the licence has no liquidated damages clause and the amount is disputed.
- Conceding over-deployment leaves only the price to argue about, so check entitlement records before conceding.
- Decide early which price list applies to a historical shortfall: the one in force when the software was deployed or the one at the time of the audit.
Federal case (N.D. Cal., 2013-2014) in which Flextronics sued PTC under computer-intrusion laws over 'phone-home' technology in PTC's software that reported cracked copies, and PTC counterclaimed for copyright infringement and breach of contract; the court granted PTC a preliminary injunction enforcing its audit right, and later allowed some of Flextronics' claims about the monitoring technology to proceed.
- Audit and overuse
- Copyright and IP
- Licence scope
Lessons learned- Audit and reporting clauses can be enforced by injunction while a licence dispute is litigated.
- An internal count of unlicensed copies that keeps changing undermines a customer's credibility.
- Licensed software may report licence-tampering data to the vendor; read the click-through notices that say so.
- A customer can challenge hidden data collection, but the claim must plead specific facts about what was accessed and the harm.
Oracle Corp. v. SAP AG is the 2007 to 2014 United States copyright case over downloads and copies of Oracle software by SAP's former subsidiary TomorrowNow, which ended in a $356.7 million judgment after a $1.3 billion jury verdict was set aside.
- Support and renewal
- Copyright and IP
Lessons learned- Treat downloads of patches and documentation from vendor support portals as part of the entitlement position.
- Do not use expired support credentials or download items beyond the licensed entitlement.
- When using a third-party support provider, confirm how it obtains and copies the vendor's software.
- Copyright damages can be measured by a hypothetical licence fee even where the vendor would never have granted that licence.
Dutch summary proceedings (Gelderland District Court, 1 September 2014) in which a manufacturer that had paid a one-time licence fee for Unit4 Multivers and later cancelled the maintenance part of its agreement recovered the yearly fees it had paid only to keep receiving licence codes; the court refused to order the dealers to supply the codes because Unit4, not its dealers, was the contracting party that issued them.
- Support and renewal
- Licence scope
Lessons learned- Check whether a perpetual licence survives the end of maintenance, and whether the agreement says so in writing.
- Find out who generates the licence keys or codes and make sure that party is bound to keep issuing them after support ends.
- Read invoice descriptions: fees labelled as a right of use can be maintenance fees under another name.
- Cancel maintenance by registered letter within the notice period the agreement sets, and keep the proof.
- A dealer that signs as the vendor's representative can be ordered to repay fees it collected, but cannot be ordered to do what only the vendor can do.
Singapore High Court decision ([2014] SGHC 251) in which Siemens Industry Software obtained summary judgment for S$267,500 against Lion Global Offshore, which had signed a settlement agreement and a licence purchase agreement for six FEMAP licences at a compliance meeting about eight allegedly unlicensed installations and then refused to pay; the court held the purchase agreement binding and rejected defences of duress, uncertainty and expiry.
- Audit and overuse
- Copyright and IP
Lessons learned- A licence purchase signed to settle a compliance dispute can be enforced as a separate contract, even if the settlement itself never takes effect.
- A threat to sue over unlicensed use, made in good faith, is not duress.
- Read the settlement documents before signing at a compliance meeting, because second thoughts afterwards will not release the customer.
Federal litigation (E.D.N.C., on appeal 4th Cir., 2014) in which a studio that had licensed Unreal Engine 3 for one game sued Epic for fraud and lost, while Epic's counterclaims for breach of the licence agreement, copyright infringement and trade secret misappropriation produced a jury verdict for Epic that the Fourth Circuit affirmed.
- Licence scope
- Copyright and IP
Lessons learned- A licence for one game does not authorize using the engine for another product: copying the engine into a second project was outside a single-title licence.
- Written disclaimers of warranty in an engine licence defeat later claims that sales representatives promised functionality orally.
- Modifying licensed source code does not remove copyright exposure; substantial copied code is not de minimis.
- Unpaid licence fees and infringement profits can be recovered separately because they compensate different interests.
Federal suit (W.D. Mo., 2011-2013) in which the insurance software developer Aithent claimed that the National Association of Insurance Commissioners owed it royalties and had stifled its LEO licensing platform; the May 2013 summary judgment order read the 'SBS' definition narrowly, so royalties on other systems were not owed, but left the marketing and unfair competition claims for trial, and the case was dismissed in July 2013.
- Licence scope
- Competition
Lessons learned- In a revenue-sharing licence, the definitions of the licensed system and of the transactions that earn royalties decide the case, so list every product and channel that should be covered.
- A licensee that agrees to 'reasonable efforts to market' may be tested on how much it actually spent and did; keep records of marketing effort.
- A fee-reduction cap that applies only to transactions processed 'in, through, within or using' the licensed system does not stop the licensee reducing fees on competing systems.
- An exclusive licence to a regulator or standards body can raise an unfair competition claim if the licensee is said to have taken the product off the market.
In UsedSoft II (I ZR 129/08, 17 July 2013) the Bundesgerichtshof applied the CJEU's answers in UsedSoft v Oracle: a buyer of a used Oracle licence may copy the program if the right to distribute that copy is exhausted, the first buyer made its copy unusable and maintenance covers the updates; it set aside the Munich appeal judgment and sent the case back.
- Resale and exhaustion
- Licence scope
- Copyright and IP
Lessons learned- A used licence can only be copied by the buyer if the buyer gets the exhausted copy, which means the first buyer must have made its own copy unusable.
- A notary's confirmation that the seller says it stopped using the software does not prove that the copy was made unusable.
- Updates can be used by the second buyer only to the extent the first buyer's maintenance contract covers them.
- A contract term that reserves use for the first buyer cannot remove the second buyer's statutory right to use an exhausted copy.
- The party relying on the right to copy without consent must prove its conditions.
District court order (N.D. Tex. 2013) in a suit by a benefits software licensor against its bank licensee for using the program to serve third parties, holding that a contract claim based only on use outside the licence scope was preempted by the Copyright Act while a trade secret claim survived.
- Licence scope
- Copyright and IP
Lessons learned- A licensee that serves third parties with licensed software may face a copyright claim, because use outside the licence scope can infringe.
- Pleading only that the licensee exceeded its permission, without pointing to a specific promise it broke, can leave a contract claim open to preemption.
- Service bureau and third-party use rights should be recorded per component, because amendments may grant them for one module and not another.
- Ask the licensor what the licence permits before offering the software as a service to others, as the 2011 inquiry in this case set the dispute in motion.
Federal copyright and licensing case (N.D. Cal., 2010-2012) in which Actuate claimed that Aon ran per-CPU licences on multi-core processors in breach of later click-through terms, and that a subsidiary Aon sold to Onex lost its licence; the court found triable issues over which terms governed Aon, but held that a stock sale did not transfer or void the subsidiary's licence and awarded the subsidiary its attorney's fees; Actuate and Aon settled.
