The U.S. Court of Federal Appeals (CAFC) just released its decision in another breach of software license case. Bitmanagement Software GMBH v. United States, Fed. Cir. 2020-1139 (Feb. 25, 2021). This is the second case where the court recently found for the contractor and held the Government to have overextended its use of a software license. (For a similar case at the Contract Board of Appeals, please see here).

As factual background, the Navy was using Bitmanagement’s software through a third party reseller agreement. The Navy was having trouble tracking the seat licenses and transferring them when needed (i.e. when Navy personnel transitioned). So the Navy and Bitmanagement directly discussed solutions.

Together, they decided (1) Bitmanagement would allow the Navy to use a web-based version of the software, hosted on a Navy server, and replicated for users; and (2) the Navy would run the software through an intermediate mechanism: an independently contracted and licensed software called Flex Wrap, that tracked floating licenses in order to limit the number of programs being used at any one time. Contrary to its agreement to do so, the Navy never actually implemented the Flex Wrap.

To read the full Taft law bulletin, click here.