Learning Technology Partners v. University of the Incarnate Word is a breach of contract case in the Northern District of California between an online education software company, Learning Technology Partners (LTP), and a private university in San Antonio, Texas, the University of the Incarnate Word (UIW). LTP’s claims concerned the terms on which UIW used LTP’s IZIO learning platform. The allegations below are the parties’, as recorded in the court’s orders, unless stated otherwise.
Background
In 2004 the parties signed a “Services Agreement” under which LTP provided UIW an online learning platform, IZIO, described as managing teaching and learning from posting course materials to grading exams. The original term was three years and was extended several times, last by an addendum of December 2013 running to 31 December 2014. LTP began with UIW’s all-online courses and over time also served an adult degree completion programme (ADCaP) and an online high school programme. UIW paid a per-student fee for each student who used the platform. The fee schedule was tiered by semester: USD 15 per student per course per 5-8 week semester for up to 1,800 students, USD 12 above 1,800 and up to 2,500, and USD 11 above 2,500.[1]
The dispute
LTP sued in state court on 19 August 2014 for breach of contract and the case was removed to federal court. It alleged breaches of five provisions; the order of 30 October 2015 addressed three.[1]
- Exclusivity (section 7.6). The agreement made LTP UIW’s “sole and exclusive provider” of distance education content or learning management systems for the term, in return for waived set-up fees and a discount exceeding 60 percent. LTP said UIW breached it by letting high school students use another program, by running “test” courses on Blackboard, and by moving to Blackboard after notifying early termination in August 2014 and enclosing a cheque for USD 120,144 meant to cover the remaining term. UIW said LTP acquiesced by cashing the cheque; LTP said it had written that cashing it did not waive its rights or accept UIW’s enrolment estimate.
- Fees (section 5.1). LTP said UIW enrolled ADCaP “non-blended” students in IZIO without paying the per-student rate, and let ADCaP students use IZIO for more than the eight weeks it said the agreement allowed. UIW said the parties had agreed a USD 2 rate for portal-only textbook access in 2009, that a December 2011 email exchange let those students use IZIO, and that LTP’s account manager helped set the courses up. UIW also conceded that certain professors had “mistakenly overused” IZIO in what it called “rogue courses”, which were not part of its motion.
- Restrictions on the technology (section 4.3). LTP said UIW built software “bridges” and adapted third-party products including Blackboard, Banner, Recruiter and DataTel to replicate its platform. UIW did not dispute building bridges but said they were not derivative works of IZIO.
Decision or outcome
Partial summary judgment denied (30 October 2015). The court denied UIW’s motion on all three provisions. It found the exclusivity and acquiescence questions turned on disputed facts, held that the fee schedule language appeared to tie each payment to a single student, a single 5-8 week semester and a single course, so a factfinder could find that longer access was owed additional payment, and held that whether LTP’s account manager had authority to modify the contract was a question of fact UIW had not resolved.[1]
Pretrial (January and February 2016). The court refused to reconsider its pretrial ruling that LTP could not allege an exclusivity breach before 2013, because LTP had answered an interrogatory saying the breach began no later than 2013 and had not supplemented the answer.[2] It settled the affirmative defences for the jury, including waiver and modification, and approved a special verdict form that asked whether UIW breached by using IZIO for ADCaP non-blended courses and by allowing access beyond eight weeks, and whether LTP waived or modified its right to fees or failed to mitigate.[3][4]
Judgment (1 March 2016). The action was tried to a jury, which returned a verdict for UIW on LTP’s claims and for LTP on UIW’s counterclaim; the court entered judgment for UIW on LTP’s claims and for LTP on the counterclaims, dismissed the action and ordered each side to bear its own costs.[5] The jury’s answers question by question were not in the records read, and no appeal was found.
Significance for software licensing and SAM practice
The case is a customer-side per-user counting dispute in education. The agreement priced use per student, per course and per short semester, so which students were covered, and for how long, decided what was owed. The side arrangements (a USD 2 portal rate, emails, an account manager’s help) were then the evidence on whether the written terms had changed.
Lessons learned
- Define who is a counted user and for how long. The fee clause was tied to student, course and semester, and the parties disagreed on whether access beyond eight weeks or by non-blended students was covered.[1]
- Put scope changes in the contract. The USD 2 portal arrangement was worked out by email and not memorialised in a written contract, and later became part of the fee dispute.[1]
- Check who can modify the agreement. Whether an account manager who helped set up courses could change the contract was left to the trier of fact.[1]
- Settle the early-termination payment in writing. UIW paid an estimate of the remaining fees with its termination letter and the vendor reserved its rights in reply.[1]
- Keep discovery answers current. The vendor was held to its interrogatory answer on when the exclusivity breach began.[2]