- Licence scope
- Copyright and IP
Lessons learned- A sale of a subsidiary's shares does not by itself transfer the subsidiary's licences, so they usually stay with the divested company; check whether the licence instead names the parent or limits use to affiliates.
- A licence metric such as 'CPU' can change meaning as hardware changes; know which document defines it for each licence you hold.
- Click-through terms accepted when installing an upgrade may be argued to replace the metric in your negotiated agreement; route such acceptances through whoever manages the contract.
- Emails in which the vendor treats a negotiated agreement as a master agreement can be evidence of which terms govern.
After a 2011 licence audit, Attachmate claimed that the Dutch State's fine collection agency CJIB needed 1,598 licences for Reflection software installed on every PC, not the 750 it held; in a 2012 interim judgment the Amsterdam District Court held that the EULA's Roaming User Profile exception made the deployment compliant until the server moved to Windows 2003, and referred the question whether that exception still applied afterwards to an expert institute on Washington State law.
- Audit and overuse
- Licence scope
Lessons learned- Read the exact licence wording for flexible-desk and roaming deployments: the court counted users, not installations, because the EULA expressly allowed Roaming User Profiles.
- Licence terms tied to named operating system versions can turn an infrastructure upgrade into a compliance question, so check the EULA before upgrading the platform.
- An auditor that disputes facts the customer has documented, such as installation dates, must substantiate its position; a bare denial was not enough.
- If damages are due, the court took the list price at the time of the breach plus contractual interest, not the discounted price the customer originally paid.
- A reseller is not automatically liable for the customer's licence shortfall; the claim against the reseller failed for lack of a specific duty to advise.
Post-trial opinion (Bankr. S.D.N.Y., 2012) in which the reporting software vendor Actuate claimed US$1,144,000 from Lear for running its per-CPU software on an additional server without buying licences; the court disallowed the claim as time-barred because Actuate had itself authorised and known of that installation from 2002, years before the limitations cut-off.
- Licence scope
- Audit and overuse
Lessons learned- A vendor that installs, or issues keys for, an extra copy and then stays silent for years may lose the right to claim for it; keep the emails and key records that show the vendor knew.
- Know what your agreement says about back-up, disaster-recovery and pre-production copies, and get any extra installation approved in writing.
- Be clear which version of the agreement governs when a signed copy, a vendor template and click-through terms all exist.
- Keep servers and logs that show actual usage under a litigation hold; destroying a server cost Lear an adverse inference even though it won.
D. Mass. case (2011 to 2012) in which Monotype claimed that Deluxe's web ordering and emailed electronic proofs exceeded a 1996 internal-use font licence for 100 printers; the court let Deluxe's counterclaim for breach of the licence's quiet-use clause proceed, and the case settled.
- Licence scope
Lessons learned- Licences written before online business models may not clearly say whether customer-facing web use is internal use; check defined terms such as "bitmap" against how the software is used today.
- A licence clause promising use "without disturbance" can give the licensee a counterclaim when the vendor demands extra fees for disputed uses.
- Asking a vendor to quote for a new use can prompt a review of how the existing licence is already being used.
- Long, open use without objection did not by itself show that the vendor acted in bad faith when it later asserted a breach.
Federal copyright and breach-of-contract suit (C.D. Cal., 2009-2012) in which Quest alleged that DirecTV ran Foglight on more CPUs than licensed and on AIX servers instead of Windows NT; the court held that exceeding a CPU count with a true-up clause is a breach of covenant, not copyright infringement, that Quest's own help with the AIX migration estopped its AIX claim, and that true-up fees do not carry retroactive maintenance, and the case settled before trial.
- Audit and overuse
- Licence scope
- Copyright and IP
- Support and renewal
Lessons learned- A CPU limit backed by a true-up clause may be treated as a contract covenant, so overuse is a payment claim rather than copyright infringement.
- A vendor that helps deploy its software on an unlicensed platform may be estopped from charging for that use.
- A true-up clause that mentions only licence fees may not support back-maintenance charges.
- Counts from the vendor's own tool can be challenged, and the vendor may have to disclose how the tool works.
- Check whether the agreement prices true-ups; if it is silent, list price is not automatically the measure.
S.D.N.Y. copyright case (2009 to 2012) in which the Software Freedom Conservancy and a BusyBox developer sued fourteen electronics companies over firmware distributed without complying with GPLv2; most defendants were dismissed after negotiations, and a 2010 default judgment against Westinghouse awarded USD 90,000 in enhanced statutory damages, an injunction and forfeiture of infringing televisions.
- Open-source licence
- Copyright and IP
Lessons learned- Retailers that sell products under their own brand were sued as distributors of the firmware in those products.
- Under GPLv2 section 4, a non-compliant distribution terminates the licence, so later copying is unlicensed until the licence is restored.
- Ignoring a GPL claim can be expensive: a defaulting defendant faced enhanced statutory damages, fees, an injunction and forfeiture.
In UsedSoft v Oracle (C-128/11, 3 July 2012) the Court of Justice of the European Union held that the distribution right in a copy of a computer program sold for an unlimited period is exhausted even when the copy was downloaded, so that a later acquirer of the licence is a lawful acquirer of that copy.
- Resale and exhaustion
- Copyright and IP
Lessons learned- Perpetual licences first sold in the EU can be resold even where the contract prohibits transfer.
- Remove resold licences from the seller's licence position and make the seller's copies unusable at the time of resale.
- Keep records of the original purchase and the transfer chain for any second-hand licence.
- Treat maintenance as a separate contract that does not pass with a resold licence.
District court order (N.D. Cal. 2011) in Adobe's suit against eBay resellers of its software, which declined to hear a copyright misuse counterclaim, left an unfair competition counterclaim standing and refused the resellers a preliminary injunction because the first sale doctrine did not appear to apply under Vernor v. Autodesk.
- Resale and exhaustion
- Copyright and IP
- Licence scope
Lessons learned- Resellers of OEM-bundled or second-hand creative software cannot count on the first sale doctrine if the vendor's channel contract states that only licences pass.
- Under the Vernor test, a stated licence, transfer limits and use restrictions point to a licensee rather than an owner of the copy.
- A belief that a resale is lawful is not enough to obtain an injunction against the vendor's enforcement.
- Keep the upstream contract or proof of title for each transferred licence, because the ownership question decides whether it can be resold.
Apple sued Psystar in 2008 for selling non-Apple computers with a modified copy of Mac OS X; the district court found copyright infringement and DMCA violations and enjoined Psystar, and in 2011 the Ninth Circuit affirmed, holding that Apple's licence term limiting Mac OS X to Apple-labeled computers was not copyright misuse because it did not stop anyone developing competing hardware or software.
- Licence scope
- Copyright and IP
- Competition
Lessons learned- A licence term that limits software to the vendor's own hardware was upheld as a legitimate condition on use, because it did not prevent anyone developing competing products.
