Software Licensing Litigation
108 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.
108 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
- 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.
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.
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 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.
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 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 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.
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.
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.
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.
- 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.
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.
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.
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.
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 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.
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.
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.
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 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.