Software License Disputes: Managing the Inherent Risks

Intellectual Property Partner Richard Raysman and Litigation Partner Francesca Morris authored a Practical Law Company article titled "Software License Disputes: Managing the Inherent Risks." In the article, Mr. Raysman and Ms. Morris discuss key issues and set out practical tips for licensees and licensors to help anticipate and manage the risk of disputes that commonly arise in software license arrangements. Many companies outsource the development of the software they rely on to help run critical business systems more efficiently and manage their operations cost-effectively. Mr. Raysman and Ms. Morris explain that while licensing third-party-owned software can be an effective business strategy, any sudden suspension or termination of the software license by the licensor due to a dispute with the licensee may significantly harm the licensee's ability to conduct its business. For licensors, disputes with licensees that result in the non payment or setting-off of license fees deprives them of critical operating revenue necessary to recoup their costs for developing that software, as well as to invest in the development of new products and services.

The article addresses the business risks for each party when a dispute arises (see Business Risks when Software License Disputes Occur), key provisions that typically lead to disputes between licensors and licensees (see Key Provisions that Lead to Software License Disputes), steps that licensees and licensors often can take when negotiating the software license agreement to minimize the risk of harm that could be caused by a dispute between them (see Common Steps to Manage the Risk of Software License Disputes), and relevant recent case law (see Relevant Case Law).