- Buying a boxed copy does not make the buyer an owner: where the licence says the software is licensed, not sold, and restricts transfer and use, the buyer is a licensee and first sale does not apply.
- Holding one purchased copy per machine did not cure infringement when the machines actually ran copies made from a modified master image.
- Copyright misuse is a narrow defense in the Ninth Circuit and succeeds mainly where a licence stops the licensee using or developing competing products.
Federal copyright and breach-of-contract suit (W.D. Wash., 2009-2011) in which Attachmate alleged that Health Net over-installed Reflection software; the court held that a click-through EULA promise to buy additional licences for unauthorised copies was an enforceable contract term not preempted by the Copyright Act, and the case was later recorded as settled.
- Audit and overuse
- Licence scope
- Copyright and IP
Lessons learned- A click-through EULA accepted when installing a new version can form a separate contract alongside negotiated agreements.
- A term requiring non-discounted purchase of additional licences for unauthorised copies can support a contract claim in addition to copyright.
- Accidental over-installation and non-use of extra copies are not defences to copyright liability.
- Over-deployment can also affect maintenance fees.
In 2010 the European Commission opened two investigations into IBM's mainframe business: one into alleged tying of mainframe hardware to IBM's mainframe operating system, closed in 2011 after the complaints were withdrawn, and one into supply terms for independent maintainers, closed on 2011-12-14 by binding commitments to supply spare parts and technical information on reasonable and non-discriminatory terms.
- Support and renewal
- Competition
Lessons learned- Third-party maintenance depends on access to the vendor's spare parts and technical information, and competition law can require a dominant vendor to supply them on reasonable and non-discriminatory terms.
- Commitments are time-limited: IBM's covered a period of five years, so customers relying on them should check whether they still apply.
- A complaint that a vendor ties its operating system licence to its hardware does not always lead to a decision; the Commission closed the IBM tying case once the complaints were withdrawn.
High Court judgment (Technology and Construction Court, 2011) dismissing a London council's claim against IBM over third-party master data management software that IBM supplied under the licensor's own licence terms; the court held that the contract was not a sale of goods because a licence to use transferred no property in the software, that IBM gave no fitness-for-purpose warranty, and that the exclusions would in any case have been reasonable.
- Licence scope
Lessons learned- When a reseller supplies third-party software under the publisher's licence, its own warranties may be limited to passing through the publisher's; negotiate direct warranties if you need them.
- A licence to use software, with title retained by the licensor, is unlikely to be a sale of goods, so statutory quality and fitness terms may not apply.
- Write the functional requirements into the contract or its specification; quality is judged against what the contract says the software must do.
- Customers that select and evaluate software themselves will find it hard to show they relied on the supplier's judgment.
Ninth Circuit case (2010, amended 2011) holding that breaching a licence term is copyright infringement only if the term is a condition with a nexus to the licensor's exclusive rights; World of Warcraft's anti-bot rules were contractual covenants, but selling the Glider bot to evade the Warden technology violated DMCA section 1201(a)(2).
- Licence scope
- Copyright and IP
Lessons learned- A use restriction breached while running software is a copyright matter only if the term is a condition tied to an exclusive right such as copying or modification.
- Read whether a licence makes the grant conditional on a term or merely promises it; headings alone do not create conditions.
- Tools that bypass a vendor's technical access controls can create DMCA liability even where the underlying use breaches only a contract.
Federal breach-of-contract, copyright and DMCA suit (N.D. Cal., 2009-2010) in which Actuate alleged that IBM, after acquiring its OEM licensee MRO Software, used Actuate software in Tivoli products without paying acquisition fees and posted licence keys online; the court held that unauthorised distribution of licence keys and passwords can be circumvention under the DMCA anti-trafficking provisions, and IBM later paid USD 11 million in settlement.
- Licence scope
- Copyright and IP
Lessons learned- Check what happens to embedded or OEM licences when the licensee is acquired; acquisition clauses can limit use to the original products.
- A definition used in one clause may not decide how the same word is read elsewhere in the agreement.
- Licence keys can be treated as technological protection measures, so distributing them without authority can bring DMCA claims as well as contract claims.
- Keep licence keys out of public download sites, documentation and support portals.
- Judgment
D. Md. case (2008 to 2010) in which CoStar sued a subscriber and the third parties who used its logins; the court held that people using a subscriber's account were bound by the click-through Terms of Use, found breach of contract and copyright infringement, and measured damages by the subscription fees the users would have paid for CoStar's minimum one-year terms.
- Licence scope
- Copyright and IP
Lessons learned- A named-user subscription is breached when credentials are shared; the court treated each person using a shared login as an unlicensed user.
- Third parties who use a subscriber's account can be bound by the click-through terms they accept, even without a signed licence agreement.
- The court measured damages by the list subscription fee for the vendor's minimum one-year term, rounded up to whole years, so shared access can cost far more than the months actually used.
- Vendors can reconstruct usage from login records and IP addresses years after the fact; keep user lists and authorised-user rosters accurate.
Dutch civil case (Rotterdam District Court, interim judgment of 22 December 2010) in which Exact sued a mortgage advice firm for unpaid licence and maintenance invoices after the firm returned Exact Compact 2003, saying it had ordered software for four simultaneous users but received a configuration for two; the court presumed, subject to rebuttal, that the order covered two simultaneous users and allowed the customer to prove its claim of mistake.
- Licence scope
Lessons learned- Write the number of simultaneous users into the order form itself; a quotation that only says several users can work at once proves nothing either way.
- Ask the vendor how licences, workstations and company files (administrations) combine before ordering, and get the answer in writing.
- Internal e-mails describing calls with the vendor can be used as evidence of what was agreed.
- Signing and returning the quotation formed the contract; a user count written later on a registration card did not change it.
- Returning software does not by itself end the obligation to pay; the customer must establish a legal ground such as breach or mistake.
- Judgment
2010 ruling in the Southern District of Texas in which a customer that licensed payroll and HR software for USD 220,000 and terminated after a failed implementation was allowed to pursue breach of contract and indemnity claims, because oral statements made in demonstrations might override the licence's warranty disclaimer, while its fraud and support-clause claims were dismissed.
- Support and renewal
Lessons learned- An 'as is' disclaimer of implied warranties does not by itself remove express warranties, and specific statements made in demonstrations can be argued to be express warranties.
- A licence that limits the product's warranty to its documentation is the first thing a vendor will rely on, so check that the capabilities you buy for are written in it or in the order documents.
- Complaints about support succeed only if tied to the support obligations written in the licence, not to general dissatisfaction.
- An indemnity clause that is not limited to third-party claims may be read to cover the customer's own losses, so its wording matters.
