A Litigator’s View of Software License Agreements Dylan J. Steinberg

A Litigator’s View of Contracts Almost always already a dispute What are the key contract terms? How do they address the issues in dispute? Is there an ongoing business relationship? Other agreements? What tools are available to change the playing field? Nearly all cases settle

Early Litigation Mechanics Any preliminary relief? Forum Arbitration State or Federal Court Venue Applicable Law Who files first? Declaratory judgment Choose forum

Discovery What is discovery likely to tell us about the issues in dispute? Communications between the parties Internal communications

SPECIFIC ISSUES

Technical Issues Technical issues arise frequently in software license litigation Integration with proprietary or other vendor software Who provided installation and support? If there were customizations, who provided them? IP issues

Additional Complexity Experts Protective Orders and Secrecy Protections May limit ability of client to review key documents

Indemnity Licensee is generally going to want an indemnity for IP issues Particularly for customer-facing software Potentially large numbers of users Integration can make this complex What is covered by indemnity? How is software designed to be used?

Competition Issues What happens if licensee and licensor are in related businesses? Limitations on competition generally disfavored Significant variation across jurisdictions

Limitation of Liability Scope Does intended use create possibility of consequential damages? Does limitation amount offer sufficient protection? Will limitation be enforced?

Assignment Can licensor assign support and maintenance obligations? Any opportunity for due diligence Is licensor liable for any breach of assignee? Can licensee assign use Related companies Has there been an assignment? What notice required? Bankruptcy implications

Third Parties Manufacturer vs. Reseller Third party support Source of remedy Dispute between manufacturer and reseller Third party support Third party integrators

Multiple Agreements Master Licensing Agreement Insertion Order / Purchase Order Which agreement controls in case of a conflict? Treated as single agreement for some purposes, but not all In a bankruptcy, do the agreements need to be assumed together or can they be assumed individually?

Venue and Choice of Law Home field advantage Reasons for choice of law What do we know about the local jurisdiction? Will there be access to federal court? Reasons for choice of law Certainty Specific provisions

Arbitration Control costs? Speedier resolution? Can limit home field advantage May permit finder of fact with relevant expertise

Warranty and Support Discontinuation of software or support Does limitation of liability apply? Any protection for solvency issues? Source code escrow

Termination Issues Licensor’s right to terminate Opportunity to find substitute software Licensee’s right to terminate Provisions to ensure software is not used after termination

QUESTIONS?

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