Enforcing End User License Agreements in Government Contracts: Protecting IP Rights, Lessons From Recent Cases

Description

Government contractors that sell or license software to the federal government, either directly or indirectly through a reseller agreement, frequently attempt to preserve and protect their intellectual property rights by incorporating commercial licensing terms from an EULA into their government contracts. Two recent cases shed light on the enforceability of EULAs in federal government contracts and the steps software licensors can take to protect their IP enforcement rights.

In Avue Technologies Corp. v. Secretary of Health and Human Services, the Federal Circuit ruled that software manufacturers may seek to enforce EULAs against federal agencies if the EULAs qualify as "procurement contracts." Specifically, the Federal Circuit found Avue's allegation that its EULA combined with the prime contract qualified as a "procurement contract" sufficiently "nonfrivolous" to establish jurisdiction before the Civilian Board of Contract Appeals (CBCA). What the court left undecided was whether Avue's master services agreement/EULA qualified on the merits as a "procurement contract" enabling direct enforcement under the Contract Disputes Act and what role resellers must play in bringing claims before the CBCA.

In another case, 4DD Holdings L.L.C. v. United States, the U.S. Court of Claims ordered the government to pay millions of dollars in damages to a software developer for copyright infringement. This opinion, which determined that a Department of Defense contractor made thousands of unauthorized copies of the plaintiff's software, highlights the risks to both the government and contractors of misunderstanding software copyright requirements in federal contracts.

Listen as our authoritative panel reviews the holdings in these cases and the important lessons they provide for contractors licensing software to the federal government. The panel will provide tips and best practices for counsel representing software companies to ensure that their client's IP rights are protected from unauthorized use on the front end of the contract.