- Settled
Jacobsen v. Katzer is a United States case in which the Federal Circuit held in 2008 that the terms of the Artistic License, an open-source licence, were enforceable conditions of a copyright licence, so that breaching them could support a claim for copyright infringement.
- Open-source licence
- Copyright and IP
Lessons learned- Treat attribution, notice and change-marking obligations in open-source licences as conditions of the right to distribute.
- Software obtained free of charge can still carry licence obligations that the law will enforce.
- Check whether licence terms are worded as conditions of the grant, because breaching them can support a copyright claim rather than only a contract claim.
Dutch civil case (Amsterdam District Court, interlocutory judgment of 21 April 2010) in which Oracle accused the Philips group of using Oracle software beyond the permitted scope, seized documents under court leave, and then lost its request to inspect them as a fishing expedition; the court joined the case with Philips's own claim over a self-made audit report.
- Audit and overuse
- Licence scope
- Copyright and IP
Lessons learned- Evidence seized under a court order does not give the vendor an automatic right to read it; a separate request must name specific documents.
- A customer that has produced its own audit report may keep the court focused on that report; the court can order an independent expert later.
- Search terms such as product names plus licence metrics (named user, processor, CPU) define what a seizure covers.
- Licence overuse can be pleaded both as breach of contract and as copyright infringement.
English case (Technology and Construction Court, 2010) in which KDP Software, owner of the SET/TURN and DOCUMENTOR tools for IBM System i, defeated its former distributor SoftLanding's claim to the source code and ownership of the software; the court found that SoftLanding had under-accounted for royalties, that KDP was entitled to terminate, and that licences and maintenance renewals granted after termination infringed KDP's copyright.
- Resale and exhaustion
- Copyright and IP
- Support and renewal
Lessons learned- Where licence keys are tied to a machine's model and serial number, a hardware change depends on the software owner issuing new keys; check who controls them before relying on a reseller.
- A maintenance renewal can be a licence grant in its own right, for example when it carries disaster recovery codes.
- Renewals sold by a distributor after its rights end may give the customer nothing the owner recognises.
- Reseller royalty reporting is a core obligation; persistent under-accounting justified ending the relationship.
Fifth Circuit decision (2010) reversing summary judgment for a licensee that let an outside law firm enter data into licensed form-database software, because the licence withheld every right it did not expressly grant and prohibited sublicensing.
- Licence scope
- Audit and overuse
Lessons learned- Access that benefits the licensee is not automatically permitted; if the licence grants only named rights, a contractor's use needs an express grant.
- Check whether the licence names the third parties who may access the software, because a short list of named exceptions can imply that other third parties are excluded.
- Contractor and outsourcer access should be mapped against the licence before onboarding, including data entry or input access.
- Ask the vendor in writing what level of contractor access is acceptable, and keep the answer consistent with what actually happens.
Ninth Circuit case (2010) holding that a software user who receives a copy under an agreement that grants a license and significantly restricts transfer and use is a licensee rather than an owner, so the first sale doctrine did not protect resale of used AutoCAD Release 14 copies.
- Resale and exhaustion
- Licence scope
- Copyright and IP
Lessons learned- Check the transfer and use terms of the licence before buying or accepting second-hand software in the United States.
- Retire or destroy earlier versions when an upgrade licence requires it.
- Treat transfers outside the licence terms as a potential copyright issue, not only a contract issue.
In March 2008 Waste Management sued SAP AG and SAP America in Texas state court for fraud and breach of contract over a 2005 software licence and implementation agreement for a waste and recycling revenue management system; the case settled in April 2010 with a one-time cash payment to Waste Management on confidential terms.
- Licence scope
Lessons learned- Put the functional scope, the degree of customisation and the implementation timeline into the licence or services contract, not only into sales material.
- Record which party is responsible for business requirements and staffing, since that was the core of the vendor's defence.
- Expect the public record of a settled vendor dispute to be limited to what a listed company must disclose.
Federal copyright case (S.D. Ohio 2005-2007; 6th Cir. 2009) in which Cincom sued Novelis after a series of internal mergers moved a non-transferable software licence from the original licensee to a successor entity without Cincom's written consent; the Sixth Circuit held that the merger was a prohibited transfer and that continued use was copyright infringement, affirming stipulated damages of USD 459,530.
- Licence scope
- Copyright and IP
Lessons learned- An internal merger or reorganisation can transfer a software licence by operation of law, even when the software never moves.
- Under US federal common law, intellectual property licences are presumed non-transferable unless they say otherwise.
- Check every licence's assignment clause and named licensee before a restructuring, and get written consent where needed.
- It does not matter that the new holder is an affiliate rather than a competitor.
S.D.N.Y. copyright case (2008 to 2009) in which the Free Software Foundation alleged that Cisco's Linksys products distributed GNU programs under the GPL and LGPL without the required source code; it was dismissed in April 2009 and settled with Cisco agreeing to appoint a Free Software Director for Linksys and make a monetary contribution.
- Open-source licence
- Copyright and IP
Lessons learned- Firmware and embedded software count: distributing devices or firmware downloads that contain GPL or LGPL code triggers the source code obligations.
- Source offers must cover the complete corresponding source, including the scripts used to control compilation and installation.
- Settlements with licensors can impose ongoing compliance governance, not only a payment.
Federal litigation (S.D.N.Y. and 2d Cir., 2007-2009) in which the distributor Consist argued that a 1998 distribution agreement for Software AG products could be ended only for cause; after a bench trial the district court held the 18-month no-fault termination valid and enjoined Consist's contract claims, and the Second Circuit affirmed that judgment and a separate anti-suit injunction against Consist's actions in South America.
- Resale and exhaustion
Lessons learned- A distribution or resale agreement that has both a no-fault notice clause and a for-cause clause should say expressly how they interact; the courts will not read one clause so that it makes another meaningless.
- Courts are reluctant to find a perpetual agreement without a clear provision, and unexpressed beliefs of one party do not count as evidence of mutual intent.
- Conduct after a termination notice, such as telling customers when exclusivity will end, can be treated as strong evidence of how the party understood the contract.
- Parallel suits in other countries over the same agreement can be restrained by a US court under an anti-suit injunction.
District court order (N.D. Cal., 2008) granting StorageTek, Sun and customers summary judgment on a software vendor's copyright claim: a limit of one user per licence purchased, unpaid distribution fees and an anti-assignment clause were treated as contractual covenants, not limits on the scope of the licence, though an operating-system restriction was a scope limit.
- Licence scope
- Audit and overuse
- Copyright and IP
Lessons learned- A limit stated as 'one user per licence purchased' may be read as defining what each purchase buys, so exceeding it can be a breach of contract and not copyright infringement.
- A clause that restricts platforms or ways of using the software is more likely to be a limit on the scope of the licence.
- Unpaid fees do not end a perpetual licence unless the contract makes payment an express condition.
- Over-deployment claims should be pursued as contract claims with the contract's own payment and remedy terms in mind.
