In a rare software damages case, the
Through a complex series of procurements, relying on other federal agencies and schedules, the
In 2013, the Agency anticipated an IT hardware overhaul and planned for new servers with two processors, each with eight processor cores, for a total of 16 processor cores, to be used. The Agency modified its then-existing contract with SoftwareAG, now owned by immixTechnology (Immix), in early 2014 (Modification). It provided new software licenses and new software support for a period covering the remaining option years on the contract. The Agency deployed the new servers, with the Software.
Fast forward to
The contractor submitted a claim alleging that: (1) the Agency breached the Modification by over-deploying the Software to processor core types without a corresponding license (for almost three years), and (2) the Agency was required to buy licenses for the additional 80 over-deployed processers, along with support. For its part, the Agency took the position that it derived no real benefit from the over-deployment.
Although the Board disagreed with the contractor's second claim - requiring the Agency to buy new licenses - it did find that the Agency had breached the license agreement and that the contractor had been damaged.
Determining quantum in software damages cases is difficult. There are very few cases for guidance. Both the contractor and the Agency submitted their recommended calculations. Not surprisingly, Immix asked for expectancy damages relying on the published list price for each license, treating them as "new" licenses - a more typical commercial approach. In contrast, the Agency relied on the pricing in the 2014 Modification, which reflected government negotiation and discounts.
Ultimately, the Board agreed with the Agency's approach - applying the license rates negotiated in the 2014 Modification. The 80 unlicensed deployments netted out to
Finally, the Agency's claim about the meaning of its perpetual license must be noted as well as the fact that it was unsuccessful. The SBA argued that the 2003 and 2006 licenses were perpetual and should carry over to the current usage. The contractor countered that those licenses were no longer supported by the Software developer, and would no longer work on their own.
The Board agreed with the contractor. Its view of perpetual licenses is clear:
Perpetual licenses for a particular software product do not necessarily grant unlimited technical support or updates from the owner or manufacturer. See
In other words, "perpetual" doesn't mean forever. Instead, it is the terms of a license agreement granting a perpetual license that are forever! So, if those terms of a software license agreement granted a perpetual license to the government, the terms will continue to control throughout the use of that license, which can mean - up to forever.
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