Eastern District of Texas copyright action (No. 6:06-cv-00335) in which MathWorks sued COMSOL over COMSOL Script, a MATLAB-compatible product; the docket records a jury verdict on 2008-10-20, denial of COMSOL's motions for judgment as a matter of law and a consent judgment with a permanent injunction on 2008-11-24, with a companion patent action filed the same day.
- Copyright and IP
- Competition
Lessons learned- A compatibility product that reproduces a rival's function names and signatures can draw a copyright claim, and the dispute can run for more than two years.
- Competitors often plead patent and copyright claims together: two actions were filed on the same day against the same products.
- A consent judgment can follow a verdict, so the final terms on continued sale and use may be in a sealed or separate document that licensees should ask the vendor to explain.
- Antitrust counterclaims can prompt motions to sever and stay them, which adds procedure to an infringement dispute.
In 2004 the European Commission found that Microsoft had abused its dominant position by refusing to supply interoperability information for work group servers and by tying Windows Media Player to Windows, fined it EUR 497,196,304 and ordered licensing of the information on reasonable and non-discriminatory terms; in 2007 the Court of First Instance upheld the decision and the fine, annulling only the monitoring trustee provisions.
- Competition
- Licence scope
Lessons learned- A dominant vendor's refusal to license interface information can be an abuse, and the remedy can be a compulsory licence on reasonable and non-discriminatory terms.
- Bundling a separate product into a dominant product can be unlawful even when no separate price is charged and use of the bundled product is optional.
- Compliance with a licensing remedy is judged on the actual price and terms offered, not just on the offer being made.
- On appeal
2007 decision of the United States Court of Appeals for the Sixth Circuit in a copyright case brought by Thoroughbred Software International against its customer Dice Corporation after a licence audit found 33 unauthorized installations of Solution-IV and 31 of OPENworkshop. The court held that the customer owed the unpaid licence fee for every unauthorized copy it made, including copies that nobody used.
- Audit and overuse
- Licence scope
- Copyright and IP
Lessons learned- Copies made outside the licence terms are infringing even if they are never used; the court measured damages by the licence fee that should have been paid for each copy.
- A written dealer or licence agreement with an integration clause can defeat a claim that an earlier verbal arrangement allowed installation before payment.
- Technical controls that stop customers using extra copies do not turn unlicensed copying into licensed copying.
- A vendor audit result can stand even where the customer disputes the audit method, so keep your own records of installations and authorization codes.
Federal copyright case (C.D. Cal. 2002-2003; 9th Cir. 2006) in which the Los Angeles County Sheriff's Department imaged Wall Data's RUMBA Office onto 6,007 computers while holding 3,663 licences, relying on access controls to limit use; the Ninth Circuit held that installing beyond the licence was infringement, rejected fair use and essential-step defences, and upheld USD 210,000 in damages plus attorneys' fees.
- Licence scope
- Copyright and IP
- Audit and overuse
Lessons learned- Under a per-device licence, installing a copy counts even if access controls stop it being used.
- Disk imaging a full software baseline onto every machine can create large licence shortfalls.
- A customer's own control system that the vendor cannot verify does not replace compliance with the licence metric.
- Over-installation can cost more in the vendor's legal fees than in licence fees.
Seventh Circuit decision (2006) affirming dismissal of Daniel Wallace's claim that IBM, Red Hat and Novell conspired through the GNU GPL to fix the price of Linux at zero; the court held that the GPL does not restrain trade and that free distribution without prospect of recoupment is not predatory pricing.
- Open-source licence
- Competition
Lessons learned- Distributing software under the GPL at no charge was held not to violate United States antitrust law.
- Vendors may charge for media, support and services around GPL software; the licence itself allows a fee for transferring a copy and for warranty protection.
- Read the licence text rather than summaries of it, including summaries in judgments.
- Judgment
German case (LG Frankfurt am Main, 2006) in which, according to the plaintiff's announcement, the court confirmed Harald Welte's rights in Linux kernel code, D-Link Germany's violation of the GNU GPL in its DSM-G600 NAS device and the validity of the GPL under German law, and ordered D-Link to reimburse test-purchase, re-engineering and legal costs.
- Open-source licence
- Copyright and IP
Lessons learned- Treat the GPL as an enforceable licence; the defence that it is not legally binding failed.
- Device and appliance makers that ship Linux must meet the GPL conditions in each product they distribute.
- A cease-and-desist declaration may not end the matter; the enforcer's investigation and legal costs can also be recovered.
Eighth Circuit decision (2005) affirming judgment for Blizzard against the developers of bnetd, a free server that let Blizzard games play online without Battle.net's CD key validation: the EULA ban on reverse engineering was enforceable, and the emulator violated the DMCA's anti-circumvention and anti-trafficking provisions.
- Licence scope
- Copyright and IP
Lessons learned- A CD key checked by a vendor's server can be an access control protected by the DMCA, so tools that skip the check can be unlawful even when offered free.
- Click-through EULA and terms-of-use bans on reverse engineering were enforced against the users who clicked them.
- The interoperability exception does not help where the circumvention also enables infringement, such as play with unlicensed copies.
- Per-copy keys that a server verifies and tracks for concurrent use are part of how a vendor controls licensed use online.
- Judgment
2005 decision of the United States Court of Appeals for the Second Circuit holding that Titleserv, a customer that had paid a developer to write custom programs and could keep and use them indefinitely, owned its copies for the purposes of 17 U.S.C. section 117(a), so its bug fixes and modifications to the source code were not copyright infringement even though the developer kept the copyright.
- Licence scope
- Copyright and IP
Lessons learned- Ownership of a copy of a program is separate from ownership of the copyright, and a customer can own its copy without owning the copyright.
- Courts look at the incidents of ownership, such as payment, customization, the right to keep the copy forever and the right to destroy it, rather than only at formal title.
- A licence that limits possession, use or transfer makes it harder for a customer to rely on the owner-of-a-copy defence.
- Customer rights to fix bugs and adapt software to business changes can exist under the Copyright Act even where the contract is silent, but only for owners of copies.
English case (Technology and Construction Court 2004, Court of Appeal 2005) in which Peregrine Systems recovered GBP 700,000 of licence fees after its customer Steria terminated a managed services provider licence agreement; the courts held that Peregrine had only agreed to supply GBP 200,000 of time-and-materials implementation services, and that Steria had in any case affirmed the contract by continuing to use the software.
- Licence scope
Lessons learned- Licence fees described as irrevocable and non-cancellable stay payable even when implementation goes badly.
- A time-and-materials services schedule buys a budget of effort, not a finished implementation.
- Continuing to use licensed software while complaining can affirm the contract and remove the right to terminate.
- If you intend to terminate for breach, act promptly and reserve your rights in clear terms.
US Court of Appeals for the Federal Circuit decision (2005, applying First Circuit law) that vacated a preliminary injunction against an independent maintainer of StorageTek tape libraries, holding that the maintainer was likely to prevail on the copyright claim under the machine maintenance provision and the customers' implied licence, and that the DMCA claim failed without a link to copyright infringement.
- Support and renewal
- Licence scope
- Copyright and IP
Lessons learned- A licence that lets the customer activate its equipment can carry an implied right to make the memory copies that activation inevitably creates, even if it excludes the maintenance code.
- The statutory machine maintenance exception protects a repairer's temporary copies only when its conditions are met, so the vendor's code design can decide the outcome.
- Anti-circumvention claims need a link between the access and copyright infringement.
- Contract wording on who may use maintenance code and diagnostic tools should be explicit if the vendor wants to restrict third-party maintainers.
United States Court of Appeals for the Sixth Circuit decision (383 F.3d 462, 2004) affirming a jury verdict of USD 3 million compensatory and USD 10 million punitive damages for American Trim against Oracle, which had sold a USD 1.76 million ERP licence and services package by presenting an automotive EDI solution that was in beta and not generally available.
- Licence scope
Lessons learned- Put the exact product, version and release status you are buying into the licence schedule, not only in demonstrations and brochures.
- Ask for a reference customer running the product in production, and treat a refusal as information.
- Read the product names in the order form: a name that means different things to each side is a litigation risk.
- Use the acceptance or cancellation window to test that every module you bought is actually delivered.
Federal Circuit decision (2004) in a dispute between Globetrotter Software, maker of the FLEXlm licence manager, and Elan Computer Group, which sold a competing licence manager also distributed by Rainbow Technologies as SentinelLM; the court affirmed dismissal of the competitor's state-law counterclaims over patent warning letters and revived Globetrotter's infringement claim on a patent covering concurrent-licence control.
- Competition
Lessons learned- Concurrent (floating) licence control, which counts simultaneous users against a purchased number, was itself the subject of patent claims.
- A licence-management product can be sold under the reseller's own brand, and the dispute can then reach both brands.
- Warning letters about patent infringement sent to a competitor's business partner are protected from state-law claims unless the claims are objectively baseless.
- A message that tells a program it may not run was held to satisfy a claim to preventing a copy from running, so enforcement does not have to be active.
English case (High Court, Chancery Division, 2004) in which Navitaire, the licensor of the OpenRes airline booking system, sued its customer easyJet and the developer BulletProof over a replacement system built to look and behave like OpenRes; the court rejected the main claim of non-textual copying of the user commands and business logic, but found infringement in the graphical screens and icons, in unauthorised modifications to the licensed TakeFlight web module, and in limited parts of the data migration.
- Copyright and IP
- Licence scope
Lessons learned- A licence that allows copying only for back-up or archive purposes does not let the customer modify or clone the vendor's code, even when the vendor's staff know about it.
- Rebuilding a licensed system's behaviour without access to its source code is not, by itself, copyright infringement in England.
- Plan the exit from a licensed system early: how data is extracted and handed to a new supplier can itself infringe.
- Customers own their data, but the vendor's database structure and graphical screens can still be protected works.
Antitrust case in which the D.C. Circuit, sitting en banc in 2001, upheld the finding that Microsoft unlawfully maintained its monopoly in Intel-compatible PC operating systems, including through restrictions in its Windows licences for PC manufacturers, while vacating the break-up order; a 2002 consent final judgment required uniform Windows licence terms for the largest manufacturers and was upheld in 2004.
- Competition
- Licence scope
Lessons learned- Licence terms are not immune from competition law; the court rejected Microsoft's argument that exercising its copyrights could not create antitrust liability.
- Restrictions on what licensees may change, remove or promote in licensed software can be unlawful when used to protect a dominant position.
- Regulatory remedies can themselves become licence terms, such as uniform royalty schedules and notice before termination.
- Judgment
German Federal Court of Justice judgment (24 October 2002) in a dispute between a software vendor and its licensee: a standard-form clause requiring an additional fee when term-licensed software is moved to a more powerful or additional computer is valid, even if the licensee partitions the new machine to the old capacity, but the vendor had to repay a fee paid under protest because it could not show how the fee was calculated.
- Licence scope
- Virtualization
- Copyright and IP
Lessons learned- A clause tying a term licence to a named computer and charging extra for a more powerful or additional machine was upheld as fair in standard terms.
- Partitioning a more powerful machine down to the old capacity did not avoid the upgrade fee.
- A vendor that relies on a list-price uplift must be able to show how the figure follows from its price list.
- Paying under an express protest of compulsion shifted the burden of proof to the vendor in the repayment claim.
Federal suit (N.D. Ill., 2001-2002) in which Compuware claimed that Blue Cross Blue Shield of Illinois operator Health Care Service Corporation let its contractor Unitech Systems use Compuware mainframe software licensed only to HCSC; the court held the contract claim and the trade secret claim lost on a one-year contractual limitation and a failure to enforce confidentiality, while part of the copyright claim survived.
- Licence scope
- Copyright and IP
Lessons learned- A licence that says the software may be used only by the customer does not allow a contractor to use it unless the contract says so; name outsourcers and consultants in the licence.
- A vendor that learns of third-party use and does nothing loses time: a one-year contractual limitation ran from the date the vendor knew.
- Confidentiality clauses that are not enforced do not protect a trade secret claim.
- Where a licence has been amended many times by schedules, a court may treat each schedule as an amendment, not a new contract with a fresh limitation period.
Federal copyright case (D.N.J. and 3d Cir., 1994-2002) in which an independent maintenance provider modified and copied a vendor's mainframe HR and payroll source code for licensees; after a jury found for the provider, the Third Circuit held that the licence agreements were a question of law, that no defence justified the copying, and reversed, finding infringement and reviving a trade-secret claim.
- Support and renewal
- Licence scope
- Copyright and IP
Lessons learned- A licence that lets a customer give consultants access only under a vendor-approved non-disclosure agreement does not authorise a maintainer to copy and modify the code for many customers.
- Industry practice and interoperability arguments did not excuse copying where the licence terms did not permit it.
- Check whether a third party you hire has signed the specific non-disclosure agreement your licence requires, for your company, before it touches vendor code.
- A general agreement not tied to a named customer is unlikely to be read as blanket permission to serve all licensees.
Federal lawsuit (D. Mass., 2001-2002) in which MySQL AB counterclaimed against Progress Software and NuSphere over use of the MySQL trademark after an interim agreement ended and over distribution of MySQL under the GNU GPL with NuSphere's Gemini component; the court enjoined use of the MySQL mark pending trial but refused an injunction on the GPL claims, and the parties then settled and dismissed the case with prejudice.
- Open-source licence
- Licence scope
- Copyright and IP
Lessons learned- Check whether a component distributed with GPL-licensed code is a derivative or a separate work before shipping, because courts treat this as a factual question.
- Releasing the source code of a combined component may reduce the risk of an injunction, but it does not settle whether the GPL was breached.
- A licence to use a trademark is separate from the GPL licence to the code; when an interim trademark agreement ends, use of the mark must stop even if the code may still be distributed.
- Keep commercial end-user licence terms for GPL-based distributions consistent with the GPL, or be ready to withdraw them.
Second Circuit case (2002) holding that users who downloaded Netscape's SmartDownload by clicking a Download button were not bound by its licence, and its arbitration clause, because the only reference to the terms was below the button and the download did not unambiguously show assent.
- Licence scope
Lessons learned- Online licence terms bind users only if a reasonably prudent user would have noticed them and the user clearly assented, for example by clicking to accept.
- Record how each licence was accepted (clickwrap, installer prompt, signed order) as part of the entitlement evidence.
- Terms accepted for one product did not extend to a separately downloaded plug-in that had its own licence.
Federal case (N.D. Cal. and 9th Cir., 1995-2001) in which Cadence alleged that Avant! copied its place-and-route source code; in 1997 the Ninth Circuit reversed a partial denial of a preliminary injunction, holding that a copyright defendant cannot rebut the presumption of irreparable harm by showing money damages are adequate, and in 2001 it certified a trade secret limitations question to the California Supreme Court.
- Copyright and IP
Lessons learned- Source code that a competitor has copied is protected by copyright, and a court may enjoin the competing product even when damages could be calculated.
- Rewriting disputed code in a clean room does not end the claim if the process itself used the copied code or the original's structure.
- A release in a settlement of one dispute may not cover a later claim for continuing use of trade secrets, but whether it does depends on how the claim is defined.
- Employee departures are a common route for source code to move between competitors, so access and exit controls for source repositories matter.
District court order (C.D. Cal. 2001) that denied Adobe a preliminary injunction against SoftMan, finding that the distribution chain for Adobe's boxed software involved sales of copies and that SoftMan, which never installed the software, had not assented to Adobe's end user license agreement.
- Resale and exhaustion
- Licence scope
- Copyright and IP
Lessons learned- A single payment for perpetual possession of a boxed copy may be treated as a sale of that copy, whatever the licence label says.
- A reseller that never installs software may not be bound by the EULA.
- Bundle and suite transfer terms and support registration rights should be recorded for each acquired product.
- This interim district court order is not binding precedent and was followed by a different Ninth Circuit test.
United States District Court for the District of Vermont, 2001: a customer sued Descartes and a successor over a distribution software system and a related professional services agreement; the court dismissed the suit for improper venue because the arbitration clause in the software licence agreement was broad enough to cover claims framed under the services agreement.
- Licence scope
Lessons learned- A broad arbitration clause in a software licence can reach claims that a customer frames under a separate services agreement, if the facts relate to the licensed software.
- Courts look at the factual allegations, not the label of the claim, when deciding whether a dispute falls inside a licence's dispute resolution clause.
- Forum, governing law and arbitration terms in the licence agreement should be read together with every related services or hardware contract.
- Setting off disputed services charges against licence fees can still engage the licence's dispute resolution clause.
English Court of Appeal decision ([2001] EWCA Civ 317) allowing a software supplier's appeal and holding that a clause excluding indirect loss and limiting direct loss to the price paid, in the licence terms for an integrated mail order and accounting software package, was fair and reasonable under the Unfair Contract Terms Act 1977, because the parties were of equal bargaining power and the customer had negotiated over the term.
- Licence scope
Lessons learned- Liability caps and exclusions in a software licence are normally enforced between businesses of equal bargaining power.
- A negotiated addendum, even a modest one, can show that the customer understood and bargained over the risk allocation.
- An entire agreement clause that records non-reliance narrows the claims that remain after a cap, so reps that matter must be written into the contract.
- Your own standard terms can be used against you if they contain the same exclusion that you challenge.
Fifth Circuit decision (2000) in which a software vendor claimed a customer had installed its plotting software on 76 unauthorised computers and demanded USD 1.14 million; the court found the licence ambiguous on CPU and site limits, rejected the claims on contractors and later-purchased products, and held the vendor's copyright claim failed for incomplete registration deposit.
- Licence scope
- Audit and overuse
- Copyright and IP
Lessons learned- A licence schedule that was never completed can make the licence ambiguous about how many machines or sites are covered, which turns a dispute into a trial about facts.
- Keep every order, quote and invoice, because later purchases may show which products and quantities were licensed and on what terms.
- Contractors working for the licensee on its own product may be covered when the licence allows use "by and on behalf of" the licensee, but check the exact words.
- A vendor's demand figure is a claim, not a finding; check it against your own installation records.
- Judgment
English Technology and Construction Court judgment ([2000] EWHC Technology 137, 2000) assessing damages of about GBP 9.05 million against Wang (UK) for admitted breaches of a contract to supply an integrated manufacturing and business system to Pegler, and holding that Wang's exclusion and limitation clauses were unreasonable under the Unfair Contract Terms Act 1977 because the system had been oversold.
- Licence scope
Lessons learned- A supplier that oversells how well a packaged system fits your requirements may not be able to rely on its standard exclusion clauses.
- Keep the tender document and the supplier's response as contract documents, so that claims of a perfect fit can be tested against them.
- Record in the contract the licence quantities for every user and module, because shortfalls were part of the admitted breaches.
- A customer that starts work before the supplier's terms are agreed loses bargaining power and should negotiate the liability terms first.
Fifth Circuit decision (1999) in which a telecom-switch maker that licensed its operating system only for use with its own hardware sued a maker of compatible expansion cards; the court upheld infringement and trade-secret findings but held that the licence was copyright misuse, barring the copyright injunction, and affirmed dismissal of DGI's antitrust claim.
- Licence scope
- Copyright and IP
- Competition
Lessons learned- A licence that allows the software to be used only with the vendor's own hardware can be treated as copyright misuse when it prevents a competitor from testing compatible hardware.
- Customers who hold a software licence do not own copies of the software for section 117 purposes, so a third party who sells hardware that makes the customer copy the software can face contributory infringement.
- Copying a licensee's installed software to test compatible products, even with the licensee's help, can be infringement and a trade-secret problem for the copier.
Federal Circuit decision (1999) in which DSC sued a rival interface-card maker for copyright infringement over software embedded in its Litespan 2000 telecom equipment; the court held that carriers who paid once for the equipment and software were not necessarily 'owners' of the software copies under section 117 because the licence restricted transfer and use, but that a rival who bought the equipment on the open market was.
- Licence scope
- Copyright and IP
- Resale and exhaustion
- Competition
Lessons learned- A one-off payment and an unlimited term do not by themselves make a software buyer the owner of its copy; restrictions on transfer, disclosure and use on other hardware can make it a licensee.
- A licence that ties embedded software to the vendor's own hardware is what lets the vendor treat compatible third-party hardware as infringing; owning the equipment outright, bought on the open market, led to the opposite result for the rival.
- Check how the equipment was acquired. Secondhand equipment bought without licence restrictions was treated differently from equipment held under the carriers' licences.
Fifth Circuit decision (1998) affirming judgment against a software vendor that sued an independent service organisation, formed by its former employees, for supporting a bank's licensed software, because the bank's licence allowed other persons on its premises to work on the software.
- Support and renewal
- Licence scope
- Copyright and IP
Lessons learned- A customer's licence may allow third-party support staff to work on the software, so read the licence's third-party access clause before assuming support by others is infringing.
- Courts read copyright licences narrowly but still give effect to clear wording; vendors cannot add restrictions the text does not contain.
- Remote access by contractors is treated differently from on-premises access, and the licence should say which is allowed.
- A vendor that loses a copyright claim can be ordered to pay the other side's costs and fees.
US copyright case (D. Colo. 1995; 10th Cir. 1997) in which Mitel sought a preliminary injunction against Iqtel for copying the four-digit command codes that technicians use to program Mitel's Smart-1 call controller; the Tenth Circuit affirmed the denial because the codes were unoriginal or dictated by compatibility and industry requirements (scenes a faire), and did not reach fair use.
- Copyright and IP
- Competition
Lessons learned- Copyright in a manual or product does not automatically protect the commands, codes or settings that a compatible product must accept.
- Elements chosen arbitrarily, or dictated by hardware, compatibility and industry conventions, may be unprotectable even when copied wholesale.
- Interoperability features such as a translation mode for a competitor's commands can be lawful; licence restrictions, not copyright, are the more reliable control.
- Judgment
Seventh Circuit case (1996) holding that shrinkwrap licences are enforceable unless their terms are objectionable on grounds applicable to contracts in general, and that enforcing such a licence is not preempted by the Copyright Act.
- Licence scope
- Copyright and IP
Lessons learned- Licence terms presented in the package or on screen can bind a user who accepts them by using the software.
- Use restrictions tied to lower-priced editions, such as non-commercial use, can be enforced as contract terms.
- Contractual licence terms can apply even where the underlying content is not protected by copyright.
- Shrinkwrap terms remain open to general contract objections such as unconscionability.
Ninth Circuit decision (1995) affirming a preliminary injunction that barred an independent service organisation from maintaining Triad computers whose owners were software licensees, because loading the licensed software into memory during service infringed the copyright; fair use and copyright misuse defences failed at this stage.
- Support and renewal
- Licence scope
- Copyright and IP
- Resale and exhaustion
Lessons learned- Whether a customer owns or licenses its software decides whether an outside maintainer may run it. Triad conceded that customers who bought their software outright could let a service company use it.
- A maintainer carries the burden of finding out which customers own their software and which are licensees.
- Copyright misuse did not apply where the vendor did not stop anyone from writing competing service software.
First Circuit decision (1994) affirming a US$27.4 million jury verdict for a computer maker against an independent maintainer that duplicated and used its licensed diagnostic software, and holding that a copyright owner's refusal to license that software to competitors is presumptively a legitimate business justification under the antitrust laws.
- Support and renewal
- Copyright and IP
- Licence scope
- Competition
Lessons learned- Diagnostic and service software licensed to equipment owners is protected by copyright and trade-secret law against use by a third-party maintainer that obtained copies through customers or former employees.
- A vendor's refusal to license its software to competing maintainers was treated as presumptively legitimate under the antitrust laws, and the maintainer could not rebut it on this record.
- Duplicated copies kept in a maintainer's library, and copies left on customer sites, are the facts that turned a service dispute into a damages award of about US$27 million.
US Court of Appeals for the Ninth Circuit decision (1993) holding that loading licensed operating software into a computer's memory makes a copy, and that a third-party maintainer using software licensed only to its customers for their own internal use was outside the licence; the court affirmed the copyright injunction but reversed and vacated parts of the trade secret injunction.
- Support and renewal
- Licence scope
- Copyright and IP
Lessons learned- Licences that allow use for the customer's own internal processing do not extend to a third-party maintainer unless the licence says so.
- Running software, even briefly, can be copying; whether the licence covers the person who runs it decides infringement.
- A customer with a licence is not an owner of the copy for the purposes of the statutory essential-step defence, so contract wording about the licence matters.
- A statutory exception for machine maintenance and repair, section 117(c), has since been considered by the Federal Circuit, so check the current statute and the agreement before relying on this decision.
Second Circuit case (1992) in which Altai conceded liability for code a former Computer Associates programmer copied into its OSCAR 3.4 program, and the court held that the clean-room rewrite OSCAR 3.5 did not infringe CA-SCHEDULER, adopting the abstraction-filtration-comparison test for non-literal elements of software.
- Copyright and IP
Lessons learned- Copyright protects the expression in a program, not its functions, interfaces dictated by compatibility, or standard techniques, so assess compatibility products on that basis.
- A documented clean-room rewrite, with the tainted developer and code excluded, was accepted as a remedy for literal copying.
- Employee confidentiality agreements and trade secret law can reach copying that copyright does not.
Ninth Circuit case (1992) holding that disassembling a copyrighted program to reach its unprotected functional elements can be fair use when it is the only means of access and the purpose is legitimate, and that Sega's console lock-out, which displayed its trademark, could not support a trademark claim against a compatible-game maker.
- Copyright and IP
- Competition
- Licence scope
Lessons learned- Copyright does not protect the functional requirements of an interface, and disassembly to learn them can be fair use where no other means exists.
- The ruling concerned a non-licensee with no contract; an end user licence agreement that bans reverse engineering raises a separate contract question.
- A technical lock-out that doubles as a trademark display did not give Sega a basis to exclude compatible products, so the design of a licence-enforcement mechanism affects what the law will let a vendor enforce.
- Compatibility rights attach to the interface, not to the finished product, and the finished product can still infringe.
- On appeal
Ninth Circuit copyright and contract appeal (1989) in which a software supplier sued its customer for copying and modifying payroll programs licensed with a 'right of use'; the court held that a licensee infringes when it exceeds the scope of its licence, that copyright licences are assumed to prohibit any use not authorised, and that the licensee did not own its copy, and sent the case back for trial.
- Licence scope
- Copyright and IP
Lessons learned- A licence is not a defence to copyright infringement if the use goes beyond the scope of the licence.
- Courts in the Ninth Circuit read software licences as permitting only the uses they authorise, not everything they fail to forbid.
- A bare 'right of use' does not include the right to copy, modify or port the software.
- If the vendor keeps 'all rights of ownership', the licensee does not own its copy and may not have the copy-owner rights in 17 U.S.C. 117.
- Getting a copy of software through former vendor staff, instead of from the vendor, can add trade secret claims.
No cases match